WILL THE MORTGAGE LENDING RESOLVE THE HOUSING PROBLEM FOR SERVICEMEN IN RUSSIA?

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The Russian Duma considered the bill “On cumulative system of mortgage lending for servicemen.” As is widely known, the government submitted this bill into the lower house of parliament as far back as May. Debating the bill started only in late June, after recommendations of the Duma committee on budget and taxes. Undoubtedly, this document deserved few fundamental objections from the deputies. The housing problem is among most urgent in the army. According to Defense Minister Ivanov, “at the moment 136,000 families of servicemen are homeless, including 91,000 of families without permanent housing and 45,000 without housing given for the time of service.” Besides, 28,000 families need to have their living conditions improved. Thus, over 164,000 families of the military (almost one-third of the professionals) need housing. Meanwhile, the law on mortgage lending resolves this problem to a certain extent. At least young lieutenants and other categories of servicemen who start their military career after 2005 will, under the corresponding conditions of service, now have a guaranteed chance to have money savings the sate gives to purchase housing. What is being meant?

Firstly, under the bill on cumulative mortgage lending system, each young professional will be given personal accounts, into which the state will be annually transferring cumulative deposits, which will annually be indexed according to the inflation rate.

Authors of the document are saying that the amount of initial cumulative deposit has been 37,000 rubles. By the end of service this will allow saving an amount sufficient to purchase an apartment of 54 sq m (by average Russian prices).

Secondly, if a serviceman is unwilling to wait until the end of service, in three years after becoming lieutenant he’ll be able to use his savings, borrow a loan and buy an apartment on his own.

In 2005, it is planned to appropriate some 2.5 billion rubles for implementation of this law. In 2018 this amount will reach almost 20 billion, since the law will apply to more people. According to the Economic Development Ministry, in 2037 the number of participants in the cumulative mortgage lending system in the army will exceed 900,000.

The bill which is under debating at the Duma is unlikely to settle all housing problems in the army. For instance along with financing mortgage lending, the state will be spending money to purchase real housing for professional servicemen, who concluded contracts before the 1990s. The mortgage lending doesn’t apply to them. Will the government in the near future find money enough to satisfy the housing needs of 164,000 homeless officers and warrant officers?

One more problem is linked to the fact that in garrisons the officers must live in service apartments, which are in deficiency. At the moment, only 146,000 families of persons concerned with the Armed Forces reside in service apartments.

As reported by Krasnaya Zvezda newspaper referring Colonel Mikhail Savin, deputy chief of the Main Quartering and Lodging Directorate, by the end of 2004 it is planned to receive 6,200 service apartments more at the expense of budget finance.

“This is not much given the fact that the Defense Ministry needs almost 500,000 of service apartments (480,000, being more precise).” The aggravating factor is that the Finance Ministry wants to shift this duty to the Defense Ministry alone, i.e. make the program on construction of service apartments a departmental one. It was earlier planned to provide service apartments for the entire Armed Forces by 2010. However, following the consultations with the finance, property and economic development ministries 2015 has been set as a new date.

This proves that Russia will have homeless officers for at least 11 years more.

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