The debt owed to housing cooperatives and unit owners’ associations (SVJ) increased to approximately CZK 170 million in 2022. It has almost doubled year-on-year. Of the amount, 53 percent is long-term uncollectable, and 13 percent of the debtors are permanent defaulters. This was reported by the Union of Czech and Moravian Housing Cooperatives (SČMBD), which analysed statements from 554,000 flats. According to the chairman of the association, Jan Vysloužil, the data is from its members, so the total amount of debts and debtors to the administrators of apartment buildings in the Czech Republic is likely to be higher.
“The analysis of our members’ data shows that the amount of claims, even the bad ones, has increased significantly compared to the previous year, especially for tenants of cooperative flats. It is alarming that 53 percent of the total debt cannot be recovered in the long term,” Vysloužil said. He said other residents of apartment buildings often have to pay the arrears for utilities or other services out of their own money, thus getting into financial problems themselves.
The reason for the increase in debtors, Vysloužil said, is the relaxation of the debt settlement process, where people are no longer obliged to repay even 30 percent of their debts. At the same time, housing cooperatives do not have priority in court settlements, and when a borrower has multiple foreclosures, the cooperative often does not get its turn. This was also confirmed by the chairman of the Czech Bar Association Robert Němec.
“The deterioration in enforceability correlates, among other things, with a gradual increase in multiple foreclosures. Cooperatives are only in the last group of creditors when distributing the proceeds. SVJs have a limited preferential position up to ten percent of the proceeds. The proportion of the claim satisfied thus depends on the value of the apartment,” said Nemec. According to him, with regard to the repeated increase of the uncollectible amount, the enforceability of deductions from wages has also dropped significantly.
The Association of Czech and Moravian Housing Cooperatives is an interest association of housing cooperatives and associations of unit owners with activities throughout the Czech Republic. Currently, the members of the association own or manage approximately 650,000 residential and non-residential units, which is 18 per cent of all flats in the Czech Republic.
Source: SVJ and CTK
