Analysts: The Construction Act is not ideal, but it will speed up the process

Prague - The new construction law, which the government will discuss on Monday, may not be ideal, but it will speed up the process. A significant benefit is in digitalization; the expertise of officials at building authorities and their adequate capacity will also be crucial. This was stated by analysts contacted by ČTK. According to some, certain participants in the proceedings will still have too much power. Moreover, many fundamental comments have not yet been addressed.

"The proposed form of the construction law is not ideal, but it will certainly lead to a significant acceleration of the process of issuing building permits. Since our country is suffering from a shortage of properties, which leads to a sharp rise in prices in the real estate market, it is clear that the new construction law is moving in the right direction," said analyst Štěpán Křeček from BH Securities. According to an analysis by the Ministry of Regional Development (MMR), which is responsible for preparing the law, the average approval time for larger projects should be reduced from the current 5.4 years to one year. MMR plans for the law to come into effect in the spring of next year, with its effectiveness gradually ramping up by the middle of 2023.

"A version of the construction law that everyone would agree on is not possible. The various interest groups affected by the construction law are too diverse. Therefore, it will be necessary to push the new construction law through by force. The greatest resistance will likely come from civic activists, environmentalists, conservationists, and local governments," Křeček added.

Jiří Šmatlák, a partner at BDO Legal, described the current legal regulation as unclear and dysfunctional. According to him, the situation is unsustainable and hinders the development of construction. He believes that simplifying and shortening the construction process is realistic provided that adequate personnel capacity and expertise of officials at building authorities are ensured. "I see a significant benefit for simplifying building approvals in its digitalization. It can be expected that the proposal will undergo many modifications during the legislative process, and we can only hope that any changes will positively influence the draft law," he added.

According to analyst Lukáš Kovanda from Trinity Bank, the construction law as proposed by MMR would be a step forward, even though it still lacks something to be ideal. In particular, large construction projects should be built significantly faster, which would support the entire economy. "Municipalities and other more narrowly profiled participants in the proceedings, such as conservationists or environmental protectors, will still have too much power. This will allow for the continued promotion of particular interests, although to a lesser extent, which do not always benefit the economy as a whole," Kovanda stated.

Jakub Kadlec from the law firm Vilímková Dudák & Partners stated that an amendment to construction law is completely necessary. According to him, the current problem is not only the length of the approval processes but also their complexity. "The problem is that there are still many fundamental comments in the draft submitted to the government that have not yet been addressed. Moreover, the proposal for the new regulation is very extensive and has too many comments raised. Therefore, I am afraid that the approval of the new law will be a long process, and it is uncertain whether the targeted goals will be achieved," Kadlec added.

The Legislative Council of the government recommended in the first week of August that the government approve the amended wording of the draft law. According to the council, no significant conceptual interventions have occurred. Most amendments were rather technical matters and legal clarifications, so that the law would function as best as possible in practice.

According to the draft law, after its approval, one administrative process should be sufficient, and the entire building permit process will be led by one building authority. The whole process is to be digitalized. Those not integrated into the so-called one-stop system will only partially involve conservationists, specifically regarding cultural and national monuments and heritage reserves.

According to representatives of business chambers and unions, the law has deviated from its original form after incorporating comments and will significantly worsen the situation in construction instead of simplifying it. The original draft of the regulation also had many critics. Among the most common objections was that it favored developers and did not protect public interests. According to the Association of Local Governments, the law will abolish most building authorities in municipalities and lead to a brain drain of specialists who have previously performed specialized building administration there.