Czech Republic among worst countries for building permits

A World Bank report gave the country good marks except for starting construction

The Czech Republic ranked 127th out of 190 countries for the ease of getting a building permit, according to the annual Doing Business 2018 report published by the World Bank (WB). In Europe, only Romania, Moldova and Bosnia-Herzegovina ranked lower.

In addition to its length of time, other criteria, such as transparency or complexity, were assessed. Denmark was the best and Afghanistan the worst, though five countries out of the 190 had no data.

Overall, though, the Czech Republic ranked 30th for ease of doing business in the World Bank's Doing Business report and improved its score slightly, with New Zealand on the top of that overall chart and Somalia on the bottom.

The Czech Republic was listed among companies that made it easier to start a business. “The Czech Republic made starting a business less expensive by introducing lower fees for simple limited liability companies,” the report said. Overall, the Czech Republic is 81st in ease of starting a business. There was some criticism as well. “The Czech Republic made paying taxes more complicated by introducing new requirements for filing VAT control statements,” the report stated.

The country was tied for number one for ease of cross-border business, number 15 for ease of getting electricity, number 25 for ease of resolving insolvency, number 32 for ease of registering property, number 42 for ease of getting credit, number 52 for ease of paying taxes, number 62 for ease of protecting minority investors, and number 91 for ease of enforcing contracts.

The low score for building permits stands out against the other mostly positive rankings.

"Year after year, the World Bank confirms that the length of getting building permits is the biggest brake for the Czech economy. Nevertheless, our political representation cannot agree on legislative changes to overcome this overwhelming problem. In the overall ranking, which evaluates other aspects of the economy, such as foreign trade or access to credit, the Czech Republic is in a strong position,” Michaela Tomášková, executive director of the Central Group developer, told the Czech News Agency (ČTK).

In length of getting building permits, the Czech Republic is at 165th place with 247 days. In Denmark, it takes 64 days, and 652 days in Cambodia. The Czech Republic also has 21 procedures for getting a permit.

Among the neighboring countries, Germany is the best at 126 days, followed by Poland at 153 days, Austria at 222 days and Slovakia at 286 days. In the building permit ranking, Slovakia is 36 spots ahead of the Czech Republic at 91st place.

“The rankings only reflect the length of the procedures provided under the law. In fact, the process of obtaining the necessary permits takes much longer. In the Czech Republic building a typical apartment house takes about 10 years. For many issues, the administrative office requires opinions from the authorities concerned. And they do not have any deadlines,” Tomášková said.

UniCredit Bank analyst Pavel Sobíšek told ČTK that building permit process demonstrates the inefficiency of the state administration and it significantly reduces the growth potential of the Czech economy. “I find it unbelievable how long discussions about the lengthy construction process in the Czech Republic has gone on without any improvement. Personally, I do not hope too much for improvement in the years to come,” he told ČTK.

KPMG partner Pavel Kliment agreed that the length and complexity of getting building permits is the reason that there is such a low volume of construction, despite the booming economy.

ČSOB analyst Petr Dufek said the offer of new dwellings is much lower than it was during the real estate boom, and the lack of new buildings to the delays in getting permits is the reason apartment prices are going up fastest in the Czech Republic of any EU country.

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