CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 12 juin 2014

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padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom } .sB7FB9D9B { border-style:solid; border-width:0.75pt; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom } .s70B41AB9 { border-top-style:solid; border-top-width:0.75pt; border-left-style:solid; border-left-width:0.75pt; border-bottom-style:solid; border-bottom-width:0.75pt; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom } .s790D6B17 { border-top-style:solid; border-top-width:0.75pt; border-right-style:solid; border-right-width:0.75pt; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom } .s256014D3 { border-top-style:solid; border-top-width:0.75pt; border-right-style:solid; border-right-width:0.75pt; border-left-style:solid; border-left-width:0.75pt; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom } .s309031D4 { border-top-style:solid; border-top-width:0.75pt; border-left-style:solid; border-left-width:0.75pt; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom }       FORMER FIFTH SECTION               CASE OF BERGER-KRALL AND OTHERS v. SLOVENIA   (Application no. 14717/04)       JUDGMENT   This version was rectified on 26 June 2014 under Rule 81 of the Rules of the Court           STRASBOURG   12 June 2014     FINAL   13/10/2014   This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.   In the case of Berger-Krall and Others v. Slovenia, The European Court of Human Rights (Former Fifth Section), sitting as a Chamber composed of:   Mark Villiger, President,   Angelika Nußberger,   Boštjan M. Zupančič,   Ganna Yudkivska,   André Potocki,   Paul Lemmens,   Aleš Pejchal, judges, and Claudia Westerdiek, Section Registrar, Having deliberated in private on 28 May 2013, 18 February and 13 May 2014, Delivers the following judgment, which was adopted on the last ‑ mentioned date: PROCEDURE 1.     The case originated in an application (no. 14717/04) against the Republic of Slovenia lodged with the Court under Article   34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by ten Slovenian nationals, Ms Cornelia Berger-Krall, Ms Ljudmila Berglez, Ms Ivanka Bertoncelj, Ms Slavica Jerančič, Ms Ema Kugler, Mr   Primož Kuret, Mr Drago Logar, Ms Dunja Marguč, Mr   Dušan Milič and Ms Dolores Zalar (“the applicants”), on 15 March 2004. 2.     The applicants were represented by the Čeferin Law Firm, practising in Grosuplje. The Slovenian Government (“the Government”) were represented by their Agent, Mrs   V.   Klemenc., State Attorney. 3.     The applicants alleged that the Housing Reform had deprived them of their possessions and homes, that they had been discriminated against vis-à-vis other categories of tenants, that they did not have access to a court to challenge the alleged infringement of their rights and that they did not have at their disposal any effective legal remedy. 4.     By a decision of 28 May 2013, the Court declared the application admissible. 5.     The applicants and the Government each filed further written observations (Rule 59 § 1 of the Rules of Court) on the merits. In addition, third-party comments were received from the International Union of Tenants, which had been given leave by the President to intervene in the written procedure (Article   36 § 2 of the Convention and Rule 44 § 3). THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 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 ). A.     Relevant background 1.     Socially-owned flats and “specially protected tenancy” in the former Socialist Republic of Slovenia 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. 2.     The Housing Act 1991 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. 3.     The Denationalisation Act 1991 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. (a)     The denationalisation proceedings 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). (b)     Reimbursement of investments 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. 4.     The 1994 amendments to the Housing Act and the three “models of substitute privatisation” 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. 5.     The Housing Act 2003 and further developments 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). 6.     Statistical data 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. 7.     The Slovenian Ombudsman 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. B.     The Association’s undertakings 1.     The “petition” 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