The lack of affordable rental and owner-occupied housing in Slovenia is currently a key livelihood problem for a large part of the younger generations. In Slovenia, housing could be built much faster and cheaper than how this is being done in practice today. The answer to the question of why, despite many promises and lots of talk on the subject, there is no political will to build faster and cheaper – and how to change this – starts in the year 1990.
According to the data of the ministry responsible for housing policy at that time, on the 1st of January 1990, the total housing stock in Slovenia consisted of 687,590 housing units with a surface area of 46,006,633 square metres. In the same year, 602,571 households were registered in Slovenia. In 1990, there were 458,558 privately owned housing units and 229,032 ‘socially’ owned units. The average size of a privately owned unit was 74 m2, and that of a socially owned unit was 52.6 m2.
Housing yesterday
On the 31st of October 1990, the Executive Council of the Republic of Slovenia (the Government) adopted a proposal to issue a Housing Law with theses (popularly known as the ‘Jazbinšek Law’) and sent it to the Assembly of the Republic of Slovenia for consideration. The law also provided for the ownership of what were previously socially owned housing units. It abolished social ownership of housing. All socially owned housing became the property of the state, municipalities and economic entities. Article (thesis) 101 of the proposed Housing Law provided that:
– the owners must sell the unit to the owner of the housing right (the tenant) or to a person authorised by the owner; – the buyer is entitled to a 30 percent discount; – the buyer must pay 20 percent of the purchase price within 60 days of signing the contract; – the buyer must pay the remainder of the purchase price within ten years, and the annuity must maintain its real value.
Nationalised housing units were excluded from the sale. A penalty was imposed on any owner who refused to sell to the holder of the housing right.
The proposal for the Housing Law was met with a barrage of comments. The interest in privatisation was enormous. It also stood out in the debate within the Assembly committees, as many of the delegates to the Assembly, in which the Democratic Opposition of Slovenia (DEMOS) had a meagre 53 percent majority, held housing rights in social housing. These were mostly members of left-wing parties and parliamentary clubs, but some were also members of DEMOS. The debate lasted until February 1991, when the Executive Council of the Republic of Slovenia partly incorporated these comments into the draft Housing Law. This introduced additional advantages for the purchaser with regard to the privatisation of the public (social) housing stock (Article 107), namely:
– the purchase price of the dwelling is reduced by 30 percent in addition to the revalued equity or ownership share; – instead of 20 percent of the purchase price being paid within 60 days of signing the contract, this number was reduced to 15 percent; – the buyer is obliged to pay the purchase price balance price within 20 years instead of 10.
The amended draft of the Housing Law also attracted a lot of comments. Most of them were very valid. Businesses, municipalities, political parties, chambers and individuals pointed out that the decision to privatise should not be the exclusive right of the buyer, but that everywhere in a market economy, the decision to sell lies first and foremost with the owner. Interestingly, both the Slovenian Democratic Union (Slovenska demokratska zveza – SDZ) and Sonja Lokar, a delegate of the Social-democratic Party – SDP (on behalf of Krka), commented on this point. In its critical position, the SDZ wrote verbatim that a “distinction should be made between the sale and the sell-off” of housing. On the other hand, the trade unions, in particular, were pressing for a bigger discount. It has to be noted here that some of them argued for a discount linked to the number of years the employee had paid the housing contribution. At the same time, however, those who had also paid the housing contribution from their salary for many years, but who did not have a housing right, spoke out against these proposals. They were the majority in the population but, unfortunately, not the majority in Parliament. And it was this exact majority of the population, including the next generation, that ended up being the most disadvantaged by the Housing Law.
The formal proposer of the law in question, Miha Jazbinšek, tried to strike a balance between the various interests at a meeting of the Social and Political Convention of the Assembly of the Republic of Slovenia on the 5th of March 1991, saying: “… this money (from the privatisation of housing) should not be too small, because otherwise, it means that it is ruined money. On the other hand, of course, the price should not be too high, either for motivational reasons or for social reasons or for the reasons of a certain justice that I spoke about earlier.”
Metod Šonc of Pučnik’s Social Democratic Party of Slovenia (SDSS) replied to the proposer and to his colleagues who were advocating high discounts during the debate in the Assembly of Municipalities on the same day: “I am firmly opposed to giving a discount on the purchase of flats under this Article 107. I see no reason why. Why should we give a 30 percent discount if someone wants to buy a flat? I simply do not see the reason for it.”
Between March and May 1991, there was not a single day that was not historic in terms of the strategic interests of Slovenians. Important things were happening in the world, in Europe, in the disintegrating Yugoslavia, in our neighbouring Croatia and, of course, in Slovenia. The DEMOS government and Assembly were adopting acts daily to implement the plebiscite decision on an independent Slovenia. The Yugoslav People’s Army (YPA) threatened us with a military coup. Slovenia was frantically preparing to defend itself. Despite all this, the privatisation coalition in the Assembly ground on. On the basis of the views expressed during the discussion of the draft, a draft Housing Law was drawn up on the 9th of May 1991, which provided in Article 103:
– a 30 percent purchase discount on the value of the dwelling for the holder of the right to housing or the occupier; – the calculation takes into account the ownership interest (own participation and own investments made with the consent of the owner, expressed in terms of the increased value of the dwelling); – 15 percent of the purchase price is to be paid within 60 days, the balance within 20 years, the monthly instalments being equal in value to an equal share of the dwelling throughout the repayment period.
However, Article 105 of the draft Housing Law provided that a buyer who pays the contract price in a lump sum at the time of conclusion of the contract is entitled to an additional 60 percent discount. In Article 106, the draft Law also provided for an additional discount for those who later wished to repay the loan early, namely 1.5 percent for each year of early repayment up to a maximum discount of 28.5 percent. The law also provided that the value of the housing unit was to be determined on the basis of the adjusted revalued value of the flats and houses, as determined by the administrative authority, except where the appraisal was requested by the holder of the housing right. The right to purchase can be exercised two years after the entry of the law into force.
On the 3rd of October 1991, the President of the Presidency of the Republic of Slovenia, Milan Kučan, published the final text of the adopted Housing Law in the Official Gazette. Between February and October 1991, Slovenia was frantically implementing the popular will of the plebiscite for an independent Slovenia. With the left-wing opposition opposed to the building up of its own military forces, we saw the aggression of the Yugoslav People’s Army and the victory of the Slovenian Defence Forces in the war for Slovenia and waited for the final withdrawal of the last aggressor soldier from our territory. In the background of all these great and fateful historical events, however, the final housing coalition was being built in the Assembly of the Republic of Slovenia, in which all those who expected to benefit greatly from the privatisation of housing organised themselves. The final text of the law was a great success. Despite the war for Slovenia and the dramatic unfolding of the Slovenian independence epic, the process of drafting the final text of the law was fast-tracked. The Executive Council thus proposed the final text of the Housing Law as early as the 1st of August 1991, which was then finalised in the Assembly of the Republic of Slovenia. The adopted law (Articles 111 to 133) provided as follows with regard to the (re)sale of the State housing stock:
– that homeowners are obliged to sell a home to the homeowner or to an immediate family member at the request of the holder of the housing right; – that the scoring system of the 1981 Regulations shall be applied in determining the value of the dwellings; – buyers receive a 30 percent discount; – in addition to the 30 percent, the price is also reduced based on the valuation of the investment in the dwelling; – in addition to the 30 percent, the price is also reduced based on the own participation; – 10 percent of the price so reduced shall be paid within 60 days of the signing of the contract; – the balance of the price shall be paid in equal instalments over the following 20 years;
– that the 20-year repayment period may be extended if the repayment instalment exceeds 1/3 of the buyer’s monthly salary.
On top of all these discounts and benefits, Article 119 adds that instead of 30 percent, the buyer can get a discount of 60 percent of the value of the home if the full purchase price is paid within 60 days.
The success of the unprincipled housing coalition – built over political barriers and views in the shadow of the efforts for Slovenian independence – was complete. The only restriction on the new owners was the legal prohibition to resell the flat until the last instalment was paid off. Naturally, the vast majority of the right-holders opted for immediate payment and a 60 percent discount on the already-reduced price. This meant that some people were able to sell the flats they bought the very following year or immediately on the market for significantly higher prices, thus making a fat profit.
The sell-off of the state housing stock deprived over 150,000 people in Slovenia of important assets. Among them were three categories. The first category consisted of some 20,000 to 30,000 small workers’ flats, which were bought up by the poorer classes. In the second, the largest category, there were over 100,000 medium-sized and larger housing units, bought for a fraction of their real value by the privileged classes under socialism. Judges, prosecutors, state officials, employees and collaborators of the State Security Service (UDBA), political functionaries, socialist officials, editors and selected journalists, regime cultists, socialist directors, etc. At the end of 1989, the recipient list of the weekly magazine Kommunist (Communist), which was roughly equal to the number of members of the Union of Communists, included over 90,000 individual subscribers. The vast majority of these had housing rights in the larger social housing estates, mainly in Ljubljana, the regional and municipal centres, and on the Slovenian coast. Those at the top had a larger number of housing units. By granting housing rights, the functionaries’ fathers took care of the housing problems of their sons, daughters, grandchildren, nephews and cousins. For the very top of the Red elite, there were also houses in Murgle, which were privatised for a fraction of their real value by Milan Kučan, Franc Šetinc, Janez Stanovnik, Janez Drnovšek, Janez Zemljarič, and others.
Housing today
According to the Statistical Office of the Republic of Slovenia, there were 864,300 housing units in Slovenia in 2021. More than 90 percent of these units were owned by natural persons. 36,400 of these housing units were built after 2010. As many as two-thirds of all units were one- or two-flat houses. 20 percent of the housing units were built before 1946, 23 percent between 1946 and 1970, 36 percent between 1971 and 1990, and 17 percent between 1991 and 2010.
Between 2011 and 2021, the aforementioned 36,400 housing units were built, or only 4 percent of the total. The number of households in Slovenia increased by 6 percent in the same period. In the same year (2021), the Statistical Office counted 859,782 households in Slovenia. Of these, 34 percent were single-person households. The vast majority were male. 40 percent of male single-person households were made up of foreigners. Married couples with children made up only another 35 percent of all households. 13 percent of families were represented by cohabiting partners with children. Married couples without children accounted for 25 percent.
A rough comparison of the situation in the years 1990 and 2021 shows that the number of households in Slovenia increased by 260,000 in that time, while the number of housing units increased by only 180,000. This figure alone tells us that housing affordability, especially for young people, is one of the major problems in the country.
Given the substantial increase in the country’s overall prosperity during this period, the problem is even more pronounced. The fact is that the left-wing governments that have been shaping the future in Slovenia for the vast majority of the time after independence (24 of the 34 years) did not actually experience the housing problem and, therefore, did not seriously address it. And what is more, a part of the left-wing retentionist elite further enriched themselves by reselling overpriced housing while deliberately creating a low supply. And besides, it is logical that the existing high housing prices objectively suit the existing owners.
The answer to the question of why, despite much talk on the subject, there is no political will to build housing faster and cheaper, starts in 1991. At that time, over 100,000 members of the mainly left-wing retentionist elite took care of the housing problem for their descendants. With their housing problem solved, they easily accumulated enough funds to buy new homes for their children and grandchildren. An emblematic example of this was published in the yellow journalism a few years ago, where it was reported that a flat had been purchased for Milan Kučan’s grandson when the latter was still in primary school.
Housing tomorrow
When, in the midst of the financial crisis a decade and a half ago, first the Social Democrats party (Socialni demokrati – SD), and then a few years ago the Left party (Levica), realised that housing was an important political issue among young people, they repeatedly launched a media campaign to increase funding for the construction of rental housing. This has led to comical scenes. Occasionally, during this campaign, members of both parties, especially those from their NGO affiliates, posted pictures of their or their parents’ luxury owner-occupied homes on social media. The cases of Nika Kovač and Jaša Jenull were among the more well-known examples of this. This is, of course, a blatant demonstration of the delusions of the quasi-leftist elite of the first class, who have never had a housing problem. That is why they simply do not understand it or know how to and want to solve it. This is, after all, clearly demonstrated by the results of all the left-wing governments that have ever existed.
A democratic, conservative majority of the unprivileged and not first-class in the National Assembly and an operational government that will create the conditions for faster and cheaper housing construction are, therefore, the fundamental preconditions for a quicker solution to the housing issue.
A few years ago, we in the Slovenian Democratic Party (Slovenska demokratska stranka – SDS) drafted and implemented a law that allows young people to get affordable loans to rent and later buy a home. The left-wing interest group, which makes a fortune from renting and/or reselling on the overpriced housing market, has worked hard to ensure that the law has not been put into practice. This law alone is, of course, insufficient for a comprehensive approach and for faster and cheaper construction of flats and houses. That is why the SDS Expert Council is preparing a package of laws that will be implemented in the next mandate and will:
a. fundamentally change (simplify and make cheaper) the spatial policy for the siting and construction of individual houses and the provision of space for construction; b. ensure decentralisation of public investment in housing construction; c. simplify building regulations; d. speed up the issuing of building permits; e. update and upgrade the law on the housing guarantee scheme for young people; f. provide additional benefits and financial incentives for families with several children to solve their housing problem.
The SDS party will not announce populist goals in the sense of the promises of the Golobo coalition, which competed at the beginning of its mandate with promises of tens of thousands of new homes. Which, of course, are nowhere to be seen – even on paper. We will create the conditions in which faster and cheaper housing construction will be possible. Conditions in which home ownership will be a realistic option for an individual or a young family within a foreseeable timeframe.
The shortage of housing has, for a long time, also been a direct and significant constraint on our ability to tackle Slovenia’s biggest strategic problem. There are fewer and fewer of us every year. The declining birth rate and the ageing population threaten not only the pension coffers, public finances and prosperity, but also, in the long term, the very existence of the Slovenian nation and state. Housing is not the only factor, and often not the first factor, in the decision of a young Slovenian family to have children, but it is certainly one of the more important ones. This is also why tackling the housing issue will be our priority in the next mandate.
Janez Janša, Matej Kumerdej
