Neither for lease nor for sale - new terms of use for housing concessional loans

Category status:
April 22, 2016 18:31

On June 1st, 2013 Presidential Decree No 246 came to effect, which changed the terms of government support to housing construction.

Substantial state support to housing construction industry resulted in the newly built housing used as additional income source. With the new regulation the state is trying to limit the support only to those really in need to improve their living conditions. The remaining population is offered to engage in lease housing construction instead of private housing, which is the ultimate goal of the housing industry reform.

In 2013, in accordance with the approved plans for the housing construction, Belarus plans to build 6,500 thousand square meters of housing, including 2,500 square meters to be built with state support. BYR 10 trillion was allocated in the state budget for concessional loans. Housing construction for the needy in Belarus has become a kind of business for savvy citizens.

These apartments were used in two ways: they were leased off (state loan interest rates were low while proceeds from renting covered the loan payments and provided additional incomes) or sold, thereby deliberately deteriorating the living conditions and acquiring the right for another soft loan for the housing construction. Alternatively, families could go through fictitious divorces to gain the right for soft housing construction loan for a spouse.

Recent amendments restrict these apartments’ sales: there is a five-year ban on sale of an apartment built with a soft loan from the government and residents who have already built apartments using soft loans as well as their family members lose the right for the second loan. The time will show whether the new regulations will be effective. Regarding lease rules for these apartments, the changes will not have drastic effect. Residents might chose living in the newly built, using government soft loans, apartment and lease out their old apartment to which the terms do not apply. However that might increase rental costs.

The changes envisage on the one hand reducing fraud with housing built on favorable terms and on the other hand to limit the number of potential beneficiaries in the future. In the long term, it is anticipated that the volume of housing built with state support will reduce and mass construction of rental housing will develop. With the development of rental housing the state gets fairly stable and secure proceeds from rental housing, and will achieve redistribution of valuable specialists and labor resources in various locations. Housing free of charge would only be available to large families and power structures representatives. The government will stop funding the massive concessional housing construction for a large share of the population.

Thus, the state is gradually reducing social benefits for the population. The number of potential beneficiaries from the real estate market will be reduced substantially. Simultaneously, by closing the opportunity to build own housing, the “anchor” holding the labor force in the country may be lost, forcing people to look for other opportunities in other countries.

Similar articles

Former civil servants as new factor in unemployment growth
October 02, 2017 12:27

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.

Recent trends