European Commission approves CZK 2.5 billion investment program for affordable housing

The Ministry of Regional Development (MoRD) has secured approval from the European Commission for a new investment program aimed at supporting affordable rental housing. The initiative will be funded through the National Development Bank, with an allocation of CZK 2.5 billion from the National Recovery Plan. This program will enable municipalities and private investors to apply for preferential loans for the construction, reconstruction, or purchase of affordable rental housing.

This marks the second financial instrument introduced by the MoRD in the past year to expand the supply of lower-cost rental apartments, following the launch of the Available Rental Housing program. Over the past two decades, public financial support for affordable housing has been largely absent in the Czech Republic, making this initiative a significant policy shift.

Minister for Regional Development Petr Kulhánek emphasized that municipalities have expressed a growing need to address the housing crisis. Many local governments are prepared to offer affordable rental housing to groups such as young families and individuals unable to access mortgages. The new European Commission-approved financial instrument, under Component 2.10 of the National Recovery Plan, will support the creation or renovation of at least 800 affordable apartments.

The program is designed for large-scale housing projects with budgets exceeding CZK 250 million and is expected to attract regional governments, metropolitan areas, and institutional investors. Applicants can receive up to 80% of eligible costs through a subordinated loan, with at least 10% financed from their own resources. Interest rates for these loans will be between 1–2% per year. The National Development Bank has already received expressions of interest for approximately 20 projects valued at CZK 10 billion.

European Commission approval was required to ensure that public investment does not disrupt market competition and that the social benefits outweigh any market risks. The notification process involves detailed legal and economic analysis before the Commission confirms a project’s compliance with EU regulations. Kulhánek highlighted that securing approval for such financial instruments is a complex process, which had not been undertaken in the Czech Republic for twenty years after joining the EU. Following the successful launch of two programs in the past year, the ministry aims to establish a long-term, predictable investment flow into affordable housing, with a goal of reaching CZK 10 billion annually.

These financial instruments are part of the broader Housing for Life reform, which seeks to improve housing market conditions. The MoRD is also supporting municipalities by assisting with project preparation. Under Subcomponent 4.1.3 of the National Recovery Plan, CZK 500 million has already been allocated for project documentation and planning.

Additionally, Regional Investment Support Centres have been established nationwide to provide guidance on housing projects. Since their launch, they have conducted over 2,300 consultations, facilitating the development of more than 500 housing projects worth over CZK 30 billion. Through a combination of financial instruments, expert support, and legislative initiatives, the Ministry of Regional Development aims to create a sustainable model for affordable housing investment in the Czech Republic.