The Autonomy of Municipalities regarding Housing
In Decision No. U-I-144/14, dated 9 March 2017 (Official Gazette RS, No. 14/17), upon the request of the Municipality of Izola, the Constitutional Court decided on the constitutionality of the first paragraph of Article 195 of the Housing Act, according to which the provisions of the second and the third paragraphs of Article 90 of that Act did not apply to tenancy agreements for non-profit apartments that had been concluded before the Act entered into force. Such a regulation entailed that the tenants from “old” tenancy agreements were not obliged to periodically provide evidence that they still fulfil the material conditions and criteria for obtaining a non-profit apartment. The Municipality of Izola alleged that the challenged regulation interfered, inter alia, with the constitutional position of municipalities. In accordance with the second paragraph of Article 21 of the Local Self-Government Act, the creation of conditions for the construction of housing and increasing the social rental housing fund are original tasks of municipalities. Due to the challenged regulation, a certain part of non-profit apartments remained outside the control of municipalities, which as a result were no longer able to ensure that apartments acquired with public funds were in fact only used by those inhabitants that fulfilled certain material criteria and conditions. The Municipality of Izola alleged that the Act interfered with the exercise of its original tasks, namely the task of increasing the social rental housing fund and that of formulating and implementing social policy regarding housing in the municipal territory. Therefore, the Constitutional Court had to assess the consistency of the challenged regulation with the first paragraph of Article 140 of the Constitution.
The first paragraph of Article 140 of the Constitution is a constitutional bastion preventing state interferences with the core of local self-government. The state must not interfere through its regulations with the original competences assigned to municipalities. If the state limits municipalities through its regulations or prevents them from exercising their original tasks, this would entail an interference with the constitutionally guaranteed functional autonomy of municipalities. Such an interference is constitutionally admissible if the legislature employed it to protect another constitutional value, if the measure was necessary for the attainment of this goal, and if in the case in question the importance of the protected value outweighs the importance of local self-government as a constitutional value.
In its review, the Constitutional Court took into account the legal regime regarding non-profit apartments. The acquisition and renting out of non-profit apartments on the basis of public tenders is one of the measures intended to implement the obligation of the state determined by Article 78 of the Constitution, according to which the state shall create opportunities for citizens to obtain proper housing. The non-profit rent that is paid for renting a non-profit apartment is, in terms of its content, a social right and entails implementation of the principle of a social state determined by Article 2 in conjunction with Article 78 of the Constitution. The state and municipalities must determine certain conditions that have to be fulfilled in order to obtain social rights. Ensuring the stability of tenancy agreements for non-profit apartments is also an expression of the principle of trust in the law (Article 2 of the Constitution). As it constitutes a constitutional value, the protection of trust in the law is a constitutionally admissible aim for an interference with the constitutionally guaranteed autonomy of local self-government. However, in the light of established constitutional case law, the principle of trust in the law is neither absolutely binding nor does it guarantee the inalterability of long-term contractual relations. All circumstances of an individual case have to be assessed by means of a weighing of the reasons for preserving the status quo and the reasons for enacting changes.
In the case at issue, the Constitutional Court held that the principle of trust in the law as such does not require that tenants of non-profit apartments be protected regardless of the conditions determined for obtaining such an apartment. It would be constitutionally admissible if changes in tenants’ circumstances with regard to fulfilment of the required conditions were to be taken into account. However, the statutory regulation specifically excluded this possibility. While in doing so it protected the stability of the contractual right to non-profit rent for an indefinite period of time, such protection interfered with the constitutionally protected position of local self-government. As in the case at issue, in the assessment of the Constitutional Court, the Constitution does not require protection of the stability of the contractual right to non-profit rent, the challenged regulation is not a necessary measure that could justify such an interference. Protection of the stability of the contractual right to non-profit rent cannot substantiate the admissibility of an interference with the constitutionally guaranteed functional autonomy of municipalities with regard to housing. The Constitutional Court therefore decided that the challenged provision of the Housing Act is inconsistent with the first paragraph of Article 140 of the Constitution and abrogated it.