Sunday, 25 May 2025
Pension funds in the Czech Republic will soon be permitted to invest in the housing sector, following Senate approval of a legislative amendment linked to the government’s broader housing support initiative. The bill, which is now pending presidential signature, also includes several measures intended to bolster residential development and improve housing market functionality.
Under the new rules, pension funds will be allowed to invest up to 20% of their total assets in housing-related projects. This can be done through real estate funds or legal entities such as special purpose vehicles (SPVs), which may issue bonds that pension funds can purchase. However, investments in any single SPV or qualified investor fund will be limited to 10% of a pension fund’s assets.
According to Aleš Poklop, president of the Czech Association of Pension Companies, the amendment will not only enhance portfolio diversification for pension scheme participants but will also contribute to the expansion of the local housing market. Finance Minister Zbyněk Stanjura (ODS) previously estimated that pension fund investments could reach up to CZK 9 billion by the end of this year and CZK 20 billion within five years, potentially resulting in the construction of thousands of new housing units.
The legislation also introduces a tax incentive for cooperative housing members. Taxpayers who are members of a housing cooperative will be allowed to deduct interest payments on loans taken out by the cooperative from their income tax base, provided they contribute to these payments and the interest is properly allocated to members. This provision was added through an amendment supported by Minister Stanjura and ODS MP Jiří Havránek.
Another key change in the legislation is a provision aimed at expediting the eviction process for illegally occupied apartments. The law introduces a court-ordered eviction mechanism designed to give landlords more efficient legal recourse when tenants fail to vacate a property at the end of a lease term. The government stated in its explanatory memorandum that the measure should encourage long-term rental agreements by improving legal certainty for property owners.
Additionally, the amendment includes a rule allowing housing cooperatives and owners’ associations to suspend services to unit owners who default on payments for at least three months, provided certain conditions are met.
The legislative package forms part of the government’s ongoing effort to address housing shortages and improve market access, particularly by leveraging private capital to stimulate residential construction.
Source: CTK
