Romanian govt could swap First House for New House program - Competition Council alert?

The First House program, which was intended to support the young when buying their first house based on State-guaranteed mortgage loans, is to be transformed into a New House initiative aiming to stimulate the development and purchase of new homes only, according to the Social Liberal Union (USL) governing program for 2013-2016.

The transformation is expected to stimulate investments in strategic domains. At the moment, it is possible to buy both old and new houses under the First House program. An attempt by the Emil Boc's cabinet to limit this form of state aid to the purchase of new constructions in January 2010 was met with a warning from the Competition Council against offering favorable conditions to one portion of the real-estate market only. Launched in the summer of 2009, by the Boc cabinet, the First House program underwent numerous changes to accommodate the conditions set by the real -estate and banking sectors, with options for the purchase of a second home provided at one stage. The local banking industry had its hopes high for a continuation of the program in 2013. In fact, this fall, BCR and BRD, the top two banks by mortgages granted under the First House umbrella, saw their guarantee limits supplemented by the Ministry of Finance to EUR 45 million and EUR 60 million, respectively. “First House was a good program, we have supported it this year as well,” said Prime Minister Victor Ponta in October this year. “If possible, we will try to continue it in 2013". Even if Competition Council’s possible objections to the implementation of the New House initiative are overcome, there remains the issue of the pace at which newly built accommodation will be made available to the Romanian public. The number of completed construction projects in Romania during the first three quarters of 2012 dropped by 8.35 percent as against last year’s level for the same period, namely from 29,084 to 26, 654 apartments, according to data provided by the National Statistics Institute at the end of November. Ioana Jelea, ioana.jelea@romania-insider.com