OREANDA-NEWS. November 13, 2012. Vladimir Putin opened a series of meetings on improving the quality of housing and utilities services. The first meeting, held in the Kremlin late on Monday evening, was devoted to major repairs of the housing stock.

Following the meeting, the President instructed the Government to examine the entire range of issues connected to the organisation of major housing repairs and their financing.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good evening, colleagues,

Today we will begin a series of regular meetings on improving housing and the quality of housing and utilities services. These meetings will be attended not only by Government members, but also by representatives of the legislature and regional authorities, as well as experts, who are also present here today.

All of us realise that the housing issue was very acute in Russia before October 1917 and during the entire Soviet period, and continues to remain so today. As I have repeatedly said, and many of those present agreed with me, we have a historic opportunity to address this issue and if not resolve it completely – I don’t know of any major country that has resolved the housing issue completely – but we have a historic opportunity to minimise its severity and to reduce it to the minimum. In fact, this is our chance to introduce radical changes in the sector.

The matters we will discuss have vital importance for everyone. Opinion polls show that utilities prices are the most sensitive topic for 44% of Russians, whereas 26% are concerned about the unavailability and high cost of housing, and 16% about the state of housing and utilities infrastructure.

There are regions where over 60% and even 70% of local residents consider these problems to be the most acute and urgent – there are such regions in the Russian Federation. This once again confirms that addressing housing and utilities issues and putting the sector in order should be a priority for the authorities at all levels.

You know that the strategic objectives in this area were identified in the Executive Order on measures to provide affordable and comfortable housing to the people and to improve the quality of housing and utilities services. Our first priority is the availability of housing: by 2020, 60% of families who want to improve their living conditions should have the opportunity to do so.

Our aim must be a significant reduction in the cost of housing per square metre by 2018. How can this be achieved? By increasing the construction of economy class housing. In addition, the Government has been instructed to take measures to improve the quality of housing and utilities services and to eliminate dilapidated housing.

Today housing construction shows faster growth compared to other sectors of the economy. In 2009-2011, 180.3 million square metres of housing were commissioned, and 34.6 million square metres in the first nine months of 2012. This is a growth of 2.7% against the same period last year.

We have launched state programmes to provide social support to special categories of people and the state must fulfil the commitments it has undertaken in this sphere. Beginning in 2011, additional assistance has been provided to over 25,000 young families, which have received social benefits amounting to 15 billion rubles [USD 500 million] in total.

Over the past four years 210,000 World War II veterans have received new housing and fewer than 10% of the veterans registered for this benefit after March 1, 2005 are still to receive it. Military personnel and police officers who are subject to discharge from service have been issued housing certificates in the amount of 21 billion rubles in the first nine months of this year alone.

I will not enumerate everything that has been achieved. Much has been done, and we talk about it often, but still more work lies ahead. Our past experience clearly showed that we cannot resolve the numerous problems that have accumulated in this area using isolated measures. What we need is a comprehensive approach.

I will outline the main issues that must be addressed.

First, the major repairs of the housing stock. When did the active housing construction campaign begin in our country? In the 1960s, then it continued into the mid-1980s; basically the construction went on until the early 1990s, more or less, but major repairs were not tackled properly at any point in that period.

Second, the management of apartment buildings. We are faced with growing number of abuse cases in this area and we must admit that many of the relevant regulations were adopted in the past decade. They did not improve the situation, but only confused it further and experts believe that honest activities in this sector are impossible a priory, which is why honest businesspeople avoid it altogether.

Third, tariff setting in housing and utilities and the link between the prices and the quality of services provided.

Fourth, investment attractiveness of the housing and utilities sector and the development of effective economic models to attract private investment and loans.

Fifth, the development of competition in the construction sector and the removal of administrative restrictions and barriers. This also applies to property rights issues, including land. We have already talked about this several times in the recent years. This group of issues includes obtaining building permits, getting connected to electricity, water, gas, and so on and so forth.

Sixth, defining the role of the state, as well as self-regulatory organisations in construction and housing and utilities, overseeing safety and quality control issues.

Finally, the seventh, the development of the rental market, including social rent subsidised by the state.

All the issues outlined above will be the subjects of special discussions at our future meetings. But most importantly, ladies and gentlemen, one point I want to make clear right at the beginning of our meetings on this highly sensitive issue: we need a professional, realistic analysis, we must develop solutions in this area, adopt them and make sure they are enforced in practice.

This is the only way to move things forward. Under no circumstances must our meetings become simply an exchange of views on a given topic, even if the issue is very important. These meetings must result in concrete solutions in this area.

Today we will focus on major housing repairs. I have already said this but I want to reiterate: according to Rosstat statistics agency, in 2011, more than half a million blocks of flats were 30% to 65% worn out. This is more than half of all apartment buildings, which are home for 45 million people. This problem has been accumulating for a long time, as I said earlier.

These issues partly began to be addressed last year, including through the tools available to the Housing and Utilities Development Fund. But the scale of the necessary repairs is not commensurate with the financing available to the Fund.

During the period from 2008 to 2012, nearly 135,000 buildings with a total area of over 400 million square metres were partially repaired through the Fund’s programmes. That is not a bad result. It amounts to 30% of the total area in need of repairs. As a result, housing was improved for 17.3 million people. On the whole, the Fund is coping with its tasks, but it is clear that we must look for additional tools and resources to address this problem.

First of all it is necessary to conduct a complete inventory of the housing stock and then establish a system of regular monitoring, especially with regard to apartment buildings. We must have a clear picture of the situation in the entire country and in separate regions and municipalities, so that we have a clear understanding of the financial resources required for major repairs.

We have a new draft law that stipulates the use of property owners’ resources for repairs of apartment buildings. At first glance, this seems to be the right approach because the owners are usually responsible for the safety and maintenance of their property, and this is standard practice in many countries, but here we have a special attitude towards housing as a subject of ownership.

As a result of the privatisation, over 80% of the housing stock is privately owned. However, opinion polls show that 50% of Russians believe that the state must bear full responsibility for major housing repairs. In general, I don’t think it would be right to shift this responsibility over to the residents. In fact, they could never cope with this task.

After all, when property is transferred to a new owner, it must be in good condition, and if it is not delivered in good condition its maintenance cannot be dumped on the new owners. People could get involved in this process, but the question is to what extent, how and where, and this is a very delicate question. It is difficult to explain to people why utilities prices are growing, often with poor quality of the services, yet they still have to pay extra for housing repairs.

So today we must conduct a comprehensive, detailed and thorough analysis of all the proposals. They are already being examined by experts and discussed by government agencies and State Duma committees. Moreover, some regions have already gained experience in this area, they have started to implement their own programmes, and as a result they adopt balanced, effective and fair solutions. We must summarise these practices, analyse them and implement them widely.