The Lithuanian Government’s endeavour to support young families through subsidising of their housing may hit a snag – the lawyers from the Parliament’s Law Committee warn that the enactment of the piece of legislation from July 1, 2018, as foreseen would discriminate against the couples living out of wedlock. Statistically, nearly half of Lithuanian couples cohabitate, i.e. opt not to tight the knot.
“Attention is drawn to the fact that the Constitutional doctrine stipulates the duty for the state to regulate family relationships by law and other legal acts to prevent preconditions for discrimination of participants of family relationships,” the lawyers said on Wednesday, March 28.
The government-proposed amendments to Law on Family Strengthening were to be presented at the Parliament for voting on Thursday, March 29.
Under the proposed changes, young families purchasing their first housing in smaller cities and districts would be provided financial support, regardless of their income and property.
However, families purchasing homes in the cities of Vilnius, Kaunas, Klaipėda, Šiauliai, Druskininkai, Neringa and Trakai, as well as part of the Palanga city would not be eligible for state support, according to the proposal.
The law amendments stipulate that childless married couples can apply for a 15 percent subsidy of the loan when buying their flat or house. The subsidy stands at 20 per cent to families with one child, 25 per cent to those with two children and at 30 per cent to families raising three and more children. The ceiling of housing loans to which the subsidies are applicable is put at 87, 000 euros. The legislation also allows eligible families to use home loan subsidies to buy a land plot or use it as a down payment when buying property.
In the agreement with state, the subsidised families obligate to pay back a subsidy if they decide to sell their home within the first five years since its acquisition. Only spouses younger than 35 are eligible for the state support, according to the law.
The Peasants and Farmers-orchestrated Government believes that the legislation will help reduce emigration and improve the demographic situation, as well as strengthen the regions.
“Supporting families, boosting birth rates and helping young people with making their foothold firmer in their own country…is our priority. By the same token, we are aiming thus to strengthen our regions with an influx of young people. The viable and strong regions and financially secure and stable families are on our priority list,” Saulius Skvernelis, the Lithuanian Prime Minister, was quoted as saying on the occasion.
It is estimated that around 115 families will receive housing loan subsidies this year for the total amount of ca 2 million euros. The sum is expected to reach 10,1 million euro next year and is to be given out to almost 600 families under 35.
Although it is widely agreed that the measure is beneficial, some experts, however, notice that state should have offered young families such assistance years ago.
Besides, some say that such assistance comes short of the scope of support that other Eastern and Central European countries offer to their young people.
“For example, Romania, which like Lithuania grapples with massive emigration of the population, applies a preferential 5 per cent value added tax tariff to young families buying home. Besides, their state-supported «First home programme” foresees state guarantees for home loans up to 70,000 euros,” Arvydas Avulis, chairman of the Board of UAB Hanner, a major real estate developer in Lithuania, says.
Latvia, he says, have also been more supportive of their young people then Lithuania.
“Latvia provides 10-year guarantee to housing loans taken by young families and young professionals under 35 if the value of the property is below 50,000 euros. Unlike Lithuania, Latvia has not embedded in law the criteria of being in wedlock to be eligible for the assistance,” Avulis emphasized.
Meanwhile, Martynas Žibūda, expansion head at real estate firm «Eika» believes that subsidising home loans for young adults is not “enough” to keep them in the homeland.
“The idea (of home loan subsidising) itself is nice, however, we have to agree whether it is the goal or rather a means to achieve a higher milestone in assisting young families. Let’s bear in mind that, in Lithuania, there are a lot of towns where the property is much more affordable than in the large cities, yet the migration flows are towards the latter. So the subsidies initiative will not necessarily produce the desired results. On the other hand, it is good in attracting necessary specialists to the smaller municipalities that are short of qualified workers,” he underscored.
There are also other voices in the country doubting the tangible use of the housing loan subsidy initiative. Some point out to inconsistencies in state’s family policies.
Over the past 25 years, the design and implementation of family policies in Lithuania has been very changeable. The main tools of family policy (childcare leave/benefits, child/family allowances, childcare schemes, etc.) have been changed many times.
For example, Law on Benefits for Children, introduced in 1994, was amended over a dozen times throughout 1995-2014.
Since the beginning of the 1990s, governmental and state institutions have initiated, developed, and passed (approved) different strategic documents on family policy: Conception of Family Policy (approved by the Government in 1996); Strategy for the National Population Policy (approved by the Government in 2004); National Family Policy Conception (adopted by the Seimas (Parliament) in 2008).
However, they have been subject to multiple amendments sought by a new government in Vilnius.