Disappointing Interest for Government’s Housing Subsidies

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A quarter of the appropriated money has remained unspent.

Despite the expectations that the government’s programme for subsiding housing loans for young families would draw huge interest, the number of applications received has been far lower than expected, with about a quarter of reserved funds remaining unspent, reports Poslovni.hr on September 12, 2017.

The Agency for Real Estate Mediation (APN), which has been selected by the government to receive the applications, received just 1,382 applications from all ten banks with which the state signed contracts for subsidised loans. Since the relevant ministry (while then Construction Minister Lovro Kuščević was in charge) assessed that 17.5 million kunas appropriated from the budget would be sufficient for about 1,800 applications, new Construction Minister Predrag Štromar decided today to abolish a number of limits on the subsidies, which will enable additional applications to be received and the remaining funds to be spent.

“Due to the favourable dynamics of application submissions, the assumption is that the appropriated state funding will be sufficient for all current applications, as well as for all those who are still interested at this time. Also, since there is no danger that clients of just one bank could use all the funds reserved for subsidies, Construction Minister Predrag Štromar has abolished the decision on allocation of funds for loan subsidies,” said the Ministry in a statement.

Specifically, this means that the provision that a single bank’s clients can receive at most 20 percent of the total amount of subsidies will no longer be valid. The government also abandoned the provision which made it easier to buy apartments than houses. “In the desire to use all the available resources to meet the current needs of young families regardless of the type of property, the allocation of funds for subsidies will no longer be divided into 75 percent reserved for apartments and 25 percent for purchase or construction of houses,” said the APN, which will continue to receive applications.

Former Construction Minister Anka Mrak Taritaš, who voted for that law in the Parliament, said that the lack of interest was a consequence of uncertainties surrounding the programme. “The state encourages the dependence of young people on banks, and at the same time, we know that the state will only subsidise the first four years of the repayment period. Also, the funds needed have been appropriated just for this year, and we do not know what will happen in years to come,” said Mrak Taritaš. “After people had bad experiences with the Swiss franc loans, they are now more cautious. This is a short-term measure, both medium and long-term measures are needed,” she said.

The APN began to receive applications on 4 September. Banks included in the programme are: Croatian Postal Bank (HPB), Erste Bank, Podravska Banka, OTP Bank, Zagrebačka Banka, PBZ, Splitska Banka, Karlovačka Banka, Istarska Kreditna Banka Umag, and Raiffeisenbank Austria.

The state will pay a half of each loan instalment during the first four years of repayment period.

Translated from Poslovni.hr.


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