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. Last Updated: 07/27/2016

City Overhauls Free Housing System

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After nine years of waiting for an apartment so she could move her husband, parents and six children out of the kommunalka they were sharing with several other families, Irina decided to act.

She gave a "present" to someone in the Moscow city government that had the power to help her.

"We decided to grease someone’s hands at the top," she said.

In no time Irina, who declined to give her last name or details of the "grease," found herself catapulted to the top of her district’s apartment waiting list — her first movement on the list in over two years.

In a few short months, Irina and her family had three small apartments and had left behind a decade of communal living.

Irina’s story is not news to the 188,000 Moscow families currently waiting — some as long as 20 years — for an apartment from City Hall. They’ve heard it all before countless times.

So have city housing officials, and they want to implement a new system.

City Hall last week unveiled a plan to streamline its subsidized housing program. The plan calls for speeding up the archaic documentation process, quickening the pace of the waiting line, and making the acquisition of apartments faster and clearer, said Galina Khovanskaya, chairwoman of the City Duma’s committee on housing policy and communal services.

"The former scheme will change," Khovanskaya said. "The City Duma will rectify [City Hall’s] new position on the size of subsidies and other parameters for the needy to get their socially guaranteed free apartments."

One of the ways the city is hacking away at the backlog of free-housing applicants is by commandeering some of the apartments in new projects "of average quality" being built outside the central business district.

The process of acquiring those apartments is strictly controlled by city officials, said Haik Nersessian, marketing manager with the realtor Colliers HIB.

City Hall inserts a clause in the contracts it signs with the developers of such properties to take 30 percent of the new apartments, Nersessian said. If the developer wants to own all the housing in a building, it has to pay the city market rates for 30 percent of the apartments. The second option, Nersessian said, is called "providing finance instead of square meters."

The people who are receiving apartments now entered the program in 1983.

Nersessian listed three categories of people who usually apply for free apartments: veterans, families currently living in terrible housing conditions, and communal-housing dwellers. In the last two categories, he said, normal sanitary requirements — at least 10 square meters of living space per person — are not met. People in such conditions are given priority and receive more than 60 percent of the available apartments, he said.

Another change in the new scheme is making the size of the subsidies directly proportional to the length of time a person has been waiting. Based on official statistics, those who have waited for more than 15 years will get the maximum subsidy allowed, which is 90 percent of the current market price for an apartment. Those waiting 11 to 15 years will get 70 percent, those waiting three to 10 years 10 percent and those less than three years 5 percent.

For veterans the rules are a bit different. Those who have been in the active services for over 25 years will get free apartments or their monetary equivalents, while those who served between 10 and 25 years will get 75 percent of the apartment’s cost. Some progress in slashing waiting times has been made under the current scheme, which was adopted three years ago, said the housing committee’s Khovanskaya.

"But not all top officials used the principle of social justice as the basis for the distribution of the social subsidies in this free housing program," she said.

Khovanskaya said an internal review of the program showed that more than 60 percent of the subsidies were given to people who were not entitled to them but managed to get documents that said they were.

Many who are legitimately on the list remain skeptical. Tatyana Degachyova joined the list two years ago because her family of five share a total of only 20 square meters of living space. She doubted that the new system will be any better than the old.

"If all remains equal, I may probably be given an apartment in 15 years or so," she said, adding that the people receiving free apartments now entered the program in 1983.

The new procedures will also allow department heads to use all other commercial schemes available on the market to ease tension in the waiting line, Khovanskaya said. Such schemes include mortgages and the rent-to-own program, which was started last year and spreads payments over five years. A growing number of people are considering the rent-to-own variant, she said, adding that the ultimate goal is get Muscovites to buy their own apartments rather than wait for a free one from the city.

Colliers HIB’s Nersessian said that if the city wants to encourage people on the list to take advantage of the new payment schemes it needs to simplify the paperwork. "Most developers and realtors won’t touch this category of client because of the difficult and complex transaction schemes involved, and the longer capital return period on their investments," he said.