ECONOMY

End of OEK has knock-on effect

The abolition of the Workers? Housing Organization (OEK) — passed recently by Parliament as part of widespread reforms to downsize the public sector in observance of the terms set by Greece?s creditors — is expected to take a lot longer than initially planned and to have widespread repercussions in the construction sector and on banks that issue subsidized loans.

The organization, in charge of state-subsidized housing for the poor and for large families, was estimated a few years ago to have around 1 billion euros of available capital for the development of housing units across Greece. Its closure will means a 2 percent reduction in labor costs from contributions to the organizations.

According to people who work for the organization, OEK provided rent subsidies to 120,000 beneficiaries, issued 10,000 subsidized housing loans a year and built more than 1,500 homes annually. According to estimates, in 2011 alone 128,000 people benefited from the program, while this year?s abolition of the organization means that the construction of 20 villages of workers? housing around the country, consisting of a total of 1,300 homes, has come to a halt.

Of these 20, five are only in the initial stages of construction, while in most cases, a draw has already been conducted to find the beneficiaries, who were expecting to move into their new homes at some point this year.

The closure of the organization at this time, with so many loose ends still pending, means beneficiaries who have already been selected by the lottery process will not be moving anywhere soon, at least 300 homes in three settlements will remain vacant because the lottery has not been held yet, and the freezing of the cost assessment process for 15,000 homes that have already been assigned but have experienced delays in the loan-issuance process.

Also in limbo is a total of 1.2 billion euros from loans issued by banks thanks to OEK?s capital and in direct payments to the now-defunct organization. The most recent batch of mortgages was issued in 2010 for 25 years, so it remains to be seen whether beneficiaries will be able to meet the banks? terms of payments without the OEK subsidy of the interest.