The housing problem of the new stage of development of the housing relations in Russia
Table of contents: The Kazakh-American Free University Academic Journal №4 - 2012
Selutina Larisa, Saint-Petersburg economic university, Russia
Bulgakova Kseniia, Saint-Petersburg economic university, Russia
Since ancient times dwelling has been not only the
center of the private life of a man but also backbone factor of his
environment. Comfortable home is an overriding necessity of every family. When
it’s not satisfied it’s impossible to speak about people’s positive mental and
physical health and, therefore, about their political assessments and about the
desire to work for the benefit of the country.
The housing problem didn’t appear in Russia all of a sudden. Its birth can be relatively dated back to the end of XIX – beginning of XX
century, when the great mass of Russian empire population lived in unacceptable
conditions. Just then, in the beginning of XX century, in 1913 the famous term
“the poverty formula” appeared in Saint-Petersburg. It denoted the poorest
settlements of workmen who lived in the cellars, barns, basements and flophouses
not far from noble, luxurious mansions [6, p. 32].
In 1917 Civil revolution destroyed the institution of
private property. According to the decree of Council of People's Commissars
from December 14th, 1917 "On prohibition of real estate
business", the land and immovable property ceased to be the object of
sale. The management system in housing services was based on the principle of
dual subordination: to the central government authority and local Soviets
represented by the respective executive committees of cities and regions. The
most important resources and the real levers of power were in the hands of the
government which dealt with them via system of departments under the control
and management of communist party.
More than 70 million m2 of housing space
were completely lost during the Great Patriotic War of USSR. 25 million people
found themselves without hearth and home. For example, Leningrad underwent the following
during the siege: 840 enterprises were destroyed, serious damage to property of
more than 3 thousands buildings was caused, 78% of medical establishments were
phased out, 85% of rolling stock of passenger transport and almost ½ of
school buildings. From every 100 m2 of living area 27 m2 had to be rebuilt or repaired.
Postwar years were dedicated to the reconstruction of
industry. That’s why the housing needs of the population have reduced to the acquisition
of one separate room [1, p.7].
Housing policy of Soviet Union was characterized by
balancing approach. At the expense of these organizations the major portion of
flats was distributed free of charge among the persons on the waiting list and
also among enterprise workers, taking part in the house building. Level of housing
and public utilities was low and the housing made just 7 m2 of total acres per capita in 1950. It conformed to the level of housing in 1917 and
didn’t meet the needs of citizens.
The building boom broke out in the country after 1957
resolution of the CPSU Central Committee about the conversion to the standard design
and construction. New cities were appearing along with the objects of municipal
facilities. However, this stage can be described as the stage of extremely
inefficient usage of tight resources, lack of real economic relations between
management system, housing sphere producers and consumers. Authorities of the
country made attempts to improve the construction system in Soviet Union but in
vain, because they had influence only on separate elements of economic
mechanism and didn’t change it fundamentally.
In the end of 80s the decision about the transition
from planned economy to market economy was taken. Organizations began to
function on the principles of self-financing. Public revenues began to be
formed from tax proceeds. The necessity of housing sphere reforming was stipulated
not only by political-ideological but also economic changes in the country.
It is known that market can’t function without the
developed institution of private property. That’s why the question about the
transition from the public domain to private property was inevitable as far
back as at the stage of perestroika, when Soviet Union economy came to grips
with the necessity of gradual transition from single public domain to the diversity
of its forms. At this conjuncture new approaches to the housing problem have
• soviet system of housing distribution has been abolished;
• community facilities were given to the private organizations and
it has resulted in the increasing of utility bills rates;
• population has got opportunity to buy and sell immovable property;
• privatization of housing stock has begun.
• functions of government control of housing sphere have been
In 1991 the law "On privatization of housing stock in Russian Federation" was adopted. It became really a momentous event in the real estate
market. Just then official market of housing buying and selling arose.
Privatization (from Latin "privatus" – private) is the
paid or free process of transferring public or municipal property to the
property of private persons or organizations. Under conditions of market
economy citizens acquired independence in choice of housing and its
acquisition. New housing policy presupposed that citizens should have their own
incomes for the purchasing and building of housing and its maintenance. In
these new conditions the government was obliged to implement support of
disadvantaged population. It was adopted by legislation and fixed in
Constitution of Russian Federation: according to the article 40, stated that
everyone has a right on housing. Low-income people and people in need of housing
are granted with social housing from state, municipal and other housing stocks
for free or at charge [2, p. 74]).
Privatization program has been lasting in Russia more than 18 years and should finish by March 1st 2015.
By the end of 2011 Russian Federation housing stock
made up 3288 mln m2, which includes 2374 mln m2 (72% of
total acres) in urban settlement, 912 mln m2 (28% of total acres) in
the countryside. Total acres of living accommodation per capita in the end of 2011 in Russian Federation was 23,0 m2. It has grown on 19% in comparison with 2000 .
But its growth is partly provoked not only by quantity of housing but also by
population decrease. By the end of 2011 86,3% of housing stock was in private
property, 82,9% of which transited to the citizen’s private property as the
result of privatization.
On the assumption
of the improvement level of the housing stock, by the January 1st 2012 housing stock considered as dilapidated and dangerous was 99,0 mln m2.
It is 1,5 times more than in the year 2000. Its share also increased from 2,4%
to 3,0% (table 1).
To some extent,
the problem of ramshackle housing stock can be solved by its complete overhaul
and reconstruction. By the beginning of 2011 282,2 thousands blocks of flats (8,8%
of the total amount) needed complete overhaul. During 2011 35,8 thousands of
block of flats were repaired and it’s 12,7% of demand. Repair works of blocks
of flats were carried out with financial support from the Fund of housing and
Table 1- Dilapidated and dangerous housing
stock of Russian Federation
||2011 as % for
|Whole dilapidated and dangerous housing
stock, mln. m2
|Specific weight of dilapidated and dangerous
As a result of privatization, Russia became an owner of high share
in housing property - 86.3% . Free privatization determined present
diffi-culties with the housing market:
• Un readiness of citizens to the legal consequences of
privatization: not all owners of housing can afford maintenance of their
• deep ownership inequality: limited part of the population got
housing of high quality, the floor space of which exceeds social norm few
times, while the majority of the population became proprietors of dilapidated
housing and should pay for the capital repairs;
• purchasing of ready housing by citizens having surplus of cash
assets with the aim of hoarding. no more than 19% of population has enough financial
means to buy housing under existing prices and more than 60% of families are
not satisfied with their housing conditions.
According to the Housing Code, Russian citizens admitted needy in
housing should get housing due to the Municipal Housing Agreement. Municipal
Housing Agreement in Russian Federation is an agreement according to which
residential properties belonging to government and municipal housing stock are
given to citizens in need of housing improvement for permanent residence.
In a number of developed countries housing rights ensuring
responsibility is laid on the government bodies. In other countries government
body solves two problems at the same time. Firstly, it works out terms of
housing provision for every citizen. Secondly, it carries out measures,
encouraging population to buy housing on their own [7, p.11].
Depending on the share of social housing in the total volume of
housing stock, member states of the European Union can be divided into three
1. States with the share of social housing no more than 30%. The Netherlands fell into this category.
2. States with the share of social housing ranged from 15 to 25%.
This category includes: Sweden, Austria, Poland, Great Britain, Denmark, France and some other countries.
3. States with law level of social housing 1-7%. As an example we
can name Belgium, Ireland, Italy, Germany, and Hungary.
This situation is demonstrated in figure 1
In Russian Federation 2,82 mln. families were registered as in need
of housing at the beginning of 2011 (5,1% of total number of families). 181
thousands families (6,4% of registered families at the beginning of 2011) got
residential properties and improved housing conditions for the last year. Total
number of families registered as in need of housing in 2011 reduced on 0,7% and
made up 2,8 million by January 1.01. 2012 .
1. Share of social housing in the total volume of housing stock in some countries
Currently, 10% of Russian citizens are in the housing
waiting list but time of waiting can exceed 20 years. More than 70% of country
citizens can’t afford to buy housing or take a mortgage due to the low incomes.
After approval of Housing Code citizens’ income began to be taken into account
to put them on the list for housing conditions improvement, while previously
they were put on the waiting list on the basis of square meters number for one
person. Thus, more than 60% of population in need of housing conditions
improvement found themselves in difficult situation: a person can’t be considered
indigent due to the level of his incomes but to rent a flat from private
individual is too expensive for him.
The hope for housing problem solving appeared owing to
signed in May 2012 presidential decree on measures of ensuring citizens with
affordable and comfortable housing. The government was charged to ensure
affordable leased housing market grouping and development of noncommercial
housing stock for people with low incomes. In August 2012 the government of Russian Federation approved list of measures for creating of noncommercial lease system. Mr
Minregion’s conception suggests building of noncommercial housing stock. Noncommercial
lease can became effective substitute for existing social rent which doesn’t
meet the needs of population. In total from 2013 to 2030 it is intended to
build 76,3 mln m2 of leased housing, or 1,8 mln of flats with the
area of 42m2 [5, p. 1].
In December 2012 there was developed Project of
Federal law “On introduction of amendments to the Housing Code of RF and
separate legislative acts of RF in the section about regulation of relations in
noncommercial rent of residential properties” (hereinafter referred to as draft
law). Draft law was necessary to correct a deficiency of legal regulations
connected with noncommercial rent of residential properties. Enactment of such
a bill is indispensable condition of mentioned measures realization and
corresponds to assignments, contained in statutory legal acts of the president
and government of RF. The draft law introduced to government for response
offers to add the idea of rent of block of flats to the Housing Code. In such
building all flats will belong to one owner and he will be able to lodge
tenants on the ground of contracts of short-term, noncommercial or social
contract of engagement.
The purpose of this draft law is carrying out of
the following tasks:
- Improvement of general legislative regulation
of rent of residential properties institution, which includes introducing of
institution of rent house and rent relations regulation in such a house.
- Improvement of conceptual
and terminological framework and classification of housing stock depending
on the purpose, in connection with introducing of new housing stock (housing
stock of noncommercial use) and new kind of contract (contract of noncommercial
rent of residential properties);
- Legislative control of noncommercial rent of
residential properties and corresponding new type of noncommercial rent
contract of noncommercial rent will be made for the term from three to ten
years; short-termed contract for temporal housing – for one year or less. One
will have to register in waiting list in the municipality to rent a flat in
such a block of flats. It is not allowed to inherit the tenant-right. One more
difference between noncommercial and social rent is that in the case of
contract repudiation, a family will be evicted without giving other housing.
can give the following definition of the term “noncommercial rent”.
Noncommercial rent is a housing rent for the term from three to ten years,
assigned for people with low incomes but who don’t belong to low-income groups
Noncommercial rent contract of housing renter can be
- Noncommercial organizations being owners of these
housings, created by the government body or local government body.
- Government body, local government body or
organizations authorized to be renters of housing from government or municipal
housing stock on behalf of proprietor of such housing.
- Other persons, in cases fixed by law.
There are few types of landlords in the developed
European countries. Table 2 shows characteristics of social landlords in
individual countries .
Table 2 - Characteristics of 'social'
landlords in individual countries
||% of housing stock
|Private person or company
Private person or company
|Private person or company
|Private person or company
|Municipal housing company
|Private person or company
Some social rented dwellings is almost all countries
are owned by public landlords such as local authorities and private non-profit
(or limited profit) organizations like housing associations. It is only the Netherlands that there are no longer any public landlords in the social sector. The Dutch
municipal housing sector underwent a process of privatization during the last
decades of the 20th century. This involved the transfer of the
housing owned by the municipal housing companies to the private non-profit
housing association sector.
In England and the Netherlands, the actives of housing
associations are not necessarily restricted to social renting. In both
countries, the unregistered subsidiaries of housing associations many also operate
commercially. Additionally, housing associations in the Netherlands rent out more expensive dwellings to higher-income groups.
In our opinion, in Russia municipal Housing and
Utility Sector, as well as specialized noncommercial organizations, controlled
by special federal low and profit organization with bounded norm of benefit can
act as owners of rent houses. Public authorities, local authorities and big
enterprises and organizations can be founders of as specialized noncommercial organizations.
Realization of the draft low in Russia will require government’s participation in noncommercial lease fund, main aspects of
which can be defined as:
- Change of Russian Federation legal framework
(Civil, Housing, Tax Codes of RF and other federal lows).
- Regulation of rental payment.
- Provision of social and noncommercial lease to
- Backing of lessons providing housing of
noncommercial and social lease.
- Attraction of public and private organizations
for leased social housing control.
- Free connection of social and noncommercial
rented houses to infrastructure.
- Backing of rented housing building.
- Allocation of free plots
of land for block of flats building for social and commercial rent.
- Attracting of private
investors to the building of rented housing.
- Organization of
financing funds of housing building and renting.
- Amendment to the tax
laws with the aim of utility bills reducing for the tenants of noncommercial
According to the data from the Institute of city’s
economy, if the state take upon itself financing of 40% investment expenditures
on the building of houses and interest payment, budgets of all levels will
spend on rented housing creation 1,44 trillions roubles for 27 years. Rent
payment for two-room flat with an area of about 40 meters in Saint-Petersburg should average 8300 roubles. If the state deposit only indirect
investments (for example, it provides land for free), rent payment will be approximately
13500 roubles a month .
From our point of view, realization of major
investment projects and programs is possible within the frameworks of social
development programs. It’s connected with the following circumstances:
- Every investment program is carried out in the
frameworks of economic, legal and organizational system of the region.
Therefore, they can’t be considered out of its investment structure, social and
- Organizational and investment problems of the
project or program can’t be solved without regional authorities support and use
of tax and legal instruments of regional authority bodies.
- Investment programs can present real mechanism of
region’s economy reformation and its surmounting the crisis.
- Economic, investment and social priorities formed
and accepted by regional legal and executive bodies of Russian Federation, can not only give a support to investment projects but also secure by warrants
of the respective level.
- Let’s define the main problems, impeding the
development of housing sphere and sector of noncommercial rent in Russia:
- Mass and free privatization of housing, which put
emphasis on appearing of housing owners class and change population’s
preferences in the favor of housing ownership.
- Weak crediting of housing building and developer’s
financing at the expense of direct investments of future owners of the flats in
the blocks of flats.
- Sector of rent housing switched over to shadowy tax
- Upsetting parity between charges of living space
owner and living space rent charges, worsening of structures of property
categories and, consequently, lack of economic incentives for commercial economic
- Delay of the free privatization end and, as
consequence, the lack of motivation to build municipal noncommercial rent
The process of housing privatization will end in March
2015. In our opinion, this event will be additional motivation for the
development of building of noncommercial rent houses.
Development of rent housing market is profitable not
only for the state but also for property developers. Last few years dramatic
reduction of effective demand on flats is evinced. It can result in market collapse
when there will be nobody to buy housing.
That’s why the variant of noncommercial rent market
development will allow to build millions of square meters of housing necessary
for population and will reduce social tension.
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dimensions // Prediction problems - 2007. – ¹ 3.
2. Ivanchenko V. Social implication and
perspective of housing credit // Economist - 2008. – ¹ 11.
3. Mishina E. Housing rent will be cheaper //
Russian newspaper – 2012. – 12 (5975). Russian annual statistic. M, 2012.
4. Sapozhkov O. The end of free
privatization // Komersant – 2012. – ¹164 (4949).
5. Sindalovskiy N.A. Legends and myths of
Saint-Petersburg – Spb.: Norint, 2002.
6. Sokolova T.V. State housing policy: social
dimension. – M, 2009.
7. Marietta Haffner, Joris Hoekstra, Michael
Oxley, Harry van heidjen «Bridging the gap between social and market rented
housing in six European countries», IOS Press BV, 2009.
Table of contents: The Kazakh-American Free University Academic Journal №4 - 2012