New building projects must be energy efficient

A law taking effect in January may cause the prices of new flats to increase further

Starting in January, construction authorities will only allow developers of large projects to build energy-efficient buildings where the energy consumption is near zero. Some construction companies say the new rules will bring about an increase in prices for new real estate.

Larger public buildings such as town halls, schools or hospitals must already meet strict standards. As of January, smaller ones, as well as all the new private buildings over 1,500 square meters, will join them.

Housing prices in the Czech Republic have already climbed to a record level, driven in part by high demand due to cheap mortgages.

The price increase will depend on what standards the developers already use. Trigema developer group said it does not expect an increase, as it already meets the requirements. Ekospolu said its apartments may increase up to 10 percent, according to daily Hospodářské noviny (HN).

“The obligation of a high energy standard for all newly built projects will have an impact on the cost of construction and as a result on the price of the apartments sold,” developer Central Group spokeswoman Marcela Fialková said, according to HN. “In our case, we will have to invest more in the windows that regulate heat.”

Petr Holub, director the Building Chance Alliance, which is engaged in low-energy construction, said the cost of acquiring an apartment will increase only minimally. People will also reduce their electricity consumption fees in the long term. He added that half of the new apartments available meet the incoming energy standards.

The Energy Savings Act will also apply to small-scale development projects and family houses starting in 2020. Exceptions will only be given to some industrial sites, religious buildings, and small cottages.

The increases due to energy efficiency are on top of changes to the mortgage rules imposed by the Czech National Bank this year as well as an increase in interest rates, which had been flat for a long time.

The Czech Republic also has a large amount of red tape for construction projects, which makes it difficult to get a project started. 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 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.

The situation may improve due to an amendment to the Building Act that reduces red tape. It will also start to apply in January.

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