Rented housing legislation

Interest subsidies and guarantees

The state supports the production of affordable and social rented housing by paying interest subsidies on loans taken out for this purpose and issuing a state guarantee for them. These loans, known as long-term interest-subsidy loans, generally have a loan period of 40 years. During this time, tenants must be selected on social grounds and the rent must be determined based on the cost price principle. Further provisions on the terms of interest subsidy loans are laid down in Government Decrees. Buildings financed with interest subsidy loans must be managed through joint management by residents and owners. Provisions on the joint management of buildings are laid down in a separate Act.

It is also possible to be granted a short-term interest subsidy loan for affordable and social rented housing production. The loan period for short-term interest subsidy loans can be between 10 and 30 years. Interest subsidies always come with a state guarantee. More detailed provisions on the conditions for loans and subsidies are laid down in a Government Decree.

The state can also grant separate guarantees for loans used to build rental housing. The maximum guarantee period is 30 years, and the guarantees are subject to a guarantee fee. Additional interest subsidy loans for rental housing were also granted in 2009 and 2010 to help boost employment in the construction sector.

State-subsidised housing loans (ARAVA loans)

State-subsidised housing (ARAVA) loans have been replaced by interest subsidy loans. Although new ARAVA loans are no longer issued, most of the housing stock and loan portfolio financed with ARAVA loans still exists. Tenants of ARAVA-financed housing must be selected on social grounds and the rent must be determined based on the cost price principle. More detailed provisions on the conditions for ARAVA loans and subsidies are laid down in Government Decrees.

Various support measures are in place for owners of state-subsidised dwellings facing financial difficulties. The targets of such support measures are usually rental housing companies located in areas with shrinking populations. The support measures can include changes to the terms of ARAVA loans, easing the restrictions on use and assignment of apartments or granting funds for reorganisation or demolition. The State Treasury is responsible for these measures.