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IPP: Law on debt discharge may lead to crisis for 100,000 people
The Institute for Public Policies (IPP) says the law on debt discharge does not contribute to improving housing conditions for vulnerable social categories but may lead to crisis for about 100,000 people and asks the government to set up a work group at Ministry of Regional Development level. According to a study made by IPP and released on Thursday, “there has not been a strategic public policy in the housing field in Romania, and the measure adopted on Tuesday by deputies of the Juridical Commission does not contribute to improving housing conditions for the most vulnerable social categories (young families) and could even lead to crisis for about 100,000 people who have credits guaranteed by real estate in case they choose debt discharge with the house, following the adoption of the law.”
According to IPP, the average mortgage for the purchase of a house in Romania is 37,000 euros, a value seven times lower than the level foreseen for the new variant of the draft law.
“The IPP study also shows that the real beneficiaries of the law and of the new level of 250,000 euros foreseen by the law are a minority of 1,500 clients who have credits of over one million lei, guaranteed by properties purchased in the period of real estate boom, and for whom it is more profitable now to get rid of those unhappy investments rather than pay debts to banks. The state is not ready to answer a number of social cases of people who have no place to live after they yield the house to the bank,”IPP shows.
The study points out the fact that “the bill, which unjustifiably pretends to represent the transposition of Directive 17/2014, is harshly criticised by the European Commission which noted in Romania’s 2016 Country Report that the law may have a negative impact on domestic demand, as well as on the confidence of consumers and investors.”
IPP requests the government, by means of the Ministry of Regional Development and Public Administration to set up a work group, considering that “Romania is probably the only EU state which does not have a national housing strategy.”