Prague, April 20 (CTK) – People, who until recently ran dubious profitable businesses with Czech dormitories for the poor, have started buying hundreds of flats at housing estates especially in northern Bohemia for the poor who receive housing subsidies from the state, daily Pravo writes on Wednesday.

This has bad consequences for the housing estates to which they move the poor: untidiness, the crime rate and tension increase, while the market prices of the flats go steeply down, the paper writes.

“Most towns in the Usti Region have this problem,” said Jakub Michal, manager of a coordination group for social exclusion in Usti nad Labem, north Bohemia.

In 2014, the parliament passed a bill that limited the paying out of money to the owners of dormitories for the poor, which introduced stricter rules that had to be followed and made this “business with poverty” less lucrative. As a result, these entrepreneurs began to focus on residential districts, Pravo writes.

“This happens more and more frequently,” Labour and Social Affairs Minister Michaela Marksova (Social Democrats, CSSD) told the paper.

However, this business is not illegal: the state pays housing subsidies to the poor and they give the subsidies to the dormitory or flat owners who often demand overpriced rents and offer accommodation of a very low quality, Pravo writes.

Several years ago, speculators bought dilapidated dormitories in poor neighbourhoods and moved in poor families living on welfare, especially Romanies, and these locations often turned into ghettoes. Social tension increased in some areas, for example, in the remote Sluknov district bordering Germany in 2011.

Michal said the speculators often buy flats that were sold in auctions because their owners did not pay the rent. Such low-quality flats, which the state usually sold to the tenants in the past, are not attractive for young couples and towns have neither the required money nor interest in buying them, he said.

Michal said the speculators are often people who were punished for frauds in the past, but he said it would be very hard to identify them. There are no data on how many dormitory operators started buying flats, he added.

Last year, the state paid out 13 billion crowns in housing subsidies, part of which ended up in the accounts of the speculators.

Marksova said decent people living in a block of flats contribute to a fund, from which new lifts and various repairs are paid. The rights of these people should be protected, she said, indicating that speculators move in the poor tenants who do not contribute and do not care for the building.

“We pay them the subsidies and have no instrument to say we won’t pay them,” she told Pravo.

Marksova recently proposed that the Swiss system, in which flat owners would have to approve of new tenants, should be applied in the Czech Republic. However, she admitted that she had no power to propose such a measure. She therefore started negotiating with other ministries about the situation, Pravo writes.

“We lack hygienic standards for flats as they were abolished in 2006, for example,” Marksova said.

The authorities should have the power to remove the licence for long-term accommodation if a flat or dormitory did not meet given standards, according to one of the proposals.