WHAT WILL THE NEW CONSTRUCTION ACT BRING?

On Tuesday 13 July 2021, the Czech Parliament adopted a new Construction Law from the Ministry of Regional Development (MMR) which should lead to faster construction procedure, as the Czech Republic ranked at a dismal 156th place out of 190 countries ranked in the World Bank’s annual publication called Doing Business 2019 in which all of the European Union members finished ahead of the Czech Republic. A considerable length of construction procedures is one of the main reasons for the constantly rising property prices in large cities, according to Eurostat, the annual growth in house and apartment prices in the Czech Republic reached 11.9% in the first quarter of this year, which is well above the EU average of 6.1% and the eurozone average of 5.8%.

The adoption of the new Construction Act, which should lead to an increase of supply on the real estate market, is thus welcomed by representatives of employers’ associations, namely the Chamber of Commerce and the Confederation of Industry and Trade. The Association of Developers also expressed its support of the recodification. However, there is some criticism of the Act, especially because of the centralisation of construction proceedings and because of the procedure for the drafting of the Act itself, which, according to the critics, was contrary to the legislative rules of the government. Although the law has already entered into force, on 29 July, its provisions will come into force gradually, the first of them at the beginning of next year, with the entire law coming into force on 1 July 2023.

Due to the significance of this recodification for all businesses, we will focus on the new Construction Act and the changes it introduces compared to the existing regulation in a series of articles in the coming weeks. However, in the beginning it is crucial to introduce the basic conceptual changes that the recodification of construction law brings. These are expressed in the basic theses of the recodification of public construction law published by the MMR in September 2017. In this document, the MMR identified the problem of the so-called systemic bias, which stemmed from the fact that according to Act No. 183/2006 Coll., on Spatial Planning and Building Code (the old Construction Act), the state administration in the field of construction law was delegated to local government authorities, which, according to the MMR, could give priority to its interests over the public interests as a whole. The new Construction Act solves this problem by transferring all construction authorities to the state. The basic level of the construction system will be regional construction offices, which will have territorial offices in municipalities, but certainly not in as many municipalities as before. The number of construction offices at the municipal level should be reduced from the current 700 to 300. This reduction in the number of offices is to be compensated by digitalisation, so that citizens are able to deal with everything from the comfort of their homes with the new Construction Act, through the Builder’s Portal enshrined in Section 268 of the new Building Act. Instead of submitting a paper application with a number of attachments, it will be sufficient for the interested party to submit an electronic application, which is simply uploaded to the Builder’s Portal with all project documentation needed.  This is also connected with the creation of two new authorities under Sections 16 and 17, namely the Supreme Construction Office in Ostrava and the Specialised and Appeals Office in Prague.

Another change is the integration of previously separate processes, namely the issuance of building permits, zoning decisions and other binding opinions. This means that citizens will no longer have to go to a number of authorities before heading to the building office, but that the building office will have an integrated assessment of issues related to conservation, fire protection or public health protection, all of which will then be incorporated into the building permit decision.

A significant change that should lead to faster building procedures is the shortened permitting and automatic decision-making by the authorities. According to Section 178, the building authorities shall issue a decision within 30 days from the date of submission of the application. This time limit can be extended by up to 30 days, but only in particularly complex cases or if an inspection is required. If the authority concerned does not decide within this period, its decision shall be deemed to be a consent decision without conditions.

The new Construction Act thus introduces a number of elements that should lead to a streamlining and simplification of the entire construction procedure. There is now nothing to do but wait and see how the whole recodification will work in practice.

Do not hesitate to contact us for more information.

Vojtěch Makovec, Partner

rutland & partners, law firm

Tel: +420 226 226 026

Email: vojtech.makovec@rutlands.cz