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Nadezhda Kosareva, President of IUE, delivered a presentation on creation and work of housing-construction cooperatives at a training seminar organized for regional public authorities and hosted by the city of Kazan

In Kazan, officials from State Duma, the Council of Federation, the Ministry of Construction, discussed “housing aspects” of the presidential message delivered by Putin. Regional authorities were tasked with ensuring a 1.5 times increase in housing construction. One solution is to look as far back as Soviet times and restore the mechanism of housing construction cooperatives (HCCs) with apartments 50 percent cheaper, as compared with market prices, which makes the apartments affordable to public employees and families with many children. The work of HCCs is currently governed by federal law No.161-FZ. The law, however, has some flaws which impede full-scale implementation of the mechanism.

According to the experts, today HCCs are being realized in an ‘ugly way’.

“What we have got are ‘fake’ HCCs the developers have used and continue to use as a means of bypassing federal law No.214-FZ,” says Nadezhda Kosareva, IUE President.

Experts list the major challenges facing people in establishing HCCs and becoming equity holders in HCCs. In the first place, it is impossible to take out loans because a capital asset is land which is provided to an HCC on conditions of free-of-charge use and, therefore, cannot be used as a pledge.

“In fact, HCCs have been designed to solve the problems of socially vulnerable groups of population. So, who falls into these groups? These are public employees who, to become an equity holder, have to pay ‘in cash’ the cost of an apartment, albeit it is 30 percent below the market price, but ‘in cash’. Just think of it! We need sound financing mechanisms. First, extend a loan to an HCC during a construction phase, and then, once the construction is completed, extend a long-term loan to an equity holder against the pledge of equity. The cost of the lease of land set at 1 ruble should be specified in law. Then affordability of land would remain at the same level, but the land itself could be used as a pledge,” suggests Nadezhda Kosareva.

In present-day Russia, the activity of HCCs is governed by federal law No.161-FZ. The program ensures eligibility only for public employees and families with many children. Success cases are still few in number: 35 HCCs are getting land plots, contracts have been concluded with 44 HCCs, 20 HCCs are under construction and 14 HCCs have been commissioned.

Now the task facing the authorities is to develop regulatory acts which would remove the flaws impeding the implementation of the federal law “On Facilitating the Development of Housing Construction”, and to solve the problem with getting a loan.

According to Nadezhda Kosareva, the right to equity, in essence, is no different from the right to ownership. “Equity ensures the same rights: it can be sold, inherited and so on. There is no that ‘mythic’ word “ownership”. And the absence of that word would help dampen the enthusiasm of unscrupulous developers for the mechanism, but rather use it to improve the affordability of housing.

Online newspaper “Real Time” (Kazan), issue date October 30, 2018

City: 
Kazan
Region: 
Russia

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