Local governments in Slovakia are highly interested in the construction of rental apartments, but municipalities and cities are concerned about next year’s financing, particularly due to the planned fiscal consolidation. In Kremnica, for example, there are plans to build nearly 30 rental units, yet the key challenge is how to fund such projects. Municipalities rely on loans from the State Fund for Housing Development combined with subsidies from the Ministry of Transport.
“There is a very favorable interest rate, and it has a long repayment period,” noted Kremnica’s mayor, Martin Novodomec.
According to Jozef Božik, chairman of the Association of Towns and Municipalities of Slovakia, “The critical factor is the volume of subsidies from the Ministry of Transport. Cities and municipalities typically request 40 percent in subsidies and 60 percent in loans from the State Fund for Housing Development."
As fiscal consolidation approaches, concerns are growing about whether subsidies and loans will continue next year. "With our own resources, I can’t imagine the city or local government being able to finance a project costing €2.3 million. Without a subsidy, such activities are simply impossible," Novodomec emphasized.
Despite budget cuts, the Ministry of Transport is planning to continue construction support next year. “The draft budget approved by the government for 2025 and 2026 includes €20 million annually for subsidy contracts to support rental and replacement apartment construction, as requested,” said Ministry of Transport spokesperson Petra Poláčiková.
The situation is different for the State Housing Development Fund, which will feel the impact of consolidation due to the loss of state contributions. “The state used to provide an annual subsidy of €25 million. This year, we received half of that—€12.5 million—and we won’t be counting on any subsidy for the next few years,” explained Milan Lipka, the Fund’s general director.
Despite this, loans from the State Fund, similar to subsidies, should remain available. The Fund can operate on its own budget of €260 million. According to the Association of Cities and Towns of Slovakia, these resources should be enough to build over 1,000 new rental apartments next year.
Source: STVR
