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This article discusses the various types of prices in housing, such as market prices, cost prices, maximal prices, time direct prices, and stop prices. It also explores the history of rent regulation in the Czech Republic and its impact on the housing market.
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Thepriceaspects of housing (Prices) Ing. David Slavata, Ph.D. HousingEconomics
Thekinds of prices in CZ • Market prices • Costprices • Maximalprices • Time direct prices • Stop prices
Most of prices in CZ are based on the market prices. Onlysupply and demanddeterminetheresultprice. • Example: Prices of flats, houses, land, carsetc. • Some of goods are underpriceregulation. • Most of flatrents are market based. • Some of rents are regulated.
Payments in Housing Owner of theflatpayments Rents Tenantpayments
Payementsforowner Payement = Flatexpences (house) + AadvancePayments Flatexpences (house) = repairs + tax + funds + land rent + administration + accounting + inspections + mortage Profit = Rent(reven.)-Costs (expences)
TenantPayements Payement = Net Rent + Advance Payments, Deposit Net rent = rent per m2 x area of flat + rent from facilities Advance Payements = water + gas + electricity + waste +….
Threekinds of determinantion Rent per m2 _______________________________ Adm. regulat. Cost Market Selected Cooperatives Others cities
Rent regulation P D S P1 P2a Q Qs Q1 Qd
Administrativeregulation • Traditionfrom 1914 in CZ • Expecting end 2013 in CZ • Housing list situation in 70s and 80s • Demotivatedforindividualactivity in thefield of construction • Biggerdemagethanfirst and second worldwar • Theownermustrespectthecharge set by thegovernment (low) • Disbalance in lowprotection
Typicalpoints of Czech rent regulation • Priceregulation • Legalregulation by civil code
Prices - overview • 1914-1918 rent regulation • 1918 – 1938 step by step deregulation • 1939 restoration of rent regulation • 1953 currencyreform in cz • 1964 new civil code - 2Kč/m2 • 1991 2Kč/m2 • 1992 4Kč/m2 • 1993 rent deregulationlaw • 1994 5,5Kč/m2 • 1995 6,76Kč/m2 • 1996 8,50Kč/m2 • 1997 12,70Kč/m2 • 1998 15,90Kč/m2 • 1999 17,39Kč/m2 • 2000 18,25Kč/m2 • 2001 18,98Kč/m2 • 2006 new rent deregulationlaw • 2010 60Kč/m2 • 2012 End of regulation 100Kč/m2
Disbalance in Legalregulation Civil code 1991 - 2005 • Lowor no possibility to give a notice to tenant (only by decision of thecourt) • In case of noticetheobligation to providecompensation (newflat) • Theownermustrespectedeven non payer • Familieswithchildrenwereuntachable • Ownermustrespecttheregulatedrents • No barriersfortenant – noticewithoutreasons
Impact of rent regulation in CZ • Latentshortage of flatsduring 100 years in CZ • Grayness • Inequity • Poorqualitybuildings • No efectivedistribution • No efectiveconstruction • Antagonisticclases – owners and tenants
Poorhouseholds • Subsidies • Municipalflats • Privatehostels • Receptioncentersforhomeless
Problem of increase of rentsafterderegulation in case of indefinitelyagreement • Agreementproposal to tenant • Twomonth term foracception of theproposal • In case of no acceptionthreemonths term for civil action • The rent isdeterminate by court on thelevel of market rent.
Determination of market rent by thecourt • The map of market rents • Expert statement • Submitting of minimalthreevalidagreementsfromthesame house by theowner • Submitting of paybillswhichdocumentsrepairing of flator house
Cost rent Tenant (shareholderof coop.) Paysthe rent Agreement Cooperative (owner of flat)
Cost rent Rent = mortage + Repairs + Administration + Insurance + Taxes + Rent of land + Last yearlossfromhousekeeping
Impact of cost rent in CZ housing • Wellmaintainedhousing fond in comparisonwithadministrativeregulatedhousesduringthe term of rent regulation • Relationship of coopmembers to their house
Market rent Rent = f (P, F, N, Sch,…..) • The rent isdeterminate by many kinds of factors.
Themainfactors • Place • Neighbourhood • Infrastructure • City transport • Services • Educations • Health care services • Public offices • Labour market • Population
previous Urban development in Ostrava
Themainchracteristics of thesituation • Theprices are affected by thefinancialcrise • The market systemafter 100 yearsisbalanced • Supply exceedsdemand • There are no possibilites to reachoversized profit • Balancedlawprotection of tenants and owners • Participation of privatesector on socialhousing (opportunityforenetrepreneures) • Highrate of flatreserves
Future of housing market • Therise of servicepricesconectedwithhousing (gas, electricity, water….) • New construct technology • Gethoproblems – concentration of poors • Vacantflats • Privatisation of statehousingstock • Changes in qualitystructure of tenants (partlyfinancialweakhoseholds) • Demography