Additional financing for preferential housing loans

This year, nearly 200 families are to get youth housing loans, informs Leonid Rysukhin, chairman of board of the Fund for Support of Youth Housing Construction (FSMZhB). According to Rysukhin, the average state housing loan will amount to 300-350 thousand hryvnias at three percent per annum.

According to the Fund, an average of 400 to 500 young families in each oblast need long-term housing loans at preferential terms. Overall, this amounts to close to 10 thousand people.

This is to say that the Fund’s planned 200 loans for this year still looks negligible compared with real needs. Simple arithmetic shows that at the present rate it will take around half a century for the state to provide loans to all who need them.

Translated into the youth language these figures mean that one will have to spend a lifetime waiting for the housing loan, emphasized Oleksandr Solontai, one of the masterminds of the action “Authorities, build what you promised,” held by the Ukrainianwide public campaign “Youth Watch: the Young Are Watching You.”

“Ninety-five percent of young people reach the age of 35 and ‘drop off the line.’ After 35 we no longer belong in the Fund’s jurisdiction on account of being too old,” explained Solontai. The activists of this NGO made their own reckoning and found out that each year nearly one hundred thousand young people who need to improve their housing conditions and are registered, never get any accommodation. On reaching the age of 35, they merely lose the right to participate in youth loan programs.

The chairman of the board of the Fund, when asked how long an average young family (neither scholars nor athletes at that) have to wait to get a state housing loan on preferential terms, did not give us a definite answer. “People can stay on our waiting list even for five or six years,” specified Rysukhin. However, in practice this is far from the upper limit.

Rysukhin is convinced that the reason for the very slow progress up the preferential housing waiting list is in a lack of budget funds. “The monies that are allocated for this purpose are insufficient. That is why the Fund’s supervisory board came up with several initiatives. We suggested that the Cabinet of Ministers increase the allocations from the common state budget fund tenfold: from 20 million hryvnias in this year to 200 million which would be highly advisable to build into the budget for 2011,” he added.

Also, according to Rysukhin, in 2010 the Fund is to participate in the implementation of the state special-purpose social and economic program “Affordable Housing,” which provides for a certain reduction in the cost of housing at the state’s expense in the 2010-17 period.

To finance its own programs, the Fund is planning to issue 500 million hryvnias worth of state-guaranteed bonds. “Of course, they will not be available at three percent per annum, but in any case, the interest will be lower than in commercial banks,” admits Rysukhin.

According to the Fund’s projection, the lower limit for the interest rate in youth loans will be no less than the National Bank’s rate for domestic state loans (otherwise no one is going to buy those bonds).

The youth representatives in turn say that they will support any option aimed at reducing the costs of housing loans. According to Solontai, it would be quite good if housing loans were granted at 10 to 15 percent per annum in national currency. “This is quite a feasible rate for a young family’s budget,” he says. So if the Fund’s initiative in issuing the bonds can be taken as the first step towards the solution of youth housing problem, this is a very proper action, in Solontai’s opinion.

He is convinced that if the Fund proceeds in this direction, they will be able not only to “start the mortgage market going,” but also to take excessive markups off housing costs and do away with bribes and kickbacks.