Mechanisms for Providing Housing Subsidies Need to be Simplified

16 january 2017 | OTR

The Analytical Center expert Dmitry Khomchenko appeared in the 'Otrazhenie' (Reflection) program on Public Russian Television where he commented on the bill submitted to the Duma by the Ministry of Justice to allow the state to foreclose a debtor's only home.

Dmitry Khomchenko
Dmitry Khomchenko
Department for Sectors of Economy

"The total debt on housing and public utility services bills exceeded 1 trillion rubles in March 2015," Mr. Khomchenko said. "And I believe that in 2016 it is going to be at least 1 trillion 300 million rubles once all the reports and financial statements are in. We clearly have a problem, don't we? And that means we should solve it somehow. For comparison: In 2017 the budget for the entire healthcare system for the whole country makes 381 billion rubles. In the fall of 2016 total recorded overdue debt on bank loans was 941 billion rubles. It is the need to somehow solve this problem that prompted the appearance of this bill, which, among other measures, allows for the expropriation of the only home that a debtor has."

The vast majority of debtors are people with median incomes or people that have found themselves in a tight spot (for example, people that have lost work and cannot find new employment). Naturally, if we are talking about a debt of, say, 300 thousand rubles, nobody is going to be expropriating a 5-7 million-ruble apartment to pay that off, the value of the expropriated property must match the amount of the debt. What often happens, though, is that both utility bills and bank loans are not paid by people that are pretty well off but are just not bothered to pay their bills in full and on time. According to the expert, in situations like these, it is the income rather than real estate which will be foreclosed by the state.

Mr. Khromchenko believes that more work needs to be done on the bill and other laws and regulations need to be developed to solve this and other problems that exist in the utilities sector. Specifically, the mechanisms for getting housing subsidies need to be simplified.

Source: Obshchestvennoye Televideniye Rossii - OTR (Public Russian Television)