At a time when affordable housing has become a critical issue across Europe, an innovative ERDF-backed financial instrument in Slovakia is making a real difference. A unique public-private partnership has enabled hundreds of vulnerable people to find quality homes at prices ranging between 5% and 30% below market rates depending on the location and the financial situation of the tenant.
Slovakia is facing a severe rental housing shortage, with public rental properties comprising merely 1.6% of the total housing stock. “Slovakia currently needs approximately 500 000 rental flats, particularly in major cities like Bratislava. The sharp increase in housing prices has made homeownership unattainable for a larger proportion of the population, while also increasing the number of socially disadvantaged people who need affordable rental options,” explains Zdenka Polednáková, chair of the board of directors at Dostupný Domov, which translates to “Affordable Home” in Slovak.
The housing shortage in Slovakia mirrors a wider European trend. For instance, in October 2024, massive protests took place in Madrid as tens of thousands took to the streets to demand affordable housing, highlighting that housing costs take up an unsustainable proportion of people's salaries.
An innovative public-private partnership
To address this challenge, the Slovak Investment Holding (SIH) – a well-established centre of excellence for financial instruments in the country that is 100% owned by the Ministry of Finance – formed a strategic partnership with Slovenská sporiteľňa – a leading Slovak commercial bank and part of the ERSTE Group – through its subsidiary SLSP Social Finance s.r.o., and Nadácia SLSP – an NGO set up by the bank as part of its commitment to social responsibility. This partnership led to the creation of the affordable housing programme run by Dostupný Domov.
As of October 30, 2024, the programme has achieved significant results, with 397 total apartments owned out of which 248 were rented to 528 residents.
“Affordable Home seems to be a perfect example of public-private sector partnership,”
Investment Manager at SIH Tomas Gric.
“SIH invested €25 million in direct equity into the Affordable Home project, holding a 49.94% stake, while SLSP Social Finance holds another 49.94%, and Nadácia SLSP 0.12%,” explains Tomas Gric, Investment Manager at SIH. In addition, an equal footing (pari-passu) investment structure has been put in place to ensure that the incentives of public and private partners are aligned and that the risks and rewards of the programme are shared out between them.
The programme is specifically aimed at those at risk of poverty or social exclusion. This includes people with disabilities, those who face obstacles in the job market due to health, age, or with low education, and single parents. Vulnerable people are also able to benefit, such as those receiving social services, people living in temporary or short-term accommodation, young adults leaving children’s homes, ex-offenders, people with low incomes, and those who require adaptations or mobility for employment.
Through Dostupný Domov, the programme offers two distinct ways for tenants to access discounted housing.
The first option provides direct access for people with disabilities, those on low incomes, and those requiring housing for employment purposes, without the need for NGO intermediaries. Eligible applicants who demonstrate they can cover both the rent and basic living expenses can receive a discount of between 5% and 10% compared to market rates.
The second option is designed for recipients of social service allowances. In these cases, rental contracts are arranged through partner NGOs rather than directly with tenants. These arrangements can offer rent discounts of up to 30% compared to market rates. “We've seen several success stories where residents, such as single parents with young children, have moved to our standard affordable housing programmes after just a few months,” explains Zdenka Polednáková.
A well-structured programme
The programme is carefully structured: SIH group funds act as financial investors, under the oversight of the Supervisory Board. Dostupný Domov manages property acquisition, reconstruction, and maintenance. To ensure economic efficiency, Dostupný Domov purchases entire blocks of flats at optimal prices to maintain below-market rental rates, before accommodating tenants from socially disadvantaged groups.
Dostupný Domov has also forged strong partnerships with local NGOs that have a deep understanding of community needs. NGOs play a pivotal role in identifying potential beneficiaries, placing tenants, and providing social services; from helping secure state housing allowances, to connecting clients with the “Housing First” project, an initiative that addresses homelessness by making stable housing the foundation for social reintegration.
“Thanks to our close cooperation with NGOs, we are not currently facing any issues related to losses or unpaid rents. Our NGO partners have detailed knowledge about the target communities, which has been crucial when ensuring tenants' financial capability and successful tenancy,” says the Dostupný Domov representative.
By carefully managing risks through tenant mix, community partnerships, and strategic financing, the Dostupný Domov programme has been able to deliver both social impact and financial sustainability - a model that could be replicated in other parts of Europe facing affordable housing challenges.
A place to call our own: Maria and Ľubica's stories
At 61, Maria found herself raising her grandchildren after her daughter developed addiction problems. Despite being employed, she could not access commercial rental housing. “The Dostupný Domov apartment with discounted rent was like a light at the end of the tunnel,” Maria says. “It provides home comfort, privacy, and a better study environment for the whole family.”
Ľubica, 45, was able to escape domestic violence with her daughter through the programme. After fleeing with just two bags, she found safety in a Dostupný Domov flat 40 kilometres away. Today, both Ľubica and her daughter have left the cycle of violence, stabilised their lives, and Ľubica has secured employment.
An effective risk assessment
Social housing initiatives often face higher risks due to their innovative approaches and focus on vulnerable people. Dostupný Domov’s shareholders have developed an effective solution to balance these challenges with financial sustainability through its strategic 70/30 tenant profile model. Under this framework, Dostupný Domov allocates 70% of its flats to socially disadvantaged tenants, while renting the remaining 30% at market rates to residents outside the target demographic. This mixed-income approach helps ensure the project's long-term viability. “While our mission centres on providing affordable housing to those most in need, maintaining operational sustainability is essential,” explains Gric. He emphasises that all tenants must demonstrate financial capability, even though rents for social housing units are set 15% below market rates.
The programme has encountered certain headwinds along the way but has successfully addressed them by mobilising internal resources within the SIH group.
“Delivering on our financial commitments has paved the way for future expansion. By maintaining a committed and supportive investor base, we've ensured the programme's long-term sustainability and growth potential,” explains SIH Project Lead Juraj.
Promising results
The housing programme has shown remarkable progress. In the four years that Dostupný Domov has existed, the number of residents has grown to 835 people, forming a diverse community. Of these residents, 552 individuals come from vulnerable groups, while 283 residents are from outside the target demographic. Some having left the programme in the meantime, the portfolio now comprises 397 flats, with 248 units successfully housing 528 people. The programme makes housing accessible to all by offering rent prices that are significantly below market rates, ranging from 5% to 30% lower depending on the location and the financial situation of the tenant.
The partnership between Slovenská sporiteľňa and SIH proved mutually beneficial. Head of Social Banking at Slovenská sporiteľňa Rastislav Blažej emphasised this, saying: “Our innovative partnership with SIH establishes a pioneering approach to institutional partnerships, combining public investment and private financial expertise. We hope that it will inspire other similar partnerships, and above all that it will help to create many stable and secure homes for people living in Slovakia.”