Traffickers in poverty in the Czech Republic have a new trick for not losing their profitable business model

Real estate speculators in the Czech Republic who charge high rents for dilapidated apartment units in socially excluded localities do not intend to lose their profitable "enterprises". They are selling apartment units in places where local councils have decided not to disburse housing benefits to their impoverished tenants and are buying other units in localities where the state housing benefit is not limited.

According to a recent article published by news server iDNES.cz the "business" behind ghetto creation is now moving into other quarters of other towns. "The most important thing is to own apartments in different buildings and on various streets," says Boris B., a Russian citizen who has been a trafficker in poverty for two years now in the Czech Republic.

The trafficker buys up cheap, dilapidated apartment units in impoverished quarters and charges high rents for them to socially vulnerable people who are eligible for the state housing benefit and housing subsidies if their welfare benefit are not enough to cover their housing costs. Since last year local councils have been authorized to refuse to disburse the state benefits in selected localities, streets or even to those residing in specific buildings.

The measure was meant to be the main weapon for fending off the trafficking in poverty locally. Speculators have therefore invented a new way to defeat this new weapon.

The traffickers are moving to neighborhoods where the benefits are still available and are mainly no longer concentrating on entire apartment buildings, but are buying individual units at different addresses to minimize the risk that local governments will decide not to disburse the benefits. Boris B. used to own as many as 10 units in a single building.

Because of the local councils' ordinances that approach is no longer profitable, so he has sold his units that are concentrated in such ways and bought other ones on different streets in various other towns. "As long as the state will cover people's rents, this will continue to be profitable," he told the news server.

Today he owns several units at the Janov housing estate, in the town of Sokolov, at Větřní near Český Krumlov and in the Vimperk area. By taking this approach he has minimized the risk that all of the localities with such units will be designated by local councils as areas where benefits will no longer be paid.

Other business people are taking the same approach as Boris. In the town of Varnsdorf alone there are dozens of units for sale in the most problematic socially excluded locality.

Entrepreneurs Jan Pražák and Pavel Němec are selling 123 units there. "We are business people and this enterprise is no longer profitable for us," Pražák told the news server. 

Twenty units owned by these traffickers have been empty ever since the local council issued its ordinance banning the disbursal of housing benefits and they are now selling all the units for an average of CZK 70 000 [EUR 2 800] each. "The tenants have a condition in their contracts that we can end it immediately should we decide to sell, that was the deal when they took up residency in our properties, so it was not a problem to empty the units," Pražák said.

The evictees are moving elsewhere, either into other parts of the same town or into nearby towns that are just as quickly preparing to adopt similar ordinances. The entrepreneurs will not abandon their trafficking in poverty but are just moving into the Šluknov foothills, where housing benefits are still being paid.

Experts on the issue of social housing are surprised at the rapidity with which the speculators have reacted to the "benefit-free" zones in various towns. Limiting benefits, in their opinion, is a solution that just moves the problem to other locations around the country.