Housing leasing would increase demand for housing, but would not solve problems in construction

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April 10, 2017 13:06

Decree No 109 of April 6th, 2017, amended housing leasing rules for citizens. Inter alia, novelties include revised utility rates for leased apartment, and a ban on increasing the cost of rent if leased apartment’s market value goes up. The amendments are likely to boost the demand for leasing apartments. As the discount rate reduces, leasing schemes would become more affordable for citizens and amid excess liquidity, more banks are likely to offer leasing schemes. In addition, developers could create own leasing companies to sell the constructed housing. In 2016, more than 50 apartments were sold using leasing schemes hence even a multiple increase in sales is unlikely to have a significant impact on the real estate market. Housing sales will step up only if prices on the real estate market continue to fall or household incomes increase.

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According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.