CASE OF BERGER-KRALL AND OTHERS v. SLOVENIA
Remainder inadmissible;Remainder inadmissible (Article 34 - Victim);No violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions);No violation of Article 8 - Right to respect for private and family life (Article 8-1 - Respect for home);No violation of Article 14+P1-1 - Prohibition of discrimination (Article 14 - Discrimination) (Article 1 of Protocol No. 1 - Protection of property;Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions);No violation of Article 6 - Right to a fair trial (Article 6 - Civil proceedings;Article 6-1 - Civil rights and obligations);No violation of Article 6 - Right to a fair trial (Article 6 - Constitutional proceedings;Article 6-1 - Access to court)
Aleš Pejchal;André Potocki;Angelika Nußberger;Ganna Yudkivska;Mark Villiger;Paul Lemmens
6. The applicants’ names and dates of birth are listed in annex 2. They are members of the Association of Tenants of Slovenia (Združenje najemnikov Slovenije). 7. In the former Socialist Republic of Slovenia, socially-owned dwellings represented a significant part of the housing stock (230,000 housing units). Approximately one-third of the Slovenian population lived in such housing units at the time. According to the doctrine of “social ownership” (družbena lastnina) introduced into the Yugoslav system in the 1950s, such dwellings were owned by the community, the role of public bodies being confined to management. 8. After the Second World War, private dwellings and other premises passed into State ownership through legislation on nationalisation. At the same time, dwellings were built or purchased by socially-owned enterprises or other public bodies. In both cases the latter allocated them to their employees and other entitled persons, who became holders of a “specially protected tenancy” or “occupancy right” (stanovanjska pravica – hereinafter translated either as “specially protected tenancy”, as suggested by the applicants, or as “occupancy right”, as indicated by the Government) under Article 206 of the then Constitution of the Socialist Republic of Slovenia and the existing legislation. The right to a socially-owned dwelling guaranteed the citizen “the permanent use of the dwelling for his personal housing needs as well as for the needs of his family”. The Housing Act 1982 (hereinafter referred to also as the “ZSR”) provided that once allocated by an administrative decision followed by a contract, a specially protected tenancy entitled the holder to permanent, lifelong and uninterrupted use of the flat against the payment of a fee covering maintenance costs and depreciation. The fee (or rent) was determined on the basis of the construction price of dwellings and the requirements of simple replacement of dwellings, and in accordance with the standards and norms for the maintenance and management of socially-owned dwellings. 9. The Government pointed out that the occupancy right conferred the right to use the socially-owned dwelling only for the purpose of satisfying one’s personal and family housing needs. Its rationale was the economical and efficient use of housing space, meaning that each family should have at its disposal as much space as it needed, and no more. The occupancy relationship could be terminated and another, more appropriate dwelling allocated in the event of a reduction of the number of users of the dwelling (Section 59 of the ZSR). In the Government’s view, this proved that the occupancy right was associated with personal and family needs, and not with a particular dwelling. The concept of family needs was variable and depended on the number of family members. No more than one dwelling could be used at the same time and no one could move into the dwelling without the prior approval of the holder of the occupancy right. The latter was given management entitlements, such as the right and duty to participate in the management of the socially-owned housing. Holders of occupancy rights could exchange dwellings and make alterations to the dwelling, its furnishings and appliances only with the prior written approval of the housing administration (Section 29 of the ZSR). 10. The applicants challenged the Government’s allegation that the specially protected tenancy permitted use of the dwellings for housing purposes only. They observed that the holder of the occupancy right could use the dwelling without restrictions for himself and for the members of his family, did not need any consent to enlarge the number of family members, could use part of the dwelling for business activities and could sublease part of it for an agreed rent. He could modernise the dwelling with the agreement of the housing organisation managing the building; if such agreement was denied – which in practice almost never occurred – he could demand substitution of consent in legal proceedings. The dwellings in question could be sold only to holders of occupancy rights, who could – with few very specific exceptions – exchange their dwellings. Any sales to third persons were null and void. 11. In legal theory and judicial practice the specially protected tenancy was described as a right sui generis. On 26 November 1998 the Constitutional Court delivered a decision (Up-29/98) in which it considered that under the legislation of the former Socialist Republic of Slovenia, the specially protected tenancy enjoyed stronger protection than a purely contractual tenancy right. The legal relationship was not limited in time and was linked not only to the holder of the right, but also to persons living with him. It concluded that, because of the very limited volume of transactions involving socially-owned dwellings, the specially protected tenancy had been more akin to a property right than to a tenancy right. 12. When a holder of a specially protected tenancy died, his or her rights were transferred to the surviving spouse or long term partner (who held the specially protected tenancy jointly) or to a registered member of the family household who was also using the flat. According to the applicants, this also applied if they moved out or divorced. Thus, specially protected tenancies could be passed on from generation to generation. 13. In the Government’s opinion, however, this was not a succession of the occupancy right but rather a specifically regulated transfer of it to one of the users of the dwelling. In this respect, the spouse and long term partner enjoyed a privileged status. Special provisions applied in the event of divorce (Section 17 of the ZSR), and if it considered that none of the users of the dwelling met the conditions for obtaining the occupancy right after the death of the previous holder, the housing administration could request the said users to vacate the premises (Section 18 of the ZSR). 14. The occupancy right could be cancelled only on limited grounds (Sections 56, 58 and 61 of the ZSR), the most important of which was failure by the holder to use the flat for his or her own housing needs for a continuous period of at least six months without good reason (such as military service, medical treatment, or temporary work elsewhere in the former Socialist Federal Republic of Yugoslavia (the “SFRY”) or abroad; see Section 19 of the ZSR). In this case, the users of the dwelling who had been living together with the holder of the occupancy right for a minimum of two years had the same rights as they would have had if the holder had died. Other grounds were inappropriate and detrimental behaviour, failure to pay the fee, full sublease, use of the dwelling by a person other than the holder of the occupancy right and possession of an unoccupied flat suitable for residence. Although inspections were to be carried out to ensure compliance with these requirements, the specially protected tenancy was rarely, if ever, cancelled on these grounds (see Đokić v. Bosnia and Herzegovina, no. 6518/04, § 6, 27 May 2010). In this connection, the applicants pointed out that it was true that in theory holders of a specially protected tenancy could be moved to a substitute dwelling if the dwelling they were occupying was too large for them and the other users with regard to social standards (see the Government’s submissions in paragraph 9 above). However, according to the applicants, this possibility was in practice never used and there was no case-law on the matter. 15. All employed citizens were required to pay a special monthly housing contribution (approximately 4.5 to 6 per cent of their monthly income) to the Joint Housing Fund. The funds thus obtained were used to build and maintain socially-owned flats. The Housing Fund granted benefits (allocation of a flat under specially protected tenancy, or loan to purchase, construct or renovate a dwelling) on the basis of the principles of mutuality and solidarity with those in need. All socially-owned dwellings were part of the Joint Housing Fund and administered by State institutions, municipalities, social enterprises and other legal entities governed by public law. 16. Before Slovenia became independent, the applicants or their legal predecessors acquired specially protected tenancies in socially-owned dwellings which had been expropriated under the legislation on nationalisation. Under the legislation in force prior to 1991, no difference in specially protected tenancy conditions was made between tenants of State-constructed dwellings and tenants of nationalised dwellings. 17. On 25 June 1991 the Republic of Slovenia declared its independence. Among the first reforms enacted were the Housing Act 1991 (Stanovanjski zakon) and the Denationalisation Act 1991 (Zakon o denacionalizaciji), aimed at redressing the wrongs committed after the Second World War. The new Constitution of the Republic of Slovenia (Section 33) guaranteed the right of private ownership. 18. The Housing Act 1991 (hereinafter referred to also as the “SZ”) provided for the transformation and privatisation of socially-owned dwellings. The Joint Housing Fund (see paragraph 15 above) was dissolved and, with few exceptions, the socially-owned dwellings were transferred ex lege into State ownership or into that of local communities or the National Pension Fund. Those dwellings which had become socially-owned property after having been expropriated from private owners were transferred into the ownership of the municipalities (Section 113). 19. The specially protected tenancy was replaced ex lege with a normal lease contract (Section 141). The previous holders of specially protected tenancies or, in the event of their death, their family members living in the flats, were given the possibility of renting the flats for an indefinite period and for a non-profit rent (which covered maintenance, management of the flat and capital costs – Section 147) or of purchasing them on favourable terms, paying an administratively defined price which was calculated on the basis of a discount of 30% (in the event of payment in instalments) or 60% (in the event of one-off payment) off the estimated value (Sections 117-124). 20. According to the applicants, in practice this meant a price of 5-10% of the real market value of the dwelling payable in instalments over 20 years or 5% of that value payable within 60 days. The right to purchase on favourable terms could be transferred inter vivos or mortis causa to close family members. However, previous holders of specially protected tenancy in flats which had been expropriated could only purchase them on favourable terms if the owners agreed to sell them within one year from the restitution of the dwelling (Sections 117 and 125). In that case the 30 or 60 per cent discount (Sections 117 and 119) was offered by the owner, who would then be reimbursed by the municipality. 21. It follows from the above that all previous holders of specially protected tenancies were given the possibility of taking out new leases (to be signed within six months from the entry into force of the Housing Act 1991). However, the applicants contended that these new leases were less advantageous than the specially protected tenancy. In particular, tenants no longer had secured tenancy of their homes since the owners could move them to other adequate flats without any particular justification (Section 54). There were now nine grounds on which tenants could be evicted for misconduct, compared with three previously. The fault-based grounds for termination of the lease were (Section 53 of the SZ): “- if the tenant and any person living with him uses the dwelling counter to the law or the terms of the lease; - if, by the way they use the dwelling, the tenant or any person living with him causes major damage to the dwelling or to common areas, parts, facilities and installations of a multi-dwelling building; - if the tenant fails twice in succession or for two out of the last twelve months to pay rent or costs payable in addition to rent within the time-limit specified in the lease; - if the tenant or any person living with him, by their manner of using the dwelling, frequently or seriously disturbs other residents in their peaceful use of the dwelling; - if the tenant makes changes to the dwelling and fixtures without the prior consent of the owner; - if, in addition to the tenant, a person who is not named in the lease contract uses the dwelling for more than thirty days without the owner’s knowledge; - if the tenant leases out the dwelling without the agreement of the owner or charges a subtenant a higher rent; - if the tenant does not allow access to the dwelling in cases [specified by law]; - if the tenant or any other person who uses the dwelling engages in a prohibited activity there, or a permitted activity in an unlawful manner.” 22. However, before terminating the lease the owner had to give prior written notice to the tenant who was allegedly violating its provisions; no termination was allowed if the inability to pay the rent in full and to entirely fulfil other obligations was due to the social distress of the tenant and the other persons using the dwelling. 23. Without the owner’s permission, tenants could not sublet a flat, renovate it or decorate it. Nor could they bring new people into the flat (Section 53). The owner could renovate the flat at any time and enter it twice a year (Section 44). The tenant could not freely transfer the lease to another family member or exchange the flat. After the death of the original tenant, only the spouse or a person having lived with the tenant in a permanent relationship, or an immediate family member living in the flat, had the right to take over the lease (Section 56). The tenant had to pay the legally regulated non-profit rent (Section 63), which, unlike the fee (see paragraph 8 above), not only covered maintenance costs and depreciation, but also included a sum to offset capital costs and management of the dwelling. 24. The Denationalisation Act 1991 (hereinafter referred to also as the “ZDen”) regulated the denationalisation of property which had previously passed into State ownership through legislation on agrarian reform, nationalisation, confiscation or other forms of expropriation of privately owned properties. Previous owners or their heirs (hereinafter referred to as “previous owners”) were entitled (until 7 December 1993) to claim restitution of the expropriated property. Wherever possible, the property itself was to be returned in natura, including dwellings which had been let under the specially protected tenancy scheme. Where such restitution was not possible, claimants were entitled to substitute property and/or compensation (Section 2). 25. The restitution of dwellings occupied by a tenant did not affect the leases concluded in the meantime, which remained in force (see Section 125 of the SZ and Section 24 of the ZDen). 26. The applicants pointed out that after the enactment of the housing reform, a number of former holders of specially protected tenancies in previously expropriated flats filed requests to purchase the flats. The deadline for filing such requests expired before that for “previous owners” to file restitution claims. Only when it became clear in individual cases (especially in 1994) that denationalisation proceedings had been initiated, were the former holders of specially protected tenancies informed that their requests to purchase had been rejected. 27. Holders of occupancy rights had no part in the denationalisation proceedings to determine the ownership of the property, which meant that they were not notified when a request was filed for the restitution of the dwelling they were occupying. According to the data submitted by the applicants, 37,000 restitution requests had been filed and in the period until the end of 1999 a yearly average of 2,000 to 5,000 decisions had been rendered, which meant a total of approximately 29,000 decisions, out of which only approximately 24,000 became final. Until 1999 approximately 18% of decisions were for restitution in the form of compensation, 27% for restitution of ownership of free dwellings, 44% for restitution of ownership of occupied dwellings and 8% were refusals or rejections of the requests. This meant that by the end of 1999 a substantial portion of denationalisation procedures had not been completed. Initially in such procedures the property was returned to the pre-war owners; however, in the vast majority of cases those owners had passed away, which meant that in order to identify the “previous owners” a complex and time-consuming inheritance procedure was necessary. 28. The Government pointed out that tenants were not party to the denationalisation proceedings because restitution did not affect the tenancy relationship and did not prejudice the tenants’ rights or benefits which had a direct basis in law. Moreover, the existence of a tenancy relationship did not affect the decision on denationalisation and restitution (see Constitutional Court decision no. Up-237/97, point 5). However, tenants could participate if they demonstrated a legal interest, notably an interest in recovering their investments. In this regard, the status of party to the denationalisation proceedings was recognised in respect of: (a) any person who, before 7 December 1991 (date of entry into force of the ZDen), had invested in nationalised real estate, whenever and insofar as the proceedings might lead to a ruling on that person’s rights deriving from the investments concerned, and (b) the entities liable for restitution, which in the case of former socially-owned dwellings usually meant municipalities (Section 60 of the ZDen). 29. The principle of restitution in natura applied also in cases in which the value of the property had increased. Former holders of the occupancy right who had invested in the dwelling could only claim compensation under the law, but not acquire ownership of the dwelling by virtue of such investments. In particular, the occupant could claim total recovery of costs on the condition that the investments had been made prior to 7 December 1991 and that they constituted major maintenance investments and not simple routine maintenance. Upon a judicial action introduced by the tenant, the competent court would appoint a construction expert to assess the value of the property at the time of nationalisation and its value at the time of its restitution; a tenant who could provide evidence of the investments made (they were not required to provide evidence that the community of residents had consented to the investments) could then obtain the difference between the two values of the property (Section 25 of the ZDen). In cases in which a final decision on restitution had already been adopted, a claim for recovery of investments could be filed within one year from the entry into force of the 1998 Act amending the ZDen. 30. The applicants observed that in the event of an increase in the value of the property due to the investments made by the tenant, Section 25 of the ZDen gave three options to the “previous owners”: (a) to request compensation instead of restitution in natura; (b) to request part ownership of the dwelling; (c) to recover the full property and reimburse the tenant. As a rule, the tenants’ requests for reimbursement were examined in sets of proceedings initiated after the denationalisation proceedings, often after the year 2005. However, according to the applicants, the evaluation of the dwellings according to the relevant domestic rules was totally unrealistic, which made the evaluation of the increased value due to new investments unrealistic also. Moreover, only those investments which had increased the value of the dwelling – and not those which had kept the value of the property at the same level since its expropriation – were taken into account. The time-limit for reimbursement of investments was ten years and the parties could reach a friendly settlement on these matters. “Previous owners” frequently made the reimbursement conditional upon the tenants vacating the premises. In the applicants’ opinion, these rules did not guarantee former holders of occupancy rights a fair possibility of recovering the real value of their investments. 31. In the following years, the SZ and the ZDen, as well as the legal acts implementing them, underwent numerous amendments, which on some occasions were more favourable to the tenants, and on others to the “previous owners”. 32. The 1994 amendments to the Housing Act 1991, enacted on 6 April 1994, were more in favour of the tenants. Former holders of a specially protected tenancy who occupied previously expropriated flats which had not been returned to “previous owners” (because no request for restitution had been filed, or the request had been rejected) were allowed to purchase the flats they were occupying (amended Sections 117 and 123). 33. The amended Section 125 further provided that where the dwelling had been returned to the “previous owner”, if he agreed to sell he was eligible for an additional financial reward from public funds (this was the so-called “first model” of substitute privatisation). 34. If the “previous owner” declined to sell the dwelling and the tenant decided, within two years from the restitution, to move out and purchase a flat or construct a house, and if the “previous owner” so agreed, he would pay the tenant compensation amounting to 30 per cent of the value of the dwelling. If, however, the “previous owner” refused this solution, the tenant was entitled to claim the same amount from the entity liable for restitution, which was usually a municipality (see paragraph 28 above). The tenant was entitled to further compensation amounting to 50 per cent of the value, in thirds, from the municipality, the Slovenian Compensation Fund and the Development Fund of the Republic of Slovenia. In addition, the tenant also had the right to a State loan under certain conditions. This was the so-called “second model” for settling the housing issue. 35. The 1994 amendments also introduced a so-called “third model”, where a tenant to whom the “previous owner” was not prepared to sell the dwelling could purchase a comparable substitute flat on favourable terms from the municipality if he decided not to purchase another flat or construct a house (amended Section 125). Under this model, the applicants were in the same position as previous holders of specially protected tenancies in State-constructed dwellings who could not purchase the dwelling they had occupied because of practical and legal obstacles. 36. The applicants noted that the right to purchase established by the amended Section 125 of the SZ was legally directly applicable and was not subjected either to preclusive time-limits or to a statute of limitations. It was a permanent legal option, to be realised on the basis of a unilateral request by the former holder of the specially protected tenancy (Supreme Court decision of 14 January 2010, no. II Ips 370/2007). 37. However, the “third model” was repealed on 25 November 1999 by the Constitutional Court (decision U-I-268/96), which considered that the additional financial burden had unduly restricted the municipalities’ newly acquired ownership rights over dwellings which had previously been socially owned. In the Constitutional Court’s opinion, this restriction could not be justified by the tendency of the legislature to ensure that the previous protected tenants of denationalised dwellings enjoyed a position resembling as closely as possible that of other tenants, in particular with regard to the possibility of purchasing a flat. 38. On 21 March 1996 the Constitutional Court delivered a decision (U-I-119/94) concerning the pre-emption right of tenants having contracts of unlimited duration (Section 18), such as the previous holders of specially protected tenancies. It held that that pre-emption right, already provided for by the previous legislation, did not interfere with the property rights in respect of dwellings subject to original privatisation under the SZ and the ZDen, since the property right had not yet been established at the time of the entry into force of those acts. However, where property rights had been acquired by other means, the pre-emption right interfered with the right of property and was unconstitutional. The dissenting opinion of Judge Lojze Ude was appended to the Constitutional Court decision. 39. Subsequent amendments to the Housing Act 1991, and the new Housing Act enacted in 2003 (hereinafter referred to also as the “SZ-1”), were more favourable to the “previous owners”, who were authorised to raise the non-profit rent by up to 37% in order to cover maintenance costs and other expenses. That increase in the non-profit rent was to be applied only to leases taken out after the amendments entered into force (22 March 2000). However, on 20 February 2003 the Constitutional Court (decision no. U-I-303/00-12) declared this limitation unconstitutional as being discriminatory. It underlined that protecting the status of former occupancy right holders did not mean that the non-profit rent could not change, and that eliminating the discrepancy in the previous system (under which rents did not cover the real cost of the use of a dwelling) could not be deemed to be an inadmissible interference with the terms of the lease contracts. The protection of acquired rights and the principle of non-retroactivity did not protect tenants from increases in rent. The increase in the non-profit rent was thus extended to all the leases that predated the enactment of the 2000 amendments. 40. The Housing Act 2003 increased from nine to thirteen the number of fault-based grounds on which tenants could be evicted from their homes (unauthorised persons living in the flat, violation of the house rules, tenant’s absence in excess of three months, ownership of another suitable dwelling, either by the tenant or by his or her partner – Section 103). However, tenants could avoid termination of the lease by proving that the problem was not their fault or that it had not been possible for them to rectify the problem within the given time-limit (Section 112(6)). The “previous owner” could also move the tenant to another adequate flat (defined in Section 10 as a flat satisfying the housing needs of the tenant and his immediate family members living with him or her) at any time and without any reason; however, this could be done to the same tenant only once and the removal costs were borne by the “previous owner” (Section 106). In respect of the transferability of the lease after the tenant’s death, a request to take the lease over had to be filed within 90 days (Section 109). For this purpose, a relative up to the second generation who had lived in economic community with the former holder of the occupancy right for more than two years on the day of entry into force of the Housing Act was considered to be an “immediate family member” (Section 180). The tenant had a pre-emption right if the flat was for sale. 41. Furthermore, rent subsidies (up to 80% of the non-profit rent) were available to tenants in the event of financial difficulties; socially disadvantaged people could also apply to the municipalities to obtain another non-profit rental dwelling or a temporary solution for their housing needs (Sections 104 and 121). The 2009 Housing Act Amendment introduced Sections 121a and 121b, which provided for the possibility, for people who were paying market rents and had unsuccessfully applied for the allocation of a non-profit rental dwelling, to obtain subsidies (amounting to the difference between the market and non-profit rents). These provisions were aimed at compensating the shortage of non-profit dwellings. 42. The 2003 Housing Act also introduced a “new model” of so-called “substitute privatisation” for former occupancy right holders. Within five years after the enactment of the Act or after the decision on denationalisation had become final, they could exercise their right to purchase another dwelling or to build a house, thus becoming entitled to special compensation (up to 74% of the price of the dwelling – Section 173) and to a subsidised loan for the remaining amount. Entitlement to and level of compensation were determined by the Ministry responsible for housing matters. Tenants who decided to buy another dwelling or build a house were obliged to vacate their rented accommodation no later than one year after receiving the compensation. 43. Furthermore, tenants who did not wish or could not afford to buy a flat could apply to rent a non-profit dwelling (Section 174). The latter was defined as a dwelling rented out by the municipality, the State or a public housing fund or non-profit organisation, allocated on the basis of a public call for applications (Section 87). Under this procedure “tenants of a dwelling expropriated under nationalisation regulations and returned to the previous owner” were awarded a rather high number of points (190), which, according to the Government, offered them good prospects of being given priority and actually being declared eligible. Lease agreements for non-profit dwellings would be concluded for an unlimited period (Section 90). 44. According to information available on the Internet, in 1991 there were some 11,000 housing units eligible for return to “previous owners”. Some 6,300 housing units were returned to ownership in full title, while some 4,700 were returned to “previous owners” while still occupied by tenants who previously had specially protected tenancies. According to the Government, in 2012 some 2,780 such tenants had managed to solve their housing situation by substitute privatisation, that is, by purchasing or building a substitute dwelling with the help of a financial incentive from the State. A further 288 tenants had lodged requests and proceedings were still pending at the time of submission of the Government’s observations. An estimated 1,500 tenants would eventually continue to live in the flats they had previously occupied as holders of specially protected tenancies. 45. The applicants emphasised that at the beginning of the housing reform, out of approximately 650,000 housing units in Slovenia 230,000 were socially-owned dwellings housing approximately one-third of the Slovenian population under specially protected tenancies (see paragraph 7 above). At the time the legislation did not distinguish between expropriated dwellings and other socially-owned dwellings (see paragraph 16 above) and, in general, individuals acquiring occupancy rights did not even know which source the dwelling came from. This was especially true for those who had acquired occupancy rights several decades after the expropriation. The great majority of holders of occupancy rights who had been given the opportunity to purchase the dwellings on favourable terms had availed themselves of this possibility; only a few of them had stayed in the flats on a contractual basis. However, as explained in paragraph 20 above, the possibility to purchase without the “previous owners’” consent was not given to those who were living in previously expropriated dwellings subject to denationalisation (approximately 4,700 properties, covering 2% of all specially protected tenants). According to the available estimates, in February 2009 approximately 1,500 families (most likely those who could not afford to buy a dwelling) had continued to lease their denationalised dwellings, while approximately 3,200 families had vacated the premises and found a solution to their housing needs elsewhere. According to the applicants, for the former category of families relations with the “previous owners” had often been burdened with judicial and personal conflicts. “Previous owners” applied constant pressure through, inter alia, illegal evictions, rent increases or simply poor building maintenance. 46. Since 1995, in his regular annual reports the Slovenian Ombudsman has illustrated the difficulties facing tenants in denationalised flats. In his Special Report of 8 January 2002 on the Situation of Tenants in Denationalised Flats he also made a number of proposals designed to remedy the situation: feasible models for substitute privatisation (greater financial incentives to solve the housing issue, for both tenants and “previous owners”), protection of the duration of leases and definition of the non-profit rent, legal mechanisms for the protection of tenants’ rights, such as free legal aid, improved implementation of the right to pre-empt, realistic evaluation of tenants’ investments for the refurbishment of the dwellings. 47. On 3 February 1998 the Association of Tenants (hereinafter, “the Association”), lodged a “petition” with several State authorities, including the National Assembly, the President of the Republic and the Government. It challenged the Housing Act 1991 and the Denationalisation Act 1991, on the ground that they deprived the Association’s members of their specially protected tenancy rights in a manner incompatible with the Constitution of the Socialist Republic of Slovenia, which was still in force at the time when the two acts were passed in 1991. Instead of the privileged specially protected tenancy, which in the Association’s view was in many respects equal to a property right, tenants were granted leases with a temporary non-profit rent. Moreover, once the dwelling had been taken over by a “previous owner”, that contract became an ordinary lease contract. This effectively deprived the tenants of their property and home. In 1991 approximately 45,000 individuals (previous holders of specially protected tenancies and their families), living in 13,000 flats, were concerned by these measures. They considered themselves victims of the transition, in the same manner as “previous owners” whose property had been taken away under the previous regime. 48. The Association also complained that its members were not given all the rights and benefits that other former specially protected tenancy holders enjoyed, such as the right to purchase the dwelling and to have a permanent lease with a non-profit rent. It argued that tenants who – like all its members – were living in dwellings once expropriated, could not purchase their homes, which were subject to restitution to the “previous owners”, whereas all other previous beneficiaries of specially protected tenancies had that possibility. In addition, “previous owners” of flats returned in denationalisation proceedings were selling them to third parties but not to the tenants, who were facing eviction proceedings. In the Association’s view, the restitution of the dwellings to the “previous owners” deprived the tenants of the right to purchase them and resulted in differential treatment between the two groups of tenants on no reasonable ground. 49. The offending legislation allegedly also failed to provide for proper compensation for the money the tenants had invested in the maintenance and improvement of the dwellings. Moreover, the Association complained that its members did not have locus standi in the denationalisation proceedings which were to rule on the ownership of “their” dwellings. It also criticised the constant increases in the non-profit rent, which in its view was approaching levels comparable to the rents charged on the free market. The Association concluded that privatisation and restitution of previously expropriated dwellings should be achieved by paying compensation to the “previous owners” of the dwellings rather than returning their property, as recommended by Resolution 1096 of the Parliamentary Assembly of the Council of Europe (see paragraphs 87-89 below). It requested that an independent expert commission be set up, that the SZ and the ZDen be amended, that the restitution of property as such be stayed and that the National Housing Programme be supplemented. 50. On 2 April 1998 the Government adopted a decision concerning the petition, with an accompanying opinion. The Government did not agree that tenants were the victims of transition. Regarding the right of previous holders of specially protected tenancies to purchase the dwellings, different factual circumstances had to be taken into account. While in some cases the dwellings had been built with State funds, in other cases they had been expropriated from private owners. These “previous owners” might also claim restitution of, and therefore property rights over the dwellings. This meant that they had priority over the former holders of specially protected tenancy rights. In conclusion, as far as the purchase of dwellings was concerned, the two categories of previous holders of specially protected tenancies were not in a comparable position. 51. On the other hand, with respect to other rights and benefits the tenants had been put on an equal footing with all those previous holders of specially protected tenancies who decided not to purchase their dwellings but to rent them on favourable terms. They were all granted the right to rent the dwellings for an indefinite period for a non-profit rent, even after the “previous owner” took over the flat. This had been upheld by the Constitutional Court. 52. The Government also disputed the objection that the impugned legislation did not take into account the investments the tenants had put into the dwellings. They referred to the relevant provisions of the SZ, which granted former specially protected tenancy holders the right to compensation. The Government pointed out that the needs and expectations of the tenants had to be reconciled with those of the “previous owners” of the dwellings, as well as with the limited financial capacities of the State to provide them with housing on favourable terms. They further acknowledged that the tenants, especially elderly people, encountered certain difficulties in their new situation (pressure to move out or to pay a higher rent), but such circumstances had no foundation in the existing legislation. The Government supported the establishment of an expert commission with representatives of both tenants and “previous owners”. It appears that no other authority took a position with respect to the petition. 53. On 8 May 1998 the Association instituted proceedings against the Government with the Ljubljana Administrative Court, for not initiating the necessary amendments to the SZ and the ZDen. In their view, the legislation in question breached the tenants’ rights under the Constitution and the European Convention on Human Rights, and disregarded Resolution 1096 of the Parliamentary Assembly of the Council of Europe. In particular, the Association repeated the complaints from its petition that the dwellings should not be returned as such, that the tenants had only a limited right to purchase the dwellings, that they did not have locus standi in the denationalisation proceedings and that their investments in the dwellings had not been taken into account. 54. On 3 March 1999 the Administrative Court rejected the complaints, holding that the Government’s decision and the accompanying opinion did not qualify under Section 1 of the Administrative Disputes Act, as then in force, as an individual act or an action infringing the individual’s constitutional rights. 55. On 6 April 1999 the Association appealed to the Supreme Court. 56. On 20 September 2001 the Supreme Court dismissed the appeal and upheld the Administrative Court’s decision of 3 March 1999. 57. On 8 March 2002 the Association lodged a constitutional complaint with the Constitutional Court, challenging the Supreme Court’s decision. It repeated the arguments from the petition and the subsequent court proceedings, and argued in particular that the legislation in issue deprived the tenants of their property and homes. 58. On 11 February 2004 the Constitutional Court rejected the complaint. It upheld the decisions of the Administrative Court and the Supreme Court that the relevant governmental decision and the accompanying opinion could not be challenged in administrative proceedings. In the Constitutional Court’s view, they merely reflected the Government’s policy position with respect to the petition lodged, and were therefore not subject to court review. 59. On 8 March 2002, at the same time as the constitutional complaint (see paragraph 57 above), the Association, representing a group of previous specially protected tenancy holders, also lodged a constitutional initiative for review of the constitutionality of the SZ, the ZDen, the Administrative Disputes Act 1997 and the relevant judicial practice, and their compatibility with international law binding on Slovenia. 60. On 25 September 2003 the Constitutional Court dismissed the constitutional initiative (decision U-I-172/02-40). It acknowledged that the Association, relying on a number of court proceedings initiated by its members, had a legal interest in challenging the existing legislation since it directly interfered with their rights, interests and legal position, but it ruled that the Constitutional Court did not have jurisdiction to examine the compatibility of the disputed legislation with the provisions of the Constitution of the Socialist Republic of Slovenia, which was no longer in force. 61. Relying on the case-law of the European Court of Human Rights, the Constitutional Court went on to say that in any event the specially protected tenancy could not be interpreted as an absolute right to property under Article 1 of Protocol No. 1, guaranteeing the acquisition of a particular dwelling. Nor could it be said that the claimants’ right to a home had been breached under Article 8 of the Convention, since they could remain in the dwellings, with a contract of unlimited duration and for a non-profit rent. In addition, after the tenant’s death, the right of a spouse or a person having lived with the tenant in a permanent relationship, or an immediate family member living in the flat, to take over the tenancy was also guaranteed (Section 56 of SZ). 62. The Constitutional Court had held in its previous decisions that the specially protected tenancy from the former system was a right to be protected by the rule of law. However, in the new system, this right encountered other rights. In transposing the system of specially protected tenancy relations into lease relations, the legislator could not fulfil all the expectations arising from the former socio-economic and political system, which was founded on social property, and not on private property. The rights from the former system could not have remained unchanged and untouched. 63. The State had undergone political and social changes, including the transformation of social property into private property. The challenged legislation and the transformation of specially protected tenancy into simple tenancy rights should therefore be understood as part of these changes. Tenants’ rights were now limited by the rights of the “previous owners” of the dwellings. 64. In particular, the tenants’ right to purchase now competed with the property rights of the “previous owners” of the dwellings. In this conflict of rights, priority was given to the property rights of the “previous owners”. With this argument the Constitutional Court also dismissed the objection that tenants who could not purchase their dwellings because they were subject to restitution to the “previous owners” were discriminated against in comparison with all other tenants, who had the right to buy their dwellings. It held that the factual circumstances of the two groups of tenants were profoundly different. While the rights of one group of tenants had to be reconciled with the rights of the “previous owners” of the dwellings, no such limitation on the rights of the other group of tenants was necessary. The tenants also had a pre-emption right in the event that the “previous owner” decided to sell the dwelling, which could be entered in the land register and was weaker only than the pre-emption right of a co-owner (Section 176 of the SZ-1). 65. As for other rights and benefits, including the right to a non-profit rent, the Constitutional Court considered that all the previous holders of occupancy rights had been placed on an equal footing, regardless of the origin of their dwellings. These rights, in turn, were comparable to the level of protection granted to tenants in other States. General allegations that the legislative definition of the non-profit rent was inappropriate were not sufficient to warrant constitutional review. 66. The Constitutional Court also dismissed the complaint that the tenants did not have locus standi in the denationalisation proceedings. Inasmuch as the proceedings were decisive for tenants’ rights, tenants did have locus standi. In particular, this concerned the tenants’ right to compensation for any money invested in the dwelling, which could be claimed from the “previous owner”. On the other hand, on the basis of such financial investments, the tenants did not acquire a property right or a claim to the property itself in the denationalisation proceedings. 67. As to the restitution to the “previous owners” of expropriated dwellings in which tenants were living, the Constitutional Court had already ruled that the relevant provisions of the ZDen were not contrary to the Constitution. Furthermore, the “previous owners” were not free to enter into any lease agreements with the tenants; they merely took over the existing leases the tenants had signed with the municipalities. Finally, the Constitutional Court dismissed the Association’s allegations that Section 1 of the Administrative Disputes Act as then in force was unclear and contrary to the Constitution. 68. On 21 April 2005 the Supreme Court deliberated in a case, brought by applicant no. 6 (Mr Primož Kuret), concerning the right of a family member to demand a new non-profit lease after the tenant of the denationalised flat in question had died. The Supreme Court reversed the case-law and decided that users of denationalised flats could not demand the continuation of a non-profit lease following the demise of the tenant; in the Court’s view, they were entitled only to a lease, and the “previous owner” should be free to determine the amount of the rent without any limitations. 69. Subsequently, a close family member of a deceased former holder of occupancy rights filed a petition for a review of the constitutionality of this new case-law, and a constitutional complaint. In a decision of 7 October 2009 (no. U-I-128/08, Up-933/08), the Constitutional court held that it was unconstitutional to interpret Article 56 of the SZ (see paragraph 23 above) in such a manner that, after the death of the holder of a protected tenancy, the “previous owner” was obliged to lease it to the family members of the deceased for a non-profit rent. It thus confirmed the 2005 decision of the Supreme Court. However, the Constitutional Court did clarify that the spouse or the long term partner of a deceased tenant at the time of the enactment of the SZ was entitled to continue the lease at a non-profit rent. 70. The applicants observed that this case-law allowed “previous owners” to fix an unreasonably high rent, thereby preventing the family members of the deceased tenant (other than the spouse or the long term partner) from continuing the lease. They alleged that from 2009 onwards a mortis causa transferability of the right to lease had de facto been eliminated. 71. As the file contained no specific examples of individual situations, in September 2008 the Court requested the applicants to submit factual information in respect of the amount of the original rent in 1991 and that of the present non-profit rent, the surface area of the flat, its state of repair and its current market value, as well as a chronological overview of the increases in rent and in the statutory minimum wage. 72. In their reply of 9 November 2008, the applicants gave evidence that they were all original former holders of specially protected tenancies or their legal successors. 73. They stated that the first significant increase (of 100%) in the non-profit rent took place in 1995. At that time, its ceiling annual amount was still 2.9% of the value of the dwelling. Further gradual changes were introduced by the 2000 amendments to the SZ (rent increase of 31%), by the Constitutional Court’s decision and by the SZ-1 (rent increase of 23%). The ceiling amount for the annual non-profit rent was currently 4.69% of the value of the dwelling. They stated that a further rent increase of 43% was foreseen in different municipalities. The non-profit rent paid at the time by the tenants equalled 434.5% of the non-profit rent fixed in 1992. 74. However, the applicants stated that factual information provided by them showed that the non-profit rent in Ljubljana and Maribor was still relatively affordable, as it was below the market rent (see annex 1 – “Table summarising the situation of the individual applicants”). The situation was allegedly different in the countryside, but no concrete information was provided. In certain cases there was no historical data as the documentation no longer existed because of the lapse of time and because the tenants had moved. 75. In 2008, the average market price of property per square metre in Ljubljana city centre ranged between 2,000 and 3,000 euros (EUR) and in Maribor it was between EUR 1,000 and 2,000 per square metre. As to the statutory minimum wage, in 1991 it amounted to 6,000 Slovenian tolars (SIT, nominally EUR 25.03). In August 2003 it was SIT 110,380 (nominally EUR 460.6) and in July 2008 EUR 566.53. 76. The applicants also stated that they had made significant financial investments in the renovation and refurbishment of the dwellings. 77. Five applicants (Mr Kuret, Ms Berglez, Ms Bertoncelj, Mr Milič and Ms Jerančič) had been forced to move out. Mr Kuret was the only applicant who pursued the legal avenues up to the Constitutional Court. His constitutional complaint was dismissed on 6 July 2006 for lack of legal interest, as he had reached a settlement with the “previous owner” on 17 March 2006 (see annex 1 – “Table summarising the situation of the individual applicants”). 78. The other applicants, who still occupied the dwellings, were allegedly under pressure, either through court proceedings or through correspondence with the lawyers representing the “previous owners”. They complained about various forms of chicanery and intimidation. All the applicants had had to seek legal advice. 79. The parties also gave details as to the method of calculating the non-profit rent which was introduced by the SZ. Its level might be agreed upon by the parties to the lease contract, but they had to apply the method provided for by the law and not exceed the maximum permitted level of non-profit rent. This was always a percentage (2.9% for dwellings more than 25 years old) of the administrative value of the flat, which was determined by the housing authorities according to the following formula: Value of the dwelling = number of points x value of the point x usable area x effect of size of the dwelling (corrective factor) 80. The rent for dwellings for which tenancy agreements were concluded with the former holders of occupancy rights could not exceed the rent level charged for dwellings more than 25 years old. The values of the point and the correction factor for surface measurements had always been determined by primary or secondary legislation and as such amended several times. As a general rule, the non-profit rent for newly constructed or renovated flats, of better quality and better equipped, was higher than for older, less well-maintained flats. The non-profit rent was also determined in the light of the state of repair at the time the dwelling was allocated to the tenant, that is, before any investment was made. 81. The Government pointed out that the non-profit rent was a cost-based rent covering the economic costs of a dwelling. It did not include taxes to be paid by the “previous owner” and was meant to cover: - the depreciation of the dwelling (to enable the owner to replace a run-down dwelling after a certain number of years – initially 200, then 60); - the cost of the capital invested; - the management of the dwelling; - investment and routine maintenance. 82. Under the 1991 rules, for previous holders of occupancy rights the annual non-profit rent could not exceed 2.9% of the value of the dwelling. The rules were revised in 1995 for ordinary tenants, bringing the percentage to 3.8% for dwellings constructed after 1991. From March 2000 until December 2004, the percentage was 3.81% for dwellings more than sixty years old and 5.08% for dwellings less than sixty years old. For former holders of occupancy rights or persons with whom the “previous owner” was obliged to conclude a lease contract under Section 56 of the SZ (see paragraph 23 above) the percentage could not exceed 3.81%. 83. The Government observed that the new calculation method had been applied progressively over a span of five years; thus, according to them, for tenants of denationalised dwellings the rent, in real terms, had decreased from 2.9% in 2000 to 2.54% in 2004. 84. The Housing Act 2003 brought the value of the maximum permitted annual non-profit rent up to 4.68% of that of the dwelling, and this notwithstanding the fact that a study ordered by the Ministry responsible for the Environment and Spatial Planning had shown that a rent covering all costs of the use of the dwelling should amount to at least 5.63%. A progressive increase in rents was scheduled up to 31 December 2006 (see Section 181 of the SZ-1 and the Government Decree on the method for calculating rents in non-profit dwellings). As a result, for dwellings less than sixty years old, the non-profit rent was immediately decreased by 8%, from 5.08% to 4.68%; for dwellings more than sixty years old (which were the majority), it increased by 21.80%, from 3.81% to 4.68%; lastly, in the approximately 2,500 denationalised dwellings it increased by 84.20%, from 2.54% to 4.68%. On 1 January 2007, the annual non-profit rent in all buildings amounted to 4.68% of the value of the dwelling. It did not increase any more after that date. 85. The Government also emphasised that the value of the “housing point”, which was based on the annual average price per square metre of constructed non-profit dwellings divided by 320 (average number of points for newly constructed non-profit dwellings), increased from 1.88 German Marks (DEM) in 1991 to DEM 3.75 in August 1996. Non-profit rents increased no further in real terms, but they did increase in relation to the DEM. For dwellings rented after the implementation of the new calculation method introduced in 2000 the value of the point was fixed at DEM 5.39 (and later at EUR 2.63). Each dwelling was given a certain number of points which would take into account the time and quality of construction, the type and quality of joinery elements, floorings, walls, fitted installations, the type and availability of common areas, thermal and acoustic insulation and any negative impacts on the use of the dwelling. 86. According to the SZ-1 (Section 118(8) and (9)) the location of the dwelling could also affect its value. The effect of the location on the level of the non-profit rent could be determined by each municipality and might amount to a maximum of 30% of the rent; however, at the time of the Government’s observations, only two municipalities (Nova Gorica and Mengeš) had adopted provisions in this respect; this meant that in all other municipalities, the location of the building did not affect the rent.