Emergency housing: will the relocatees under the state program be offered to co-finance new houses?

The new investment model will be based on the funds of the new state fund and citizens.

Yulia Suntsova, Natalya Seybil

Rosstat data show that in Russia the total area of emergency housing is increasing every year, while the proportion of those who can improve their living conditions with the help of the state is declining.

At the same time, officials assure that in most regions the resettlement program is ahead of schedule, and supposedly should be successfully completed in 2023.

In fact, this seems impossible, emergency housing appears faster than it is settled.

20 years ago, 9.5 million sq.m. were recognized as emergency in Russia. housing, in 2015 the figure increased to 19.6 million sq. m., as of May 2021 it exceeded 26 million sq. m. m.

In 2000, the share of emergency housing was 0.5% of the total housing stock in Russia, today this share has increased by almost 1.5 times. In the same 2000, more than 250,000 families received new housing under the resettlement program. By 2021, according to the latest data from Rosstat, the number of families that have improved their living conditions has decreased by 2.5 times.

According to the estimates of the Housing and Utilities Reform Assistance Fund, by 2030 the area of emergency housing will increase by one and a half times compared to 2020.

The growing crisis in the construction industry, the almost double rise in the cost of building materials and work, call into question the further implementation of the federal program with already approved estimates and contests played.

The problem is brewing with contractors, contract executors. Due to the decrease in the issuance of mortgages, consumer demand has fallen by almost 50%, so it is more difficult for builders to plan new construction.

"According to the resettlement programs, the money goes to the regions from the federal budget, and they really come. Then there is a tender system for the right to develop the territory, developers participate in tenders for the right to conclude a contract. The problem is that between participation in the tender and the start of construction, 1.5-2 years or more can pass. During this time, prices accelerate, and this applies to any tenders now. The problem arose back in the coronavirus years: the tender was won, but it is impossible to fulfill it, because the construction costs during this waiting time for the start become higher than the state pays under the contract", - says Artyom Tuzov, Executive Director of the Capital Markets Department at Univer Capital.

Revision of the cost of tender contracts, additional payments from the state for the execution of contracts in changed conditions - all this practically does not work. All these recalculations are a rather complicated story that attracts the attention of law enforcement agencies, which begin to look for collusion and corruption, so officials are reluctant to do so. The official does not want to sit in checks for half a year on one contract. Thus, we get: if materials rise in price by 40%, no marginality in any sector covers these costs. What does a builder do? So far, he does not know what will happen tomorrow, whether the money that will come from the state will pay off his purchases of materials, moreover, with a guaranteed profit. And if he does not know, he does not participate in the tender, the expert emphasizes.

Developers in general are already reporting a decline in housing construction. According to the results of August 2021, the commissioning of new housing increased in annual terms by 26.4% against almost 32% in July and 35% in June.

The rate of commissioning of housing from housing developers will definitely decrease. But this will not happen this year, but in 2023-2024. Now houses are being completed that were sold in 2020-2021, then there was a boom in sales due to the introduction of escrow accounts. But further construction is a "hanging issue", if the Central Bank does not reduce the key rate to 10%, something may not be completed yet. The construction of houses for migrants is the same new buildings, the same developers. Developers loved such projects, because the construction is fully financed by the state, and they receive their profit by increasing the number of storeys of the settled house, that is, their profit is as many commercial floors as they like in addition to those where residents will be settled under the state program, - experts comment on "NI" .

For some time, it will be possible to travel on old stocks of building materials, and the final cost per square meter of housing can be partially balanced by falling metal prices, market participants comment.

- Metal prices fell to the level of the beginning of the year, rebar even went into prices at the end of 2020. Part of the tenders can be tried to be executed due to this fall. We now have an oversupply of metals due to the fact that metallurgists have lost exports to Europe. While logistics does not allow redirecting volumes to other countries, because of this, there is a temporary oversupply in the domestic market. Among other factors is the lockdown in China, which also reduces demand. But this only applies to metals. Approximately the same situation will be with lumber - Europe plans to abandon them at the end of the third quarter. But housing construction is not only metal and lumber, but also concrete and cement. Do not forget that inflation flows into the cost of materials. What will come out of all this in a complex is not yet clear, - market participants note.

Currently, until 2025, emergency housing stock, recognized as such until January 1, 2017, is being settled. According to the current federal project "Ensuring a sustainable reduction of uninhabitable housing stock", it is planned to relocate about 530 thousand people from dilapidated housing. The President of the Russian Federation instructed to complete the current queue ahead of schedule - in 2023. However, from 2019 to September 1, 2021, only 3.7 million sq. m. of the planned 9.54 million sq.m.

Officials still maintain that the program will be completed ahead of schedule - a difficult task, but it is intended to be completed by "rolling over" funding from funds pledged for 2022 and beyond.

Further, after this stage, the next stage should begin to resettle in the regions - 663 thousand people out of 11.7 million square meters. - housing recognized as emergency before January 1, 2021.

However, it is already clear that not all regions will cope with the set goal - territories with large volumes of the emergency fund "tail" are moving to 2024.

"There are six such regions: Yakutia, Perm Territory, Arkhangelsk, Samara, Sverdlovsk and Kemerovo regions. Another four regions - Tyva, the Jewish Autonomous Region, Leningrad and Omsk regions - have a serious deviation in schedules, and there is also a risk of switching to 2024", - said Konstantin Tsitsin, general director of the Housing and Utilities Reform Assistance Fund (Housing and Communal Services Fund). The Republic of Tuva, for example, has the lowest percentage of resettlement - only 16.4% of families moved out of emergency housing.

Even more difficult is the situation with the "dilapidated fund", which used to be at least three times more than the "emergency" one. In 2016-2017, there were about 65 million sq. m., later the concept itself was excluded from the legislation and replaced with “housing of limited working capacity”. Currently, a register of housing with wear and tear of more than 70% is only being created, and the scale of the disaster has not yet been determined. Officials plan to partially reconstruct such housing, and partially to relocate.

“Slowness” of regional authorities is a huge problem. In the subjects of Russia, they are in no hurry to recognize housing as emergency, even if it is such in all respects. In addition, in order to recognize the house as emergency, the tenants themselves must show remarkable initiative. The procedure is greatly complicated by the fact that the owners of an apartment building, not being experts in the subject, must provide a lot of “evidence” of the unsuitability of the premises for living, and they must act as a united front. Officials, in turn, have their own complex selection system, aimed primarily not at helping people, but at saving budget funds.

The annual increase in the emergency fund alone in the country is 2 million square meters, and the problem seems to be endless.

Recently, however, officials have started talking about the need to change the approach to solving the problem of old housing.

When the program first started, there were more public emergency housing than private housing. Now the proportions are beginning to change, and they want to continue to support the program, including through extra-budgetary sources and personal funds of citizens.

They plan to "change the approach" by introducing a mechanism for the integrated development of territories (CRT). According to these projects, the volume of housing built can be 20 times higher than the volume for the needs of the “settlers”. According to the KRT, the state corporation Fund for Assistance to Housing and Utilities Reform (Housing and Communal Services Fund) can finance only up to 25% of resettlement. The possibility of introducing preferential mortgages for self-resettlement of residents of emergency houses is also being considered.

"Private investment projects could be the most effective way to solve the problem of dilapidated and dilapidated housing in Russia. However, if you look through the eyes of investors, in the current realities there is practically no economic effect for them. Investing in the reconstruction of housing, for example, is beneficial for the regional authorities, it is beneficial for the migrants themselves, but not for the investor. The balance of interests can be achieved by introducing various kinds of benefits, programs and other things that are sufficiently developed abroad. In Russia, for the investor himself, financing these projects is unprofitable, since there is no return on the reconstructed building and such innovations cannot be expected. In addition, the high cost of building materials, a high percentage of corruption, the presence of one-day construction companies, etc. - all these factors create a lot of obstacles for the work of an effective investment model in the field of dilapidated and dilapidated housing", - says lawyer Victoria Danilchenko.

Thus, investor support is needed to achieve a balance of interests.

Meanwhile, hundreds of thousands of people in Russia live in terrible conditions, at risk to life and health.

It's worth reminding that at present only those whose house was recognized as emergency, that is, unsuitable for life, are being resettled before January 1, 2017. At the same time, many cannot get the authorities to adopt the appropriate resolutions for their homes at all.

Someone, hoping for help from the state, has been waiting in lines for resettlement for years.

Ghost houses - without hot water and heating, with sagging roofs and floors, with old dangerous wiring and leaking walls, are often destroyed even before the residents are relocated.

In August 2021, the wall of an emergency house built in 1917 collapsed in Tambov - by a lucky chance, no one was hurt.

In July 2017, in Petropavlovsk, a whole entrance of a two-story house collapsed a few days after the resettlement of people.

In October 2021, the ceiling collapsed on the residents of a house in Ufa - it could not withstand the downpour. The building was declared emergency back in 2013, but no resettlement measures were taken.

In October 2021, a ceiling slab collapsed in a communal corridor in Kursk. Children were playing at the scene of the accident, a few minutes before the accident they managed to escape by a lucky chance. The house at that time was not even recognized as emergency.

In the fall of 2021, in Yaroslavl, residents of an emergency building were asked to enter their apartments through a window in the entrance, because the flight of stairs was completely destroyed.

In April 2022, the outer wall of an emergency residential building collapsed in Izhevsk.

There are many such cases in Russia. But even tragedies with human casualties do not force officials to stir.