Translated material
Root meters
The city authorities will reserve the priority right of Muscovites to purchase housing
The phrase “indigenous people” literally expands its semantic meaning before our eyes. If earlier this expression was not much different in meaning from the word “aboriginal”, today, thanks to the efforts of the executive branch, it means not just the original inhabitants of any Russian area, but also people who must have an advantage over visitors. Having begun, at the instigation of President Putin, a serious fight against “non-indigenous” in the sphere of market trade, the capital’s officials did not forget about plans long nurtured in the mayor’s office to implement a protectionist policy for Muscovites in housing construction. “Our housing policy must be adjusted so that the emphasis on housing construction is made in favor of the city’s indigenous residents,” Mayor Yuri Luzhkov said yesterday at a meeting of the Moscow government.The mayor had a reason to remember native Muscovites during a discussion of the medium-term three-year program “Affordable Housing for Muscovites.” Presented by the head of the Moscow Department of Housing Policy and Housing Stock, Pyotr Saprykin, the document proposes to decisively divide potential buyers of capital real estate into two categories: those who “have been permanently residing in Moscow for at least ten years” and “non-Muscovites.” Capital officials see the latter as one of the sources of problems for Moscow. Nonresidents, according to Mr. Saprykin, today buy up to 70% of real estate in the capital, and do not always use it for its intended purpose. “ Housing in Moscow today is a profitable business , but for its intended purpose - for living in it - it is not used,” he said. “Therefore, we need to direct development companies to sell housing to native Muscovites.”
Now, according to officials' estimates, the average Moscow family is forced to save for an apartment for ten years, while the mayor's office would like to reduce this figure, called the affordability index, to at least seven years.
The proposals of the housing policy department, which volunteered to protect the interests of indigenous Muscovites, directly affect the interests of the city construction complex, which is more than loyal and friendly to the mayors. Now every developer, for the right to build a residential building on Moscow land and connect it to city communications, is obliged to either provide the authorities with a certain number of square meters or pay their cost. Petr Saprykin said yesterday that protectionist measures could consist, for example, of increasing the city's share in investment contracts for housing construction - twice as much as usual. The developer will be able to return to work under normal conditions and receive compensation from the city budget for the “excessive” 50% of the city share only if he sells his entire share of the apartments in the building to Muscovites who have a ten-year “residence qualification.” Another option he proposed was to reserve 80% of the developer's space for Muscovites. Moreover, the investor will be obliged to sell 30% of them to a buyer in the capital at a price fixed by the municipality, and the remaining 50% - on their own terms, but also to the indigenous residents of the metropolis. “The department is obliged to provide the investor with a list of Muscovites who agree to purchase housing on the investor’s terms within one and a half months from the moment of receiving information from the investor about the start of the sale of residential premises from the investor’s share,” says the document prepared by Mr. Saprykin’s department. And only in the absence of such a register of applicants with Moscow registration will the developer be able to sell apartments to “other persons.”
To avoid the temptation for Muscovites to cash in on their advantage, officials propose using a reservation system for economy-class housing. A Muscovite will be able to exercise the right to purchase an apartment under privilege only once, and besides, the immediate resale of privileged housing will be punishable by a 13 percent income tax.
The construction business, which is loyal to the capital’s authorities, seems to be ready to provide work exclusively in the interests of Muscovites. However, according to the President of the Moscow Construction Union Vladimir Dvoretsky, the percentages and reservation periods voiced by Mr. Saprykin are still alarming. According to him, this may lead to an increase in housing costs. First Deputy Mayor, Head of the Capital Complex of Economic Policy and City Development Yuri Roslyak also stood up for business. In his opinion, by establishing a fixed redemption price for reserved apartments in investment contracts, the housing policy department is “driving investors into losses.”
Mayor Yuri Luzhkov preferred not to enter into disputes between his subordinates for now, but set aside two weeks to finalize the affordable housing program. Mr. Roslyak recommended that his colleagues from the housing policy department reconsider their position during this period. However, Pyotr Saprykin was adamant. “Our proposals comply with market principles and should not cause protest from developers,” he is confident. In his opinion, an investor, by taking part in a tender, deliberately accepts losses that he will incur in favor of the municipality, “but no, someone else will find someone else.”
However, in any case, the program will have to be finalized, but in other areas that Mr. Luzhkov focused on. The mayor supported the idea of creating municipal apartment buildings. The rental market, which in Europe and the United States is comparable in size to owned real estate, in Russia, in his opinion, remains “in its infancy and in the shadows.” According to rough estimates by the mayor's office, about 120 thousand citizens own more than two apartments in Moscow, but only 5 thousand pay taxes on rental income.
In addition, according to Yuri Luzhkov, the coming year 2007, declared the Year of the Child, should live up to its name and provide benefits in improving living conditions to young families waiting for a new addition. Financial support under the Moscow program “Affordable Housing for Young Families” is provided for Muscovites who are expecting or have adopted a child, who are raising a child no more than five years old, and who have three or more children. But the age of 35, which capital officials limit for this category of beneficiaries, seemed too young to the mayor. “The only way to count it is for a couple,” said the mayor. According to Mr. Luzhkov, a “young family” is spouses who are of reproductive age, and such an age limit infringes on the rights of couples in which the husband is significantly older than the wife.