Since 2018, who constructs over 2000 m² have been mandated to allocate 3% of the space to social housing. The law offers developers the flexibility to designate this 3% either on-site or elsewhere. However, Prime Minister Edi Rama previously criticized the latter option as unfair. Last year, Rama announced that 3% of social housing would only be provided at the construction site. Despite the legislative amendment, verification indicates that Rama’s commitment has not been fully realized.
Esmeralda Topi
Six years ago, the Socialist Party approved the ‘Social Housing’ law in Parliament. The law mandates that for every residential construction exceeding 2000 m², 3% of the area must be allocated for social housing—a provision initially opposed by developers.
Developers have two options: they can allocate the required 3% of the area for social housing at the construction site, or, if not feasible, they can allocate it elsewhere.
Article 19 of the ‘Social Housing’ law, not amended
However, Prime Minister Edi Rama regarded the second option as unjust. According to him, the 3% allocation for social housing should be given at the construction site.
‘You must allocate those 3% where you build, not build here and give me 3% at the end of the world, because some people will live in the center and others will end up at the edge of the world just to be close to the sheep,’ Rama declared last year, pledging to reconsider the law on this issue.
‘We will ensure that this 3% is given where you construct, as it pertains to the people in Tirana who should benefit from these programs,’ emphasized the Prime Minister last October.
What happened?
Last year, there were several amendments to the Social Housing Act, one of which affected Article 19, defining the private sector’s contribution to establishing a public fund for social housing.
Article 19 of the ‘Social Housing’ law, as amended
The changes established that the implementation rules for this contribution would be defined by a decision of the Council of Ministers.
The Council of Ministers‘ decision, approved seven months after the Prime Minister’s declaration that the 3% should be allocated at the construction site, left unchanged the option to offset the 3% physical area elsewhere—not necessarily at the construction site.
‘…in cases where it is impractical to allocate it on the housing construction site, the private entity shall immediately allocate it to another housing construction area,’ is outlined, among others, in the DCM’s decision.
But it didn’t end there. The decision also introduced another option for developers by allowing the conversion of the 3% area into monetary value instead of physical construction, a practice that the Municipality of Tirana has implemented for five years.
In 2019, through a Municipal Council decision, the Municipality of Tirana modified the method of fee collection, enabling developers to convert 3% of the physical area of the building into monetary value.
‘In cases where the required contribution to the Municipality of Tirana, as outlined in this decision, is offered by the private developer to be paid in monetary value, the calculation for converting the area is based on multiplying the contributory area by the reference housing value in the zone for which the building permit has been applied, as determined under the Order of the Ministry of Finance and Economy.’
Conclusion
Contrary to Rama’s statement, developers once again have the option to fulfill the 3% requirement for social housing either at the construction site or elsewhere. Additionally, the government now formally allows the conversion of the required area into monetary compensation—a practice adopted for five years by the Municipality of Tirana. Therefore, based on our verification and collected data, Prime Minister Edi Rama’s statement that 3% for social housing should be provided exclusively at the construction site is deemed incorrect.
