The OECD has urged the Czech Republic (and Poland) to sharply raise property taxation and link it to market values as a tool to improve housing affordability, proposing seven concrete measures. Recommendations include computing property tax by market price, implementing mass valuation of residential property, introducing a tax on long-term vacant dwellings, completing construction-sector digitalization, considering differentiated rates or deferrals for low‑income households, empowering municipalities to require affordable housing, and purchasing land at pre-announcement prices so municipalities capture value increases. The OECD also suggests expanding developer „contributions" to finance affordable housing.

The report highlights that Czech property taxes are very low — generating just 0.5% of total tax revenues in 2022 versus an EU average of 1.9% and an OECD average of 2.8% — making real estate an attractive investment and pushing prices away from residential use. Some 16% of the housing stock is currently unused, and about 25% of the population depends on the rental market; wage growth has recently lagged rent increases.

The Ministry for Regional Development signaled openness to the recommendations. "I agree that it needs to be handled better. Many countries in Europe assess whether a dwelling is used for its intended purpose and set property tax accordingly. That is one way to achieve a fairer tax burden," said Minister Petr Kulhánek. The proposals face criticism: Petr Dufek, chief economist at Creditas, called taxing by property value "not ethical" and "basically a punishment for taking care of your own housing." Jan Schneider, head of strategies and analysis at the ministry, said work on legally anchoring limited‑profit housing companies is underway and a substantive legislative proposal will be ready this autumn. #OECD #CzechRepublic #housing #propertytax #FiatNews