Czech Republic: Trafficking in poverty on the rise, landlords cashing in

The number of people living in residential hotels in the Czech town of Ostrava is rising sharply. News server iDNES.cz reports that the owners of these facilities are making such good money that CZK 172 million in housing supplements flowed to Ostrava last year alone, double the amount previously allocated.

Families with as many as six members live in small rooms just a few meters square without private bathrooms. Those facilities are often located in the hallway and shared by everyone living on a single floor.

A residential hotel owner can cash in as much as CZK 15 000 per month from the state per room. Kumar Vishwanathan of the Life Together association (Vzájemné soužití) told iDNES.cz that according to the association’s findings from the field, 18 000 people are currently living in residential hotels in Ostrava.

Vishwanathan believes too many people are ending up in the residential hotels unnecessarily, where they are living in unsuitable conditions: "We recently addressed the problem of a family whose three children were taken away from them by the courts because their housing conditions did not meet the children’s needs. This is uneconomical. The state pays a monthly rate of CZK 4 000 per adult tenant in a residential hotel and CZK 2 500 per minor, but it costs CZK 300 000 per year to institutionalize a child. It would be less expensive to give the poor a chance and address their needs."

Record amounts of money are flowing into the pockets of residential hotel owners. "Our contact office in Ostrava disbursed roughly CZK 87 million for housing supplements in 2011. In 2012 they dispersed about CZK 172 million," Czech Labor and Social Affairs Ministry Štěpánka Filipová told iDNES.cz.

The occupants of these unsuitable residential hotels have great difficulty accessing other housing, as they have no money to pay the administrative fees associated with applying for municipal housing or for paying deposits to private owners. The numbers of impoverished people in Ostrava are rising in general. Once they lose their housing, they are on the road to the residential hotels.

Speculators buying up cheap apartments in Most

A similar situation probably also awaits the town of Most, where real estate speculators are buying up large amounts of very inexpensive apartments and leasing them to the socially vulnerable. Czech Radio reports that it is possible to buy an average-sized apartment in a prefab building near the town center there for as low as CZK 150 000.

The prices of apartments in Most have fallen by half, but the rush to buy is not about entrepreneurs believing Most will soon become an attractive location where apartment values will rise. Those buying up the apartments lease them to socially vulnerable people whose rents are paid by the state, which means their profits are guaranteed. All that is required is to manage the properties so tenants do not destroy the apartments or the buildings.

The Most town hall is aware of this problem but cannot do anything about it. "This greatly bothers us, greatly. Unfortunately, the applicable legislation does not permit us to regulate the situation or to take action on behalf of most of the respectable occupants of any given building and of the town in general," Mayor of Most Vlastimil Vozka (Severočechy – North Bohemians) told Czech Radio.