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Affordability of the home. The government intends to decide how to increase the availability of housing with the Organization for Economic Cooperation and Development (OECD) 2021-2022. recommendations of the planned study. Until the results of this study are clear, the action plan does not mention two aspects, one of which may soon have a decisive impact on the supply of housing.
First, development on state land. Today, most of the parcels in cities are state-owned. Due to unclear land use conditions and unpredictable taxes, developers avoid these types of plots, and the current situation increases the tension in the supply of new homes, which also affects final prices. If the Land Law amendment project under consideration is passed, the new construction will move to the suburbs, where plots are more private, or even more expensive. By separate calculations, at least 15 percent.
One of the objectives of the action plan is to clarify the legal framework and incentive mechanisms to accelerate the conversion and redevelopment of urban areas. However, this will be difficult to do, as most of the brownfields today are on the state parcels mentioned above, and the municipality is responsible for planning and taxes.
The second measure not discussed in the action plan to improve housing availability is municipal housing. It is a fund of municipalities that rent below the market price. For a long time, such housing can be rented cheaper than on the market by representatives of the specialties that the city needs, but less paid: teachers, doctors, firefighters, etc. Municipal housing would also contribute to the creation of a transparent and responsible rental market.
Real estate taxation. The action plan mentions the revision of real estate taxes, but does not explicitly discuss a single, universal real estate tax. This real estate taxation has the support of the European Commission, the World Bank and the International Monetary Fund, together with local specialists.
Currently, the so-called luxury tax is in force in Lithuania – one person’s real estate is taxed for more than 150 thousand. and raised in the state budget. But such a principle is wrong in its spirit: all real estate owners must be paid starting at a certain value, perhaps with the exception of the first home and collected from municipal budgets. And from here, the money would be used to improve engineering and social infrastructure, thereby increasing the city and taxpayers’ real estate value.
Cities could become landowners. The plan of measures presented envisages reviewing the functions of the Ministry of Agriculture and the National Land Service and, if possible, transferring them to the municipalities. Today, cities do not have the tools to manage their territory, making it difficult for cities to develop and attract investment. If cities succeed in becoming city landowners, this should make a significant contribution to the transparency, speed and efficiency of development processes.
Broader financing opportunities. The Government’s willingness to ensure greater use of public-private partnerships is welcomed. The financing model, which is not gaining momentum in Lithuania, is borne out in Western countries by the long-term practice of developing the state-required engineering and social infrastructure. Although today this principle is more applicable to the construction of military installations, it can be expected that good practices will be transferred to the construction of kindergartens, schools or other social infrastructure.
More efficient management of state assets. The reform of state-owned assets has advanced in recent years. Since the beginning of this year, about 140 state institutions with about 600 thousand. kv. m of usable area, you must lease and not manage in the form of a loan as before. The main objective of this transformation was by 2030. to reduce the area per staff member from 26 to 20 m2. meter. By comparison, in leased business offices, this figure is about half low.
Therefore, this reform could be more ambitious, with a broader scope and encouraging state companies to rent premises not only more efficiently, but also in energy efficient and sustainable buildings.
The plan pays close attention to renovation. State support is promised to residents renovating older homes to create a one-stop shop, digitize processes, and promote quarterly renovation. If this were to be successful, it would be one of the key drivers for urban renewal. Because to do this effectively, it is necessary to address the problems that are prevalent in parking lots, recreation areas, and other historically old construction neighborhoods.
Simpler regulation. We have inherited very detailed and inert building regulations from Soviet times, so government plans to consolidate related legislation, thereby reducing their number, avoiding duplication of procedures, and moving consistently towards the Building Code, would allow systematic and relevant legal regulation.
Real estate development requires the plan to prepare the necessary legal acts for the digitization of construction and the application of building information modeling (BIM) methods.
