VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Vladimir Putin’s opening remarks:
Good afternoon, ladies and gentlemen.
This is not the first time we discuss housing construction. Today we will talk about low-rise homes, which are a promising approach to providing people with affordable, comfortable and eco-friendly housing. We will consider the issue again – I am sure you have looked at the project organisation in Stupino – but I know that this is one of the positive examples in this sphere. Overall, low-rise housing is one of the government’s priorities and it will receive considerable backing, first of all funding.
About 25 billion roubles will be allocated from the federal budget to stimulate housing construction in the regions over the next five years. However, we have almost reached the limit of large projects within the city limits. Infill projects will only worsen traffic and the environment in cities and towns.
The first – and the worst – example that comes to mind is, of course, Moscow, where infill development has become a nightmare for people. But the situation is only deteriorating. A decision was made recently to expand Moscow’s boundaries. I say, at last! The move was long overdue because the problem was really acute. But now city authorities and the Moscow Region government are working together on this.
The advantages of low-rise housing as part of comprehensive development projects are obvious in this context. First, this method can be used in different regions, including regions with difficult terrain and high seismic activity. Second, low-rise houses can be built quickly, within a month to six months thanks to modern technology, and you know why – because they use prefab blocks that are 90% factory built. This also explains their high quality, because the homes are built under factory conditions. And third, the market value of such homes is comparable with, and is even sometimes lower than the price of housing in economy-class flat blocks.
The advantages of low-rise homes are indisputable. First of all, these low-impact homes conform to the latest requirements and are energy efficient, which means that maintenance expenses can be cut by about 70%. Other important features are a location away from heavy traffic, industrial facilities and city bustle, and the additional benefit of a small land plot the owners of such homes will enjoy.
According to the polls, most Russians would like to live in a low-rise home. This is why we are highlighting the idea of low-rise developments, as I have said before. We plan to increase their share in housing construction to 60%, or about 54 million square metres, by 2015. These plans have been included in the regional programmes for stimulating housing construction which the regions adopted last year.
But we need to resolve several practical problems to implement these plans, in particular to ensure the balanced development of engineering and social infrastructure outside the cities. As I said, the advantages of low-rise housing include living in environmentally clean areas away from city bustle and heavy traffic. But these advantages will become obvious only if we provide the necessary social and other infrastructure to the owners.
Electricity, water and gas networks, as well as roads and other communications must be built quickly enough for low-rise development. The construction of housing should proceed almost concurrently, but it would be even better if social facilities were built ahead of housing. I am referring above all to outpatient clinics, childcare centres, shops and schools, in short everything that should be a part of a comprehensive environment in low-rise developments.
All of this should be the responsibility of the regional and municipal authorities. This is why I am asking my colleagues – the regional leaders and governors – to personally monitor this programme.
Moreover, low-rise housing developments offer broad opportunities to small and mid-sized businesses because they do not provide for the use of heavy machinery, specialised vehicles or large teams. It is very important to ensure maximally comfortable business conditions in this segment by lifting excessive administrative barriers, in particular expediting the coordination of project documents and the issues of construction permits.
I recently met with the representatives of the oil companies, who complained about these problems. As I see it, the situation is no better with housing construction, including its low-rise housing segment.
By all means, it is necessary to follow all housing construction safety requirements. We must ensure that loans for low-rise housing construction are accessible and optimise the expenses of connecting to utility grids for developers.
This sphere is a real mess. It's shameful! In countries with so-called developed economies, I mean states within the OECD (Organisation for Economic Co-operation and Development), the cost on connecting to the water grid, power grid, and sewage system is 40 times lower than in Russia. How is this possible? It is difficult to understand the way our construction system operates. In OECD countries, a housing developer has to go through 15 bureaucratic procedures, whereas in Russia their number is 50, and it takes about 700 days to complete them all, which is four times more than in OECD countries.
We have done a lot to eliminate red tape in the construction sphere. Let's touch on this issue once again today.
And let's discuss another major issue. Today, even though the economic crisis is over, the purchasing power of the population is not very high. I am now speaking mostly about major expenses like the purchase of flats. We need to find more effective ways of providing modest-income citizens with modern housing. I am not only speaking about the need to promote a traditional instrument like mortgages, which we often discuss in this context and take steps to reduce mortgage interest. We should also more widely use the practice of renting housing, a practice known in Russia in the past and widely used abroad today. In Europe, for example, up to 60% of all people live in rented houses or flats. In the United States the figure is 35%, whereas in Russia it is only 5%.
With good planning and government support at all levels, renting may solve housing problems for many Russian citizens, including those who are moving to a new place or accepting a new job offer. This will increase the mobility of the population, which is extremely important for the economy.
I know that pilot projects for the construction of rental housing have already been launched in the Kaluga Region, Novosibirsk Region, and the Chuvash Republic. I'd like to know how work is proceeding.
Before we begin our discussion, I suggest we listen to our colleagues in charge of low-rise housing construction projects in the regions. We have a video linkup with them.
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Viktor Basargin (Minister of Regional Development):
Ladies and gentlemen,
Almost 21 million square metres of housing was built in Russia in the first half of the year, just a bit less than in 2010. The growth rate was more than 106% in June, which means we're making up for the decline earlier this year.
Townhouses and country houses now account for more than a half (51.9%, to be precise) of all of the country's buildings... In some regions, that percentage reaches 80%. By 2015, the national average may hit 60%.
Almost all the advantages of such housing have been mentioned today, with the main one being its short construction cycle.
Mr Gromov (Governor of the Moscow Region) and I visited this site exactly a year ago. There was nothing here but four pilot houses.
Since then, an additional 10,000 square metres of residential space has been built as part of the project and 50,000 more is to be completed by year's end. The use of advanced technology has allowed us to reduce the construction period down to two to three weeks.
Projects like this one provide better quality construction as well as cheaper maintenance.
The pilot projects we've launched in several regions with support from the Foundation for the Advancement of Housing Construction and the Housing and Utilities Fund vividly demonstrate that townhouses are much cheaper to build than apartment buildings.
Working within the Strategy 2020 expert group, we can see that the quality and the location of housing are increasingly important for modern homeowners. Townhouses and country houses come with land plots and have other assets that apartment blocks lack. So, as we move forward in developing transport and social infrastructure, consumers will become more appreciative of the many new possibilities offered by such housing projects.
Our ministry provides support for some specific projects. At Stupino, for instance, we've covered interest payments on loans for connection to the utility grid. Some 170 million roubles will be allocated for this particular project, and that amount is expected to drastically reduce construction costs. Under the Mortgage Agency's Stimulus programme, we've set aside some 1.2 billion roubles for housing construction (at Stupino) and an additional 800 million roubles for the support of homebuyers. The Stimulus programme offers mortgage loans at an interest rate of 7 to 9%. Under Housing & Utilities Fund programmes, some 494 families have been moved from dilapidated housing into new residential facilities there.
We also support projects in other regions, including Tver and Kemerovo. Mr Berg, Governor of the Orenburg Region, didn't mention that we're following in his region's footsteps, offering purchase loans to homebuyers at an interest rate of just 3 to 4%.
On such projects, we follow the "construction set", meaning that we go brick by brick. First we find a systemic investor and then, in cooperation with the proper development institutions, we go on to address each issue related to the allotment of land connecting to the utility grids, and so on.
We'd like all (subsidised) townhouse projects to be planned in coordination with development programmes for natural monopolies, including Gazprom, the Russian Railways, and the Federal Grid Company. They've already agreed to contribute to the creation of infrastructure in some regions.
The Federal Grid Company, for one, has pledged several billion roubles for the construction of power transmission infrastructure for several projects. Gazprom, too, is contributing to a number of projects in the provinces. I think that we should carry on with this arrangement. Utility companies that contribute also stand to benefit because such projects expand their customer base.
Large families are offered land plots along with their houses. Today we have the technology to provide what can be referred to as packaged housing, that is, a prefabricated house that can be assembled within two to three weeks' time, plus a plot of land. Such packages could be financed with the help of loans on purchases and down payments.
We've just visited a family house with all the modern amenities, totaling an area of 100-odd square metres. The cost of one square metre in houses such as this ranges from 10,000 to 15,000 roubles.
As for social infrastructure, we work with regional authorities to create jobs specifically for the residents of such townships. We believe that we should rapidly adopt legislation creating mechanisms for the purchase of subsidised land. This issue was raised earlier today with regard to Orel.
In keeping with your instructions, Mr Putin, we're working with the Finance Ministry on amendments to the federal budget law, so that subsidised loans can be provided for the creation of transport and social infrastructure around low-cost housing projects as well as for connecting them to the utility grid.
I propose that we amend the related Budget Code provision, extending the maturity term of subsidised loans to ten years.
We think it necessary to engage all our development institutions, including Vneshekonombank and the Mortgage Agency for these purposes.
We also support the idea of building (subsidised) rental housing. And together with the Finance Ministry and the Economic Development Ministry, we would like to consider ways of further developing the rental housing market and make proposals for amending the relevant legislation.
I recently went to Cheboksary to give keys to families moving into (subsidised) rental housing there.
Speaking with those people, I understood that they'd bought land and were waiting for their own houses to be built. The construction takes two to three years, so they are renting in the meantime.
Finally, I'd like to point out that low-rise economy housing is becoming more and more attractive to investors. Our foreign partners, such as Bering East and the European Bank for Reconstruction and Development, are willing to strike deals.
Russian finance institutions, too, are increasingly interested in such investment. But they are discouraged by the high level of risk that the Central Bank attaches to construction loans. If they were to lower the the risk level, the construction sector would see an influx of Russian money, decreasing the amount of capital set aside in reserve. Thank you for your attention.
Vladimir Putin: Thanks a lot. Thanks for your ideas and proposals. I'll comment on them later on.
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Vladimir Putin's closing remarks:
We have gathered here today to examine the readiness of the federal programme to provide Russians with quality housing and utilities services. As you know, we are currently drafting such a programme, and this meeting is part of the process.
We will consider the issues of connection to the electric grid, taxation, infrastructure financing and construction, and many others. I would like to direct your attention to the Orenburg Region and pose a few questions to its governor, Mr Yuri Berg. Mr Berg, if I understood you correctly, the price for land plots in your region does not reflect the costs of the utilities and communication services that you provide to each plot? Or did we misunderstand each other?
Yuri Berg: Yes, each plot is already equipped with all of the amenities. That is the first point. And second, just as you say, the price that land developers pay per square metre does not reflect the utilities costs.
Vladimir Putin: In other words, you have spent federal funds on improving land plots with services but these amenities are not reflected in the sale price?
Yuri Berg: That's right.
Vladimir Putin: I understand. Thank you. I think this is the ideal approach. Thank you.
I believe that in some regions (and I can understand the governors' position), in the majority of the regions, the sale price of land plots reflects the utilities and communication services expenses. We see it done here in Stupino, in the Moscow Region and in the Orlov Region among others.
Today we talked about families with many children: we have a maternity capital programme in place and we continue to adjust the amount we pay out to the families with two or more children to reflect the rising cost of living. In 2011 the amount of maternity capital was 365,000 roubles, in 2012 we increased it to 397,000 roubles. I would like to remind you that the programme will continue until 2016; maternity capital can be used for these purposes until 2016. We have planned it out until 2016. Recently I was asked (a young woman asked me in Magnitogorsk) whether the programme will be extended past 2016. At this point, we have not yet made this decision, so presently the programme will continue until 2016. Next year the amount will be increased to approximately 400,000 roubles (397,000), and even more in the following years, 400,000, 405,000 and so on. What I am trying to say is that even here in Stupino the price of land without the amenities is approximately 30,000 roubles.
Remark: 30,000 roubles is the base cost.
Vladimir Putin: It is 30,000 roubles. That includes the costs ...
Remark: That is without subsidies.
Vladimir Putin: That's right, 30,000 per square metre. I would like to ask the governors to consider the following: in the regions that include expenses for utilities and communication services in the price of the land plot to make legal exceptions in the cases of families with many children. This will be substantial financial support to such families, for the costs of such amenities add 15% or more to the final price of the property. When we consider the average cost of property per square metre – 25,000 roubles (in the Moscow Region, it is slightly higher), additional charges for utilities and communication services for a 100 square metre house priced at 2.5 million roubles will amount to 15%, or approximately 375,000 roubles. These are significant savings. The value of maternity capital is 400,000 roubles and that is approximately the amount (I saw it here) of the first payment.
If we work in cooperation with the Housing Mortgage Agency to further help families with many children, we could find a set of reasonably effective solutions of housing issues for families with two or three children. So let's think this over together. These goals are attainable.
I would like to add that I am very grateful for our meeting and discussion today. I am sure you will agree that this meeting was effective; we will make adjustments to address the issues discussed here today and resolve them. Thank you.
