Govt proposes site for building homes for troubled homeowners

Budapest, August 10 (MTI) - The government plans to start building, before the end of the year, light-structure homes it intends to offer people who are expected to default on their housing loans due to the skyrocketing Swiss franc, an official said on Wednesday.

Zoltan Kovacs, state secretary in charge of government communications, told journalists that the interior ministry has proposed the town of Ocsa, 30 kilometres southeast of Budapest, as the site for the project.

Kovacs said that further sites may be chosen in the future, depending on the number of people in need. He added that Ocsa, with a population of 9,000, was chosen because a large majority of the hundreds of thousands who are in trouble are from Budapest and its environs.

Several hundred homes are planned, where rent-controlled housing will be available on plots of 1,000 square metres with room for vegetable gardens, he said. Low household bills will be made possible by modern energy solutions in the houses, and the government also plans to launch public works projects in the area, Kovacs added.

The main opposition Socialist party called on the government to ditch the plan, which it likened to "mini reservations". Lajos Korozs, a senior Socialist politician, said the land lacked basic amenities.

He said the government was grossly underestimating the number of troubled households, and contrary to the 5,000 homes that had been estimated, around 80,000 were in danger of being repossessed, he added. Any plan to buy such a number would set the state back 300-400 billion forints, he said.

Karoly Bukodi, the mayor of Ocsa, of the ruling Fidesz party, told MTI that what the ministry has so far disclosed was still on the drawing-board, and declined further comment until a final government decision is made public. He added that negotiations are ongoing between the town and the central government.

Analysts fear that the unprecedented strengthening of the Swiss franc will cause borrowers to default on their payments en masse. Many borrowers took out franc-based housing loans when the forint was at levels around 165 - compared to its current rates of 260-270.

Troubled borrowers were recently given the option by the government of fixing their monthly repayments at 180 forints to the franc until 2014, starting August 15. The opposition parties have criticised the move, saying it would only put off the problem, and they called for more substantive measures.

An independent mayor of the adjoining village Felsopakony, Janos Sztancs, told MTI on Wednesday that the idea was premature and wrongheaded, as people would be placed with lots of hardship on this "no-man s land".