Annual Address to the Federal Assembly of the Russian Federation.Part 3
May 26, 2004
The Kremlin, Moscow
Послание Федеральному Собранию Российской Федерации
26 мая 2004 года
Москва, Кремль
Dear colleagues,
One of the most pressing problems we face today is providing people with affordable housing. This remains a real problem for the majority of people in Russia.
People need decent housing for rest, for work and for starting a normal family. But even the current rise in incomes does not always allow people to buy housing and improve its quality. This is one of the causes of the low mobility that prevents people from moving around the country in search of suitable work.
It must be admitted that very many people still live in dilapidated and unsafe buildings and apartments. Not enough housing is being built and what is built often does not measure up to modern safety and quality standards. Only people with high incomes can afford to buy new housing. The fact that young families are unable to afford housing of their own affects their plans to have children, and it is still quite common to find several generations all having to share the same apartment.
The conclusion is clear. The old methods and approaches, which did not solve the problem earlier, simply do not work today. We should stop deceiving people, forcing them to wait for years and even decades in line for housing. We need to create the possibilities for the bulk of the working population to buy housing on the market, while at the same time ensuring that low-income groups have access to social housing.
The government, regional and local authorities should work towards having at least a third of the population (and not a tenth, as is currently the case) able to buy housing that meets modern standards by 2010. They will buy housing through their own savings and with the help of mortgage schemes.
This means that mortgage schemes must become long-term and affordable for people. In order to prevent the situation when increased demand for housing pushes up prices competitive conditions for housing construction need to be ensured.
What are the steps we need to take here? They are basically well-known. I will name them now.
First, we need to put in place financial mechanisms that will enable people to improve their housing conditions not just through their current earnings and their savings, but also through their future earnings. We need to develop clear legal conditions for long-term mortgage schemes, conditions that will apply to citizens and to the construction companies.
Mortgages should become an affordable solution for people in the middle income group. Of course, we should also develop other forms of financing such as having future homeowners buy a stake in a buildings construction or take part in housing savings programmes. For all this to work, we also must ensure that we have an effectively functioning state system for registration of real estate rights, a credit history bureau and a developed market for mortgage securities. These are the things to be done.
Second, we need to put an end to the monopolies on the construction markets. Russias people are not obliged to pay the cost of the administrative barriers created in the construction sector or to ensure the excess profits of monopolist construction companies. What is needed are measures to reduce construction time and the expenses involved clear-cut rules of municipal land use and construction , simplified procedures for getting all the approvals needed for construction and preparation of the necessary engineering and utilities infrastructure.
Third, guaranteed ownership rights for honest buyers of real estate is a question of principle importance. Real estate deals should be handled through transparent, comprehensible and, also important, inexpensive procedures.
Finally, we must bring order to provision of social housing. Contracts of social renting must become available to those who really need it. Furthermore, we should come up with additional measures to provide targeted support to individual categories of people, in particular young families. Some steps have already been taken in this direction but it is far from sufficient so far. We must increase our efforts in this area.
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