AmCham Real Estate Council: Supply of residential housing will not grow rapidly also due to uncertainty about the way forward on the new construction law

Land-use policy can be separated roughly into three processes: decisions on land use (or development), creating zoning requirements to facilitate the land use plan, and permitting to ensure that those developing the land abide by zoning requirements (and therefore the land-use plan).

Each decision requires a different level of government. Land use requires politicians to approve expert proposals. Zoning requires high level legal and regulatory expertise. Permitting requires administrative and technical competence. The unfortunate reality today is that all three processes are crammed into the permitting stage today. That makes developing land unpredictable, lengthy, and expensive.

The government has recognized the current permitting process has major problems. Their main move has been to exempt the government from having to deal with the mess that government has made (by exempting major government projects from the rules). Only private citizens and companies, they seem to argue, should have to suffer. 

Their second proposal is to reverse the previous government's decision to centralize the permit process and return it to the over 6000 municipalities. That means the country will have over 6000 development strategies that will be amended whenever the local mayor decides to do so. 

The chances of this policy resulting in enough housing, or even more ideally, enough affordable housing, to generate an innovative economy is slim to none. Let's hope the government recognizes that passing their current legislative reform may not even constitute a small victory in the effort to create a land-use policy that benefits the citizens of Czechia, and starts working on next steps immediately.  

Meanwhile, on February 2, AmCham Real Estate Council organized a discussion AmCham Real Estate Council: Residential Market Update & Outlook. Supply will not grow rapidly due to unpredictability of constructions costs, investor's concerns about financing new projects, uncertainty about the way forward on the new construction law, among other factors. Thank you, Petr Hána of Deloitte, Jan Adámek of JAN Reality, Renata Vildomcová of Skanska Residential and Stan Kubáček of Heimstaden for your presentations, insights and AmCham members for the discussion.

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