To expand family mortgages, raise funding for network repairs

There are risks of slowing down housing construction, developers' debts are growing: problems in the Russian construction complex

At the beginning of the meeting, Vladimir Putin touched upon the topic of master plans — many regions of Russia have already started to draw them up.

“However, this document does not yet have a clear legal status. Work on the relevant bill is underway, but I ask you not to delay it. At the same time, it is necessary to finally clarify how master plans will relate to general and comprehensive plans for territorial development. Now we risk facing duplication, contradictions and a literal pile-up of such documents, which will clearly not be beneficial to the cause. I would like to hear how we will ‘unravel’ the current situation,” the head of state warned. He recalled that by 2036, 1.3 billion square metres of housing should be commissioned in the country, of which 663 million square metres by 2030. This will allow an average level of housing provision of 33 square metres per person to be reached.

“However, now, given the current market situation and macroeconomic situation, there are risks of slowdown. In general, more than two thousand housing construction projects are being implemented throughout the country with six-month postponements. Developers are facing a decline in demand. It, in turn, is falling due to the high cost of credit, as is known. Mortgage lending, which recently reached record levels, is shrinking. In addition, not all citizens and families who are eligible for preferential mortgage loans decide to take them. Banks impose additional fees of 5 to 10%. Of course, it is necessary to restore order here. Moreover, the state allocates financial resources to banks to issue such loans. The cost of bank project financing for construction companies is also growing — against this background, the launch of new projects has decreased by 23%.”

“Developers' debts are growing, which threatens the sustainability of the business, up to and including leaving the market, and may lead to a reduction in employment in the industry, negatively affecting the entire economy. It is obvious that the government, together with the Bank of Russia, needs to take measures adequate to the situation.”

Putin also instructed to develop a program for temporary subsidizing the interest rate on loans for project financing of construction projects: “This is, first of all, in small towns. We have talked about this several times, I would ask you to pay attention to this, the volume of construction there is small, and here, of course, state support is needed with the deadline for commissioning these facilities in small towns in 2026.”

A separate topic is dilapidated housing. New apartments should be received by 345,000 people by 2023.

“We must understand that the volume of emergency housing can grow at a higher rate than before — about 2.2 million square metres annually. Including because the resource of houses built in Soviet times in mass series is being exhausted. Of course, I would like to hear proposals on this matter, how this problem is planned to be solved,” asked the president of Russia

He also instructed to exclude from regional and municipal legal acts requirements in the sphere of construction that are not provided for by federal legislation.

“There is a problem here. At the federal level, some things have already been cancelled, but in the regions they are still in effect. This simply creates bureaucratic problems,” Putin complained.

Decisions on family mortgages from Minnikhanov: expansion to families with children under 14 and differentiation of the limit by the regions

Vladimir Putin separately called for bringing order to the sphere of family mortgages:

“In addition, not all citizens, families who have the right to preferential mortgage loans decide to take them. Banks impose additional commissions from 5 to 10%. Of course, it is necessary to bring order here. Especially since the state allocates financial resources to banks for issuing such loans.”

The same topic in his speech was raised by Chairman of the State Council Commission Infrastructure for Life, Rais of Tatarstan Rustam Minnikhanov. He recalled that, on the instructions of the President, family mortgages were extended until 2030.

“However, there are a number of factors holding back its development. Firstly, the maximum size of a family mortgage is only 6 million rubles. This covers only half the cost of the most popular housing option — a two-room apartment. The rest is paid at the market rate. To pay for such an apartment, the family income must be at least 320,000 per month, which is five times more than the average salary in our republic. Therefore, we propose differentiating the limit by region based on the average cost of a square meter, approved by the Ministry of Construction, and the number of family members. This proposal was made by 28 regions,” said Rustam Minnikhanov.

And then he proposed expanding family mortgages to families with children under 14, as well as to the families of participants and veterans of the special military operation.

Another issue is compensation for banks issuing family mortgages. The government has increased their level, but questions remain:

“In order to reduce risks and increase margins, banks continue to charge a commission, which sometimes reaches 20%. It is collected from the developer, who passes it on to the buyer. We appeal to the government of the country and the Central Bank to introduce a mechanism to control the implementation by banks of the adopted standard for protecting the rights and legitimate interests of mortgage borrowers. This proposal was made by 23 regions.”

Housing shortage and rising prices

In general, according to Rustam Minnikhanov, the housing market is currently experiencing difficulties:

“Since the beginning of the year [in Russia], there has been a decrease in the launch of new projects by 23%, the volume of commissioning of multi-apartment housing by 18%, and the issuance of mortgages by 53%. Such a trend could lead to a housing shortage in 2027-2028 and rising prices for it.”

In addition to family mortgages, he made several more proposals for consideration. For example, the issue of personnel for industrial enterprises remains acute — in Tatarstan alone, the need is estimated at 59,000 people in the next seven years. According to Minnikhanov, it cannot be solved without rental housing.

“We ask the government, together with the Central Bank, to develop a mechanism for funding the construction of such housing. This proposal was made by 25 regions,” said the rais of Tatarstan.

In general, according to him, the situation in housing construction can lead to an outflow of personnel and a decrease in the potential of the construction industry.

“To preserve it, an emphasis should be placed, including on stimulating industrial construction. I would like to say that the infrastructure bonds of DOM.RF are a good tool. In order to increase the volume of project implementation in the regions, we propose increasing the volume of the limit on infrastructure bonds to 300 billion rubles, changing the terms of financing for new projects by increasing the subsidy to 2/3 of the key rates of the Bank of Russia and, most importantly, establishing a renewable limit for the regions to direct funds to new projects after repaying loans,” the rais of Tatarstan proposed.

Regions proposed to simplify the life of developers with project financing

To make the work of developers and interaction with banks more efficient, the subjects proposed to provide a simplified mechanism for changing the bank by the developer with project financing, as well as to introduce a moratorium on the application of sanctions by banks to the company when changing the terms of project implementation. This proposal was supported by 27 regions, Minnikhanov said.

In 2024, the average level of debt coverage of funds in escrow accounts decreased by 13%, which led to an increase in the average rate for project financing to 10% per year.

“Considering that the house is being built for 2.5 years, the interest to be paid is up to 40% of the project cost. Therefore, we would like to ask to consider the possibility of resuming the subsidization of the interest rate on loans within the framework of project financing. This form was in effect in 2022-2023. 21 regions made such a proposal,” Rustam Minnikhanov noted.

Reduce the time frame for connecting to utility networks and clarify the standards

A pressing issue is connecting the constructed facility to the networks. The first thing that the regions propose is to ensure transparent conditions when forming the price for the construction of public utility infrastructure facilities by resource supplying organizations.

“When determining the cost of construction, the use of the resource-index method for forming estimate calculations must be a mandatory condition,” the rais of Tatarstan said.

Secondly, to reduce the time frame for connecting to utility networks.

“For example, the period for technical connection to the power grid can be up to two years,” Minnikhanov noted.

Thirdly, clarify the current regulatory calculations for the load on utility networks when designing residential and social facilities.

“For example, the design and installation rules provide for a twofold excess of the design capacity of the power supply over the actual consumption.”

Minnikhanov drew attention to the lack of funding for the modernization of utility infrastructure

The eternal question of financing the modernization of public utilities infrastructure was not without

“Only 169 billion rubles of federal funds are allocated for its implementation for three years. At the same time, within the framework of your message, it was instructed to allocate at least 150 billion rubles annually to the program. We would ask to provide for annual financing in the specified amount in the budget for 2026-2027, since it is quite difficult to provide the missing amount of financing by increasing tariffs for consumers,” noted Rustam Minnikhanov.

At the same time, in order to increase financing, a proposal is being made to amend the current legislation to allocate an investment component when setting tariffs in the field of heat, water supply and sanitation, to introduce an investment surcharge from the effect of the index of citizens' fees, as well as to regulate its size and ensure the targeted use of these funds. “At the same time, the solution to this issue must be linked to the strengthening and personalization of measures to support citizens for the payment of housing and communal services,” noted Minnikhanov.

He stated the need to introduce the institution of a qualified state customer to control “every budget ruble” within the framework of the federal project to modernize the public utility infrastructure.

“It is also necessary to analyze the cost of materials and work during the implementation of investment programs by regulated organizations,” the rais of Tatarstan said and proposed to assign this work to the Federal Antimonopoly Service.

In order to effectively operate water supply and sanitation facilities built at the expense of budget funds, it is proposed to allow their transfer as a contribution to the authorized capital of joint-stock companies. “A controlling stake in these shares must belong to the state or municipal authorities. We also ask to allow the transfer of public utility facilities of settlements with a population of up to 200 thousand under lease agreements without subsequent transfer of the facility to a concession. We propose to include in the rent only the costs taken into account in the tariff. This proposal was made by 29 regions,” Minnikhanov said.

At the end of the report, Rustam Minnikhanov asked Vladimir Putin to give an order to include the minutes of the presidium meeting on these issues for further study and proposals for their solution.

“Mr Minnikhanov, thank you for such a detailed report. It feels like you really worked on the whole range of issues,” Vladimir Putin said with a laugh. “And they are not simple and require special attention from the government and, in some aspects, from the Central Bank. They will definitely need to be worked on. Thank you for approaching this very seriously,” the Russian president thanked.