State premiums for savings and mortgages system to be reinstated, but under stricter conditions

Anca Alexe 04/06/2018 | 08:42

Beneficiaries of the state premium for savings at housing banks will include only those who have saved for at least 5 years or who contract a mortgage, as long as they use the premium for housing, otherwise the premium is returned to the state, according to

Legislation regarding housing banks will therefore be reinstated, after the Accounts Court blocked its enforcement, showing that the state premium isn’t for anyone who saved for at least five years, but exclusively for those who are taking out mortgages. Housing banks will also have a series of new obligations.

In 2004, Romania introduced the “bauspar” savings and mortgage loans system, a local version of the German system.

In this system, those willing to save for at least 5 years with a housing bank, which could offer them loans for purchasing or refurbishing a home at lower costs, would also receive a premium of up to 25 percent of the amount deposited over one year, but no more than EUR 250 per person. The maximum gain, of 25 percent, is obtained by depositing EUR 1,000 each year, and for larger sums other family members can open accounts so that each can receive the maximum EUR 250 from the state on their savings at housing banks.

In the past two years, this system has been blocked following a report by the Accounts Court, which interpreted the law differently, saying that the premium is only for those who actually take out a mortgage after they save money. The Court excluded children and the elderly from the beneficiaries and asked housing banks to return the state premiums paid until that date.

In the meantime, the Senate adopted a legislative project that would clarify the issue and introduce differential premiums – the annual state premium remained limited to 25 percent of the amount deposited, but no more than EUR 250, only for clients who also take out a mortgage for housing or an anticipated or intermediary loan.

Clients who only choose to save money in this system, taking out their money after the minimum mandatory period of 5 years, could obtain a reduced premium of only 20 percent of the yearly savings, and no more than EUR 200.

In the form proposed by the Senate, the law said that obtaining the state premium is not dependent on taking out any loan and that any citizen can take part, no matter their age. On the other hand, it said that using the state-subsidised sums for housing purposes will be proven with receipts, and banks must require these documents even from those who withdraw their money at the end of the five years without taking out a loan as well.

The former Tudose government made a series of amendments to clarify the law and they were sent to the Chamber of Deputies, which accepted almost all the amendments except the one that generated the reaction from the Accounts Court.

The government asked for differential state premiums to be cancelled, but also said that the premium recipients must justify its use in order to receive it after the first five years of savings, in up to six months after they receive the money.

The current form of the project says that there will be no differential premiums for those who withdraw their money earlier than after 5 years. The early state premium will only be allocated to clients who intend to take out a housing loan with anticipated or intermediary financing before the 5 years of savings is reached.

Another change is that all deposits made by the clients (except costs related to opening, managing and closing the contract) are taken into account.

In order to resolve the issue raised by the Accounts Court, the Deputies have established that, in order to receive the state premium, after the 5-year term expires, clients need to present to the banks documents proving the use of an amount at least equivalent to the total state premium and related interest rates for housing purposes in a maximum of six months from withdrawing their savings from the bank.

The updated project also introduces new obligations for housing banks, who will have to check their clients’ eligibility and the documents they provide to prove the state premium and related interest rate is used for housing purposes. Banks will also have to provide a yearly report for the previous year, as well as a prognosis for the current and following three years regarding the state premium system.

The current project will be voted on by the Chamber of Deputies and then sent to the president for promulgation.

Romania currently has two housing banks – BCR Banca pentru Locuinte and Raiffeisen Banca pentru Locuinte – with assets of around EUR 800 million and close to 500,000 clients a couple of years ago.

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