Red tape is tying up development of new flats

Despite some new rules, developers claim the city makes it too hard to building

Taking the average wages into account, people pay significantly more for flats in Prague than in neighboring Germany and Poland. Developers say the situation is due to bureaucracy, which hinders development. It can take up to eight years to get all of the permits to start construction, which is one of the longest processes in Europe.

A large number of disputes in recent years have also delayed the start of new housing projects, according to developers. The complex permitting process delays construction and in effect pushes up the price of flats, the developers maintain. People living in Prague wind up paying extra due to the bureaucracy.

It takes someone in Prague some 11.5 annual salaries to buy an average apartment, according to a market analysis by developer Central Group and consultancy KPMG. The same research showed that in Vienna a resident there would pay 9.9 annual salaries for an average flat, and in Berlin and Warsaw it is even less at 6.4 annual salaries.

The number of flats in Prague has increased during the past five years, according to the Czech Statistical Office (ČSÚ). But there has been a recent decrease in the number of projects started.

New projects are being started, but at a slower pace than previously. The first nine months of 2016 saw construction start on 1,716 flats, while a year earlier the figure was 4,144 flats. Developers blame the city administration for the slowdown and say that the lack of flats will cause a problem in the future.

Central Group chief Dušan Kunovský told the media that development in the city has been paralyzed since the last municipal election due to “extremists” in the Green Party, who are in charge of zoning development in the city. This has hurt efforts by Mayor Adriana Krnáčová (ANO) to encourage development, he added.

Green Party leader Matěj Stropnický responds to the criticism by saying that the slowdown is due solely to the developers, who had been waiting for new construction regulations to take effect. These new rules, which are more favorable for developers, took effect in September, and the number of building permits issued in October was up compared to the same month in the previous year, he said.

Developers disagree with that analysis, and say the permitting process is still too complex and makes planning projects very complicated. The prohibitively long process is what developers complain about the most.

The newly appointed head of the Institute for Planning and Development (IPR), Ondřej Boháč, said that in Prague and the Czech Republic there is a severe problem with legislation and time frames. It takes about eight years to get a building permit, and this applies not only to housing projects but also to family homes. This affects the willingness of investors to take part in the process of licensing construction.

Boháč claims that after an eight-year process, a civic group can raise objections and stop the project If the process was easier there could be more dialogue on the projects in the earlier stages among the people with potential objections. A developer now needs to satisfy 30 legal steps before construction can start. The only place in Europe with more regulations is Russia. The situation will not change without reform on the state level, he said.

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