What measures of support for construction and the construction industry did the Novosibirsk regional ministry of construction suggest considering at the Presidium of the State Council on construction?
The Deputy Minister of Construction for the Novosibirsk region, Ivan SHMIDT, answers questions from our journal.
— Mr Shmidt, the Novosibirsk region is one of the national leaders in the sphere of construction. Last year the region occupied 6th place for housing put in operation and was third for dynamics of construction after Leningrad region and Moscow. And still, before the State Council for construction, we would like to ask the Siberian constructors what main problems, from their point of view, are preventing the construction industry from going steadily forward at present?
— The slow-down in the rate of the construction industry’s development is connected with the decrease in housing customers’ effective demand in the context of the population’s real income fall. Because of this, developers are slowing down construction rates, and the enterprises on the construction industry are decreasing the production of construction materials, because the demand is decreasing and the volume of undistributed stock is increasing.
The most acute problems hindering housing construction development, from our standpoint, are:
- banking credit availability is decreasing for organizations;
- an insufficient supply of land plots for housing construction, provided with engineering and communal infrastructure;
- the population’s effective demand is decreasing for housing;
- the mortgage loan market is shrinking.
— What are, from your point of view, the sticking-points, and how can the problems be solved?
— According to figures from the RF Central Bank, as of January 1st, 2016, 16,315 mortgage loans had been lent in the Novosibirsk region, totaling 26,127 m roubles. As compared with last year’s period, the number of mortgage loan credits decreased by 43.5%, and the volume went down by 39.2%.
As of March 1st, 2016, 2,836 mortgage loans had been lent in the Novosibirsk region (a growth of 29.5% as compared with the same period of 2015) totaling 4,556 m roubles (50.6% growth as compared with the same period of 2015) at an average weighted rate of 12.14%, which is 1.85 percent lower than the same period of 2015 (last year, the average weighted rate was 13.99%).
Thus, to stabilize the situation in the construction industry, it is necessary to take measures to stimulate the demand on the housing construction market, including:
- Prolongation of the state program of mortgage loan support via preferential rates of mortgage loans for individuals in commissioned lending institutions and regional operators of the JSC Housing Mortgage Lending Agency (HMLA).
- Provisions for measures of state support for subsidizing the mortgage loans rates for private individuals buying housing on the secondary market, if the seller uses this money for buying a flat from a developer.
- Introduction of both developers working according to the “Housing for a Russian Family” and “Rental Housing” programs in the “Stimulus” Federal program of developers’ support, and also those who construct the available housing.
- Continuation of the program “Rental Housing” by provision of state support in the form of subsidizing the mortgage loan rate for the “Rental Housing” credit product for organizations interested in the creation of a rental housing fund.
- Provision for the federal support of the regional housing program implementation via the issuing of mortgage securities.
- Development of state support measures for individual developers in the country to create conditions for employee retention in rural districts via the repayment of part of the expenses for individual housing construction from the federal budget in case of the construction term being reduced to two years.
- Preservation of the regional institute of operators of HMLA (Housing Mortgage Lending Agency), as companies implementing innovation programs directed at improving the living conditions of socially significant groups of the population.
- Terminal indexation of the cost of 1 m2 within the “Housing for a Russian Family” program.
All these measures were included in the proposals by the Novosibirsk regional government sent to the head of the work group of the RF State Council, Victor Tolokonsky, on the issue of “Construction complex development and urban development improvement in the RF” for the preparation of the report project.
— How should state policy be corrected in the sphere of construction to smooth out most of the consequences of the economic crisis for the Russian construction organization and construction materials producers?
— One of the key units of proposals sent for the consideration of the State Council were on the improvement of the state regulation and self-regulation of the industry, which are to mitigate the crisis’s effects both for constructors and construction materials producers.
These proposals include the following measures of state support:
- To increase the volume of direct federal subsidies in the infrastructure of complex sites (social, engineering, road infrastructure).
- To allow by law for the RF regions to adopt the investment component within the tariff of networking organizations above the tariff limit.
- To confer upon the RF regions powers to regulate utility enterprises investment programs within the investment component of the tariff.
- While realizing №214-FL, to exclude construction financing via credit institutions, keeping the developers’ independence in attracting the population’s finance and increasing the RF regional control over its attraction (only on the joint funding of construction).
- To expand the list of insurance organizations.
- To create regional societies of reciprocal insurance, giving them powers to complete objects where a developer did not manage to fulfill his obligations.
- To develop measures of direct state support for hoodwinked investors via direct subsidizing, having provided for setting support quotas proportional to the housing volume put into operation on the territory of the RF region.
- To introduce amendments to №214-FL as to the regulation of the insurance sum calculations according to the developers’ insurance agreement – the participant of the “Housing for a Russian Family” program.
- To include in the expenditure part of the RF budget for the finance for the support of some population categories – participants of the “Housing for a Russian Family” program and individual developers in rural regions.
- To introduce the notion of “agglomeration” in the town-planning Code of Russia. To amend federal legislation with the definition of principles of agglomerations development and management. To adopt legislative regulatory acts at a governmental level, defining the order of agglomerations registration, adopting federal programs for agglomerations development, and setting the requirements for target indices of agglomeration territories.
- To provide for legislative steadiness in the sphere of urban and land development.
- To simplify the procedure of project documentation expertise, to consider only the solutions on the strength and stability of buildings, and, of engineering sections, only the ones concerning people’s security (fire extinguishing, evacuation)
- To provide for a wide range of measures for the restructuring of tax payments (including both in federal and local budgets) and for rent payment and land tax, as well as the opportunity for restructuring the payments to communal enterprises within the payment for connection.
- To charge, by law, national associations of self-regulated organizations to develop and adopt standards compulsory for execution by construction organizations.
Besides this, we propose the provision of measures to increase the efficiency of the construction materials, machines and equipment industry:
- To provide for subsidizing the credit rate and payback of direct expenditures up to 30% while lending credits for investment projects of construction materials production.
- To decrease the external rate of duty for the construction industry enterprises’ equipment.
Prepared by Alexei ANDREEV