High apartment and rent prices in the free market have made buying a home an almost impossible mission for thousands of ordinary families in Albania. Faced with this situation, the government has proposed a new draft law, which introduces the concept of “Affordable Housing”.
This reform does not aim at the extreme poor, but directly targets the middle class: young couples up to 45 years old, young people up to 29 years old at the beginning of their careers, students and public service employees (doctors, teachers, police officers).
According to the new draft law, the administration of the scheme will be transferred to the National Agency for Territory and Social Housing. For citizens who meet the economic criteria, the law opens 4 official paths to secure a free home or financial support.
Housing Reform / Here are 4 ways to benefit
1. Rent-to-Own (RTO) Program
This is one of the innovations of the new law for all those who cannot afford to pay a large capital amount immediately.
• How it works: The citizen moves into a state-owned apartment (administered by AKTSS) and pays a periodic monthly fee (rent).
• Benefit: Unlike normal leases where the money goes only for the rent, in this program a good part of the monthly payment is automatically calculated as an installment for the purchase of the house. After the contract term has expired, the apartment finally becomes your property.
2. Purchase with “Combined Financing” (30-40-30 Formula)
This mechanism is designed for families who want to buy a house immediately, but market prices are beyond their income.
• How it works: The financial burden of buying a house is divided into three parts:
• 30% of the value is paid by the citizen himself (through savings).
• 40% of the value is secured through a standard bank loan.
• 30% of the value is donated free of charge by the state in the form of an immediate grant or subsidy from the Housing Fund.
The citizen has no legal obligation to return this portion, as it is given as a grant.
3. 0% Interest Loans and Financial Guarantees
For citizens applying to the Low-Cost Housing (LCH) program, the state has removed the main barriers imposed by private banks.
• 0% Interest: The state undertakes to pay all bank interest through the Housing Fund. The citizen will return to the bank only the net value of the loan he has received (the principal), without any additional lek.
• State guarantee: If a citizen has enough salary to pay the installment, but the bank rejects it because there is no collateral (other property to pledge), AKTSS steps in as an official guarantor before the bank, covering the credit risk.
4. “Low Cost” Apartments in State Complexes
The reform brings about the merger of the National Housing Authority and its replacement with a state-owned joint-stock company called the “Albanian Social Housing Company” (SHSHSS, sh.a.).
• How it works: This state-owned company will build mixed-use housing blocks. Within the same block, there will be social housing with low rent, housing that is sold on the open market for profit, and low-cost housing.
• Benefit: Middle-class citizens have the right to apply to purchase “low-cost” apartments within these public complexes, which will be offered at prices much cheaper than private market prices.
Houses cannot be sold or rented out.
To block speculators seeking to profit from public funds, the new law has imposed an ironclad condition: the house obtained through these 4 ways must be used exclusively as the family’s main residence. It is strictly prohibited to sell it or rent it to third parties for a certain period of years.
If a citizen attempts to turn their home into a business, the state will activate the law to reclaim the entire value of the funding or grant donated.
Where does the money come from? A combined resources fund
To finance these programs, the state has created the Housing and Social Cohesion Fund. Contrary to what one might think, this fund does not depend on just one source, but relies on an entire public and private financial architecture:
• 3% contribution from private builders: Any company that builds residential buildings with an area of over 2,000 m² is required to pay into the fund a monetary value equivalent to 3% of the construction area at market price. Without this, it does not receive a construction or use permit.
• Money allocated from the State Budget: At the beginning of each year, the ministry passes a budget transfer to AKTSS, which is used specifically to subsidize market rents, loan interests, and grants for housing reconstruction.
• Free market profits: The agency has the right to sell apartments at full market price within its combined projects and transfers all these revenues directly to the social housing fund.
• International Donations and Grants: Funding from international financial institutions (such as the World Bank or the Council of Europe Bank), non-profit organizations, and other donors.
• Assets confiscated from crime: Buildings or properties seized by the state in the context of the fight against crime and corruption, by government decision, are transferred to this Fund. /kapitali.al
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