Problem number one
Vladimir Putin announced a “serious conversation” with the government in connection with the transition on July 1, 2019 to project financing of housing construction. “State support is important here, we need clear, transparent procedures and amounts of support,” the president stressed and noted that the authorities are determined to solve these issues together with the business community.
On the problems that will inevitably arise from developers in connection with the transition on July 1, 2019 to a new scheme for financing housing construction, the head of Business Russia Alexey Repik told the president. Recently, this structure, uniting representatives of the business community, held its next congress, at which the participants in the construction sector were most active.
“They have a hard time experiencing a departure from equity to project financing,” Repik explained to Putin. “Yield, of course, will fall sharply, and we will have to share with banks as part of the transition to project financing.”
In this regard, developers are asking the president to consider the possible support for the industry by the state. “At least for a transitional period,” the head of “Business Russia” specified.
Vladimir Putin did not hide the fact that the topic concerned is not only of concern to representatives of the industry. Housing construction, he said, is an extremely important thing, very thin and extremely sensitive for the economy as a whole and for people. ” In the transition from equity to project financing, it is necessary to ensure that there are no serious disruptions in the volume of housing construction in the country. “This is task number one,” the president stressed. That is how it will be formulated for the Ministry of Construction and the heads of regions responsible for both the implementation of the planned indicators and the implementation of decisions made in the field of shared construction.
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“It is necessary to ensure the unconditional interests of citizens who should not suffer from various schemes or even in the absence of those, from what is associated with the risks of shared construction,” Putin said. Recall that according to the May decrees, by 2024, housing construction in the country should grow to 120 million square meters. meters annually.
The Moscow authorities have already announced that they do not yet see the prerequisites for reducing the rate of housing construction in connection with the transition to the new scheme. On the contrary, the city is going to increase its contribution to the total piggy bank to 7-8% of the total volume – thus, 8.4-9.6 million square meters will be commissioned annually in the capital. meters of housing.
Since the construction industry is the locomotive of the urban economy, the mayor’s office is directly interested in the rejection of shared construction to be as painful as possible for metropolitan developers, whose capacity will also be in demand during the implementation of a large-scale renovation program.
According to Repik, an effective measure of support for the construction complex could be the possibility for developers to take into account in their expenses infrastructure facilities donated to the state. Vladimir Putin expressed readiness in the near future to discuss this and other proposals of developers, as well as other mechanisms to support the industry, which are developed by relevant ministries and departments. According to him, clear and transparent procedures, amounts of support and ways to bring it to the industry are needed here. “This is still a serious conversation with the government. But I want you to know: I’m in the mood for this kind of joint work, ”the president encouraged the developers.
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It is noteworthy that earlier business ombudsman Boris Titov also applied to the authorities for support of developers. A joint analysis of its expert center and the Institute of Growth Economics (IED) shows that developers will not only have to replace the money of shareholders by bank loans, but also sharply increase their own investments. From July 1, they will have to be at least 15% of the project cost – otherwise the bank simply will not issue a loan.
In addition, the cost of bank financing will be an additional burden for developers. Due to the use of escrow accounts, construction cost, according to IER, can grow by 10%. Boris Titov asked Deputy Prime Minister Vitaly Mutko, who is responsible for the construction, not to force the refusal of the existing equity construction scheme and increase the transition period.
According to the city authorities, for construction companies operating in Moscow, the transition from equity construction to project financing will take about 3-5 years. Approximately for such a period, construction permits will suffice under the old rules, i.e. using the funds of citizens, not bank loans. According to officials, the documents that developers have in their hands make it possible to build at least 15 million square meters in Moscow. meters of new buildings, and the main task in this period is to prevent the appearance of new deceived co-investors.
Source: Moskovskya perspetiva