Thousands of families who until now did not meet the conditions to benefit from low-cost housing may now have a new opportunity. The government proposes significant changes to the law “On Social Housing”, expanding the beneficiary categories, creating the Sovereign Guarantee for housing loans and adding forms of housing support.
The most significant change to the draft law submitted for public consultation by the Ministry of Economy and Innovation is related to the increase in the income limit that allows a family to apply for housing. Instead of the current formula, where the net annual income must not exceed 1/6 of the value of the apartment, the draft law raises this limit to 1/2. This means that the income ceiling is tripled.
For example, if the average value of a home is 100,000 euros, under the current law, families with a net annual income of up to about 16,700 euros per year or 1,391 euros per month can benefit. While with the new formula, the limit would reach 50,100 euros per year, or 4,175 euros per month of total income.
Another innovation is the creation of the Sovereign Guarantee. Through this mechanism, the state will guarantee a portion of the principal of facilitated loans for the purchase of a home, making it easier for families to secure financing from banks, even when they do not meet all the collateral requirements.
The Sovereign Guarantee measure is proposed to cover up to 30% of the value of the apartment. For the approximately 4,100 families that applied last year, the estimated cost of this guarantee would be around 231 million lekë. But the sovereign guarantee does not avoid liabilities.
“The Sovereign Guarantee does not exclude the borrower’s responsibility for the full repayment of obligations arising from the loan contract and does not limit the right of the state to seek recovery of amounts paid in implementation of the guarantee,” states Article 9, point 5.
As for the contribution of builders, the obligation to allocate 3% of the functional area for free to the social housing fund remains unchanged. The novelty is that this fund can be used for all social housing programs, including low-cost housing.
The draft law also provides for a new program for rent subsidies for specific categories, while the beneficiaries, criteria and amount of support will be determined by decision of the Council of Ministers.