Housing policy Romania

Housing of Ukrainian Refugees in Europe: Options for Long-Term Solutions

In Romania, the former rate of public housing privatisation was exceptionally high: in 2021, only 2.6% of the population were living in municipal housing. According to official data, the private rental sector is negligible, with only 1.3% of the population living in privately rented accommodation. The share of the owner-occupied sector is 95%. Within this sector, ninety-five percent of inhabitants do not have a mortgage, which is a sign of an underdeveloped housing finance system in which the majority of transactions are cash-based. Romania has 8.33 million housing units, and because of the population decline, housing availability is the best among the NMS.

Key features

  • The housing investment and housing finance system in Romania lag behind those of other NMS, although after the 2008 GFC, Romania’s housing market performed well. Housing construction increased, and the mortgage market grew from 4.6% of GDP to 9.1%.
  • An important milestone in housing policy in Romania was the creation of the National Housing Agency in 1999. This operates under the authority of the Ministry of Regional Development and Public Administration (MRDPA).
  • Housing programs run by NHA target a large variety of groups through the construction of social rental housing without a privatisation option, youth housing programs (rental housing for young people under 35 years with a privatisation option, a construction mortgage loan), a “first house” program associated with a reduced mortgage interest rate and guarantee, and the bausparkasse schemes, along with a non-targeted VAT rebate scheme.

Challenges

  • According to the Gini index that measures social inequality, society in Romania is more unequal than in PL, HU, CZ and DE. In addition, Romania’s outmigration figures are stark, with a population decrease of 2.2 million between 2000 and 2021 due to net migration.
  • The quality of the housing stock is very poor; around one-fifth of all homes do not have a bathroom or indoor toilet, and floor space per person is much less than in other NMS.
  • Housing transactions are largely cash-based, hindering housing mobility for multiple social groups.
  • Condominiums and multi-story buildings, including prefabricated housing estates from the socialist era, have serious problems, partly because of the quality of the housing stock (energy efficiency) and partly because of the weak financial capacity of the new owners of privatized housing to maintain the physical quality of the stock.
  • A significant proportion of low-income (urban) families have been pushed out of the social rented sector and can only find accommodation in the private rented sector or settlements further from urban centres.
  • Much of the private rental market is informal. Liberal legal regulation has created severe risks for both owners and tenants. The supply side is dominated by casual landlords, and property is increasingly becoming a desirable investment among upper-income families.
  • Housing costs have risen rapidly because of utility and energy price liberalization.

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