Alexey Chadayev. Russian dream

Russian dream
Why mortgages can become a scam

Alexey Chadayev

Publication date: August 19, 2004

One of the topics of recent weeks in the print media is mortgages, the intricacies of which are gradually becoming accustomed to all potential players: banks, insurers, officials and “responsible tenants” themselves (in the sense of future purchasers of housing under mortgage schemes). Bankers complain to the press about the underdevelopment of mortgage risk insurance. Insurers stood up in anticipation of a new golden shower (after the introduction of the “motor citizen” they clearly developed a taste for this kind of climatic phenomena). Officials report on how mortgage programs will help solve the problem of doubling GDP. “Tenants” are doing their best to save cash in tin cans for future housing, groaning over the fact that prices per square meter are rising faster than the contents of the cans are filled.

However, neither side seems to doubt the absolute benefit of the mortgage loan idea. The discussion is only about how to organize it more correctly, so as not to be robbed, evicted, deceived and left without money. But no one seems to dispute the thesis that if there is any locomotive of economic development, it is mass affordable housing under a mortgage scheme.

Meanwhile, a mortgage is a very insidious thing, especially if you take it not by itself, but in a broader economic context. One of its main drawbacks, which for some reason escapes wide public discussion, is the complex relationship of housing ownership. The same insurers, for example, are already accustoming us to such exotic forms of insurance as “ title insurance ” - when the insured event is the loss of the owner’s status as a result of a court decision. But this is only the most obvious of the pitfalls.

There are more invisible ones - and more significant ones. For example, the fact that until the entire amount of the mortgage loan is paid off, the housing de facto remains the property of the credit institution, that is, the bank, makes it very difficult to change such housing. This means that a person who bought such an apartment becomes tied to the area and city where the apartment is located for many years. And therefore, we will have to “handle” the ideas of increasing labor mobility, developing new territories, redistributing the countrywide geography of labor resources, all sorts of “Eastern Siberia” and new cities, etc., etc. People will find themselves tightly tied to old industrial centers with their acute imbalance in the labor market, inability to meet modern living standards, poor infrastructure and ecology. And in addition, they are burdened with the need to earn money to repay the loan.

And it’s a lot of money, because prices for new housing in Russia as a whole are greatly inflated. But prices are not so bad - the main thing is that the cost of construction itself is unreasonably high. And not only because of the high cost of “hardware” - building materials, communications, personnel, etc.; All these are more or less solvable problems. Various indirect costs turn out to be much higher.

Moscow, of course, is on its own - but here, in fact, it is simply most pronounced. Actually for bribes, kickbacks and any additional load per sq.m. For any object in Moscow it costs an average of 150-300 dollars - just to collect all the necessary permits. On a general scale, with an annual volume of 7 million meters of commissioned space, the resulting market is worth 2 billion dollars. In addition, housing developers are obligated to donate every third meter rented to the municipal real estate fund - which increases the price of apartments by exactly 30%. They are also obliged to develop the surrounding areas at their own expense. This arrangement is also virtually a monopoly thing, with truly fantastic pricing. Thus, planting one five-year-old seedling in Moscow costs 2,200 rubles - this is the official price. And home buyers ultimately pay for all this.

What happens? In his youth, having created a young family, borrowed some money from parents and friends, a person makes a down payment and receives a new apartment under a mortgage scheme - bearing in mind the fact that all these kickbacks, bribes and seedlings are also included in the final price, just like bank interest. And almost his entire active life he pays the price of this apartment along with interest and personal debt. And in the end, towards the end of his life, he gets happiness - he becomes the full owner of an apartment in a building that is already 15-20 years old and the price of a square meter in which is significantly lower than it was 15 years ago. The bank gains a small gain by earning its rightful interest. The big winners are the officials, all those inspectors, permits, suppliers and landscapers. The winners are the insurers, for whom a whole series of new markets have been created by administrative arbitrariness. There is only one loser - the “responsible tenant” himself.

Mavrodi and the creators of scams are resting. It’s hard to even imagine a more sophisticated and cruel scheme for enslaving people - after all, you’ll have to work for your uncle all your life. Moreover, people, as usual, go for it themselves, voluntarily and with song. Still: “latent demand” for new housing, according to some estimates, is 80% of the entire urban population of Russia.

In order for the mortgage scheme to work for what it is promoted for, that is, to improve people’s well-being, it turns out to be impossible to get by with economic measures. A large-scale “cleansing” of the Luzhkovs and Luzhkovism as a phenomenon is necessary. In this sense, when they say that we have low taxes, they deceive us: Russia has the highest administrative burden on the economy. Only this “burden” is borne not by the tax office, but by the “seedlings”, and not by individual entrepreneurs, but - indirectly, through the same high housing prices - by each of us.

But even if it is possible to achieve a reduction in taxes “on seedlings” in one way or another, this will not solve the problem of labor mobility. Therefore, making a base rate on a mortgage as a way to solve the housing problem is hardly justified. In parallel with mortgages, a market for cheap rental housing should emerge, universal and easy to use, the same everywhere - so that a person moving from Vorkuta to Vladivostok would not feel much of a difference.

In this case, the life pattern of “a young man pondering his life” looks completely different. In his youth, taking advantage of his mobility, he can quickly change his place of residence, earning money where it is most convenient. At the same time, his family’s budget should be built in such a way as to pay for rent, make current expenses and save money, preparing for the moment when, at an older age, having reached a certain position in society and wanting to settle where he likes best, he can buy your own apartment. Or - build a house.

This is the “Russian dream”.