| Viktor Khristenko told senators about the coming revolution in the housing market On Wednesday, at Government Hour, Russian Minister of Industry and Energy Viktor Khristenko told members of the Federation Council about measures to develop the affordable housing market. The minister promised that with a successful combination of circumstances, by 2010 the new legislation will allow developing the housing market and increasing the average housing supply for each Russian from the current 19.7 sq. m. meters up to 21.7 sq. meters and reduce the wait for apartments in the queue from the current 15--18 years to 5--7. But the senators had their doubts. It’s not about the adequacy of the forecasts, but about the fact that housing will become affordable.
The 27 bills that have already passed the first reading in the Duma and which Mr. Khristenko presented yesterday in the Federation Council provide that responsibility for creating an affordable housing market in Russia will fall on the regions. According to the minister, changes to housing legislation need to be “supported by specific programs in the regions.” The federal subjects that are most dynamically developing the housing sector will be able to “implement a fundamentally different regional policy.” In addition, regions will have to independently formulate “master plans for urban development.”
It turned out that the housing market is currently developing extremely unevenly in the regions. More than half of all new housing is being built in the ten largest industrialized regions of Russia (the absolute leaders are Moscow, Moscow region, Tatarstan, Bashkiria, Samara and Sverdlovsk regions). In the remaining 79 subjects of the federation, less than half of new apartments are being built in physical terms and less than 40% in monetary terms.
Mr. Khristenko’s thesis about increasing the “regional responsibility” of regional representatives was arousing. Having decided that construction programs were left to the regions, the senators became interested in what principle and with what share of state participation would orders, for example, be distributed among manufacturers of building materials? Taimyr representative Leonid Roketsky asked the minister whether the state itself would decide “which factories will produce concrete and valves.” Viktor Khristenko in response doubted that it was up to legislators to resolve such issues, but consoled the senators that “the government is thinking about it.” And in general, the ministry is thinking big: over the last four years, Russia has moved from importing to exporting construction materials, and manufacturing plants are being built where the industry is developing.
After this, members of the Federation Council suggested that the federal center should concern itself with the development of targeted programs, for example, for the resettlement of people from dilapidated housing and the development of the housing market in subsidized regions. As Viktor Dobrosotsky, Deputy Chairman of the Federation Council Committee on Economic Policy, Entrepreneurship and Property, commented on the situation to the Vremya Novostey newspaper, in many regions there is no housing market as such - since there is no money there in general and municipalities in particular: “It’s funny to talk about that the proposed laws will work in the absence of demand for housing. Minister Khristenko’s report said that today ten regions are building the majority of all housing in the country. We need to raise the rest. But it turns out that we will not be able to raise the rest with the proposed legislation. These 27 bills will somehow improve the situation on the housing market in the same ten territories. And nothing will be solved in depressed regions where there is no demand for housing due to low wages.”
Mr. Khristenko himself believes that the affordable housing market will develop where municipal authorities create certain conditions for this. Also, some of the problems should be resolved by the new Urban Planning Code, which is currently under consideration in the State Duma and is included in the package of bills on the housing market. The code, according to the minister, will reduce the rate of increase in prices for apartments and simplify developers’ access to land plots. It should also promote greater interest among developers in the development of engineering infrastructure (in other words, sewerage and water supply), as well as strengthen their responsibility to home buyers for the quality of apartments. According to Viktor Khristenko, the sale of housing by developers will not be subject to VAT.
Ultimately, according to the head of the Ministry of Industry and Energy, amendments to the legislation will allow by 2010 to increase the share of citizens “who will be able to purchase standard apartments on standard commercial terms” from 9 to 30%. When asked by senators what Mr. Khristenko meant by “standard conditions and standard apartments,” the minister replied: “This means that everyone will choose what they consider necessary for themselves.” Daria GUSEVA |
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