The Five Delusions Driving Slovenia’s Failing Housing Policy
The amendment to the housing act focuses primarily on strengthening the public rental market and state interventionism in the housing sector. Both have been seen by the socialist government as remedies for decades—remedies that never work. Yet they are so fond of them that with every term, they increase the dosage, hoping that this time it will be different. Now, in addition to their traditional measures, they are proposing a ban on individuals using platforms like Airbnb as small businesses, stripping countless families of an important source of supplementary income. At the same time, they plan to spend billions on building vast complexes of state-owned apartments, designed to make people increasingly dependent on government handouts—primarily targeting second-generation migrants as one their main client bases. Let’s outline five main delusions of this snake oil for our housing market.
The first delusion crept into our housing policy from the previous system. Back then, some people received state-owned apartments, and many of them still believe today that in Slovenia, everyone got their own property thanks to the so-called Jazbinšek Law. But the numbers tell a different story. Under that law, 160,000 contracts were signed, yet Slovenia has 864,000 dwellings. For every Jazbinšek apartment, five private single-family houses were built before and during socialism. Today, two out of three Slovenians live in those houses. Our housing prosperity doesn't rest on "Tito’s" socialist apartments but on single-family homes that people built themselves.
The second delusion is the belief that we need to create a state fund of non-profit rental apartments, which would then “circulate” among those who need them. It hardly needs explaining that moving into a state-owned, non-profit apartment is like winning the lottery for the average Janez Slehernik; once there, he’ll stay forever and try to pass the right down to his descendants. As a result, circulation in practice never happens.
The third delusion is that the state will solve young people’s housing problems by building state-owned apartments with non-profit rents. With an average of 200 new state apartments per year and a generation of 17,000 young people annually, this is utterly unrealistic. If we consider that the average cost of the apartments currently being built by the national housing fund is now close to 300,000 euros per unit, a serious expansion that would shorten waiting lists within our lifetimes would be financially unsustainable—it would cost as much as building a second railway track each year.
The fourth delusion is the claim that there are too few non-profit rental apartments. This statement is based on international comparisons, which indeed show a low percentage of non-profit rentals relative to all dwellings. But this makes sense because from the equation “all dwellings = owner-occupied dwellings + rental dwellings,” it follows that in a country where most housing is privately owned, the share of rental housing will naturally be lower. Therefore, the percentage of non-profit rentals among them doesn’t tell us much. What’s more important is how many tenants are paying non-profit versus market rents. It turns out that for every resident exposed to market rent in Slovenia, there are three in non-profit or subsidized rentals. As a result, Slovenia is already at the top globally for the percentage of non-profit rental housing among all rental housing.
The fifth delusion is that by promoting the rental market, we’ll solve social problems. The rental market is a tool to increase population mobility, making us more competitive. A healthy rental market provides people with additional choices, not the only way to find a place to live. The last thing we want in twenty years is retirees with €890 pensions paying two thirds of it in rent because they remained renters their entire lives.
It's the Price, Stupid!
If we want a functioning housing market, we need to focus on one key goal instead of chasing utopian dreams and lofty ambitions: lowering the cost of building new housing.
To achieve this, we must eliminate everything that currently drives up prices—construction regulations, restrictive land policies, high upfront payments, expensive standards, and so on.
One way to do this without years of reform is by establishing “liberty settlements.” These would be to homebuilders what free-trade zones are to businesses: places where capitalism is given relatively free rein in construction. In these settlements, special building laws would apply, ensuring that building a family house could begin without initial costs and that self-building would not be penalized.
These settlements should be located near major urban centers because that’s where people want to live. They should be well connected to cities. All the land in these settlements would be owned by the state, divided into plots of a few hundred square meters, provided with basic infrastructure, and then leased for lifetime to any first-time home seeker who has lived in Slovenia for at least twenty years. The leases would be non-transferable, and the rent for the the entire lease would be so low it would be affordable to everyone. Just enough to cover basic development.
If a tenant wanted, they could reduce their costs even further by building one of the pre-approved, standard-designed homes on their plot. Such construction would not require a building permit; one would only be necessary for non-standard projects.
The state could cheaply acquire space for liberty settlements by reclassifying land it already owns that is currently non-buildable. A square meter of forest costs less than a euro, farmland around three euros—and the bureaucratic stamp to reclassify it as buildable costs nothing.
A Place to Call Home
In theory, liberty settlements are one of the few ideas that should appeal to both liberals and socialists. The concept includes state involvement and a social component, but it is rooted in capitalist ethics, private initiative, and greater individual choice.
In capitalism, what we create and pay taxes on is ours. No one has the right to take away our private property. This applies to our crops, our car, our house, and so on.
But what about the piece of land we own—or the stream that runs through it? No one creates nature; it belongs to everyone. So how can it be ours?
Ownership of nature is a right to use it, based on a social agreement. That agreement allows us to trade that right as if nature were truly our property, because history has taught us that this encourages stewardship and efficient use.
But this social agreement lacks consideration for what happens if we appropriate all of nature—what will be left for those who are yet to be born? Where is their place under the sun, and why should they be born tenants in a world that belongs to everyone?
If we resolve this by ensuring that every person has a right to their own small piece of nature—one they can find in liberty settlements—while rights to the rest of nature continue to be tradable, we maintain a working system of rights and give each person the ability to opt out if they so choose.