President Vladimir Putin: Good afternoon dear colleagues!
I would like to thank Mintimer Sharipovich for the opportunity to meet here, in Kazan’s Kremlin. It is beautiful here. I just looked at the city and Kazan is developing quickly. It is developing at a very good rate, and this is pleasant to see.
I hope that my colleagues also became acquainted with the various technologies involved in providing public services. These are effective and quite simple technologies, and there is nothing new here. Well, there is something new but something that has already been known for along time. Since it is not difficult to construct such centres to provide public services. As I said, we finally reached the housing office and it was pleasant to see – and I believe that you had the same feeling – even though there was nothing special there. It is an ordinary building with a fibre optic cable. A person can get to any place in the city, be quickly served, and receive instant service with regards to all questions, all problems that they might have. Not bad. I would very much like to see such an achievement expand into other regions and cities of the Russian Federation.
At the same time, the issues that we have gathered to discuss – housing policy and the reform of communal services – are ones that we have discussed before. And I am confident that in view of the importance and complexity of these problems we shall certainly return to them again.
Today we will examine the whole range of topical problems in housing policy. We will discuss mechanisms to resolve problems associated with dilapidated housing and modernising available housing, as well as increasing the effectiveness of social support that housing and communal services provide. In particular, I would like to hear your opinions on how justified the transition from in kind to financial subsidies in the housing and communal services has proven to be. And here, in Tatarstan, this transition is in practice complete and this mechanism is now working.
We already spoke about this and I have also publicly spoken about how one of the main problems in today’s Russia is the large difference in income between various groups of the population. This is one of the sharpest social and economic problems of today’s Russia. In connection with this and in reference to the theme that we are discussing today, providing low income population with housing is a very important issue.
We just talked about this and a great deal is changing, changing for the better, but there is still a large category of citizens that are not affected by these changes and problems are mainly concentrated in the housing sector.
We were initially guided by the idea that housing and high-quality communal services should really become accessible, including to people with very different income levels. And the steps that we have already taken within the national project, Housing, enabled us to increase housing construction and lower mortgage rates. Last year the number of such credits that were given out increased significantly.
But let us be frank: mortgages remain inaccessible to many. According to experts, only 10 percent of Russian citizens have the opportunity to use a mortgage credit to purchase a house or an apartment.
Moreover, the availability of housing for so-called low income groups is decreasing. This is also due to the fact that cheap housing has been simply wiped off the market. Along with this, about two million families live in dilapidated and dangerous dwellings. And I would like to emphasise that for many of these people the prospect of resolving their housing problems simply does not exist today.
The development of new housing does not compensate the general ageing process that available housing is undergoing. The prospects for a major renovation of current housing has also sharply become worse. We just talked about this and Minister Vladimir Anatolevich Yakovlev drew attention to this and also expressed his concern.
Debts and problems have accumulated here over the years and, in practice, lain on the shoulders of the municipalities, and the municipalities have not yet received sufficient resources for maintaining available housing and infrastructure. However, this responsibility has already been shifted else where.
Along with this, real changes in housing and communal services are either not proceeding or proceeding very slowly. Despite the increase in rates, almost 60 percent of communal enterprises remain unprofitable. And the level of services that they provide is far below today’s requirements.
Forming a national system to oversee and supervise building and construction has not be completed. And this means that, in practice, there is nothing that prevents companies from subscribing to unfair practices in the housing sphere. We also have many problems in the process of fully establishing a new institution such as the association of property owners. Wherever they develop then, in general, they operate successfully.
It is obvious that solving this interlinked housing and communal services problem can only be done through market mechanisms. Only through effective work by all authorities and by providing support for various types of civil self-management.
I shall emphasise that all the decisions that we take in this sector must be both efficient from an economic point of view and – I would like to emphasise this especially – socially responsible. The state can not allow itself to withdraw from the housing sector, despite the fact that the market will have priority. And this implies that the state must actively create a civilised market environment in this sector. The government cabinet, heads of regions, and branches of local self-government should be responsible for ensuring that the necessary reforms are carried out in a timely way. They must provide financial and moral support to those who are successfully engaged in this endeavour.
With a view to resolving the problems in the housing sector we must first of all think about increasing the amount of construction and significantly increasing the supply on the housing market. Second, we must balance this market’s structure. It is no secret that it is now more interesting for builders to deal with expensive, or as we often say in Russia, elite real estate. And this affected prices.
We need effective mechanisms to stimulate construction companies to work with large-scale, inexpensive housing. And as far as I know, the State Council working group has concrete proposals on this account, including creating a special financial institute and updating the federal target programme entitled Housing. I would ask that we discuss these issues in more detail today.
In addition, it is important to continue our policy designed to eliminate monopolies from construction markets. And also to remove administrative barriers and superfluous costs that directly favour the creation of an unhealthy economic environment. And, put another way, simply the absence of any kind of market framework often hinders development in this sector.
I repeat that is necessary to analyse all possible options to lower the cost of housing. It is obvious that the price per square metre includes important expenses that the builder has made on infrastructure, the construction site and the necessary documents. But if we want to be honest, this price also includes another sort of opaque expenses, namely criminal surcharges and payments due to corruption.
Infrastructure is a major issue in this respect, and one that all of us have often talked about either one on one, or with other colleagues from the regions. And very often we talk about the same thing, namely the fact that infrastructure is expensive and that there is no money. But these problems are being solved in certain regions. Here, for example, there were 16 thousand square metres the year before last and, in my opinion, this number has remained the same today. Why is that? The appropriate mechanisms have been found by the responsible people.
Further. Effectively subsidising the interest rates, co-financing infrastructure and providing credit guarantees for builders should also result in lowering the housing prices.
Another promising option is the expansion of low-rise housing construction. This type of housing is more convenient for many people than high-rise apartment blocks. Moreover, according to experts, large-scale low-rise housing will significantly lower housing prices and render housing more accessible to low income groups, as one might expect. One’s own house, its price and the cost per square metre are less in low-rise housing then in a high-rise building. I know that the corresponding and necessary legislative work has begun.
And, finally, technological developments for the construction and building materials industries should influence prices. First and foremost, regional and local capacities should be involved here. Today we also spoke about how the act of bringing clay if bricks are not sufficient is both expensive and silly. In almost every region the necessary capabilities exist – in practically in every one.
Along with increasing construction it is also necessary to develop the traditional mortgage system and other forms of credit designed for citizens with low incomes. And similar attempts have already taken place in Russian regions, including here, in Tatarstan, where there are various types of social mortgages. Programmes such as those for young families, for example, can have serious advantages, including by subsidising an initial payment, a flexible mortgage rate, and a long-term credit. Nikolai Vasilevich has told me a lot on this account, and these forms are developing successfully in the Republic of Tatarstan.
In many countries the cumulative system of purchasing housing, through so-called construction savings banks has worked well. And in some European countries up to two thirds of housing are purchased through these mechanisms.
Unlike normal savings banks, these banks do not require guarantees for mortgaged real estate. Along with this, investors receive steady governmental subsidies. Of course, this is also required here.
I think that we can provide the corresponding legislative base within the deadlines we have set so that similar mechanisms can start to work Russia. And this will be more effective and cheaper than simply social housing.
And it is certainly true that within the whole range of sectoral, organisational and legal issues, a consistent state policy designed to increase the incomes of citizens and diminish poverty in the country is extremely important. And I am not saying anything new here, the struggle against inflation is obviously important because otherwise incomes will simply diminish.
In summary I shall note that the analysis presented by the working group convincingly proves that progress in housing policy, as well as in modernising the housing and communal services, exists mainly in those territories where the authorities are actively looking for local resources and harmoniously cooperating with business and investors. And where they generally show initiative and persistence.
I would ask the State Council Presidium members present here to discuss these results in detail. And to develop concrete proposals based on the conclusions of this discussion.