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Vladimir Putin: On our agenda is without exaggeration a vital issue, a vital theme: the housing problem. It has always been one of the most sensitive and significant issues for the people of our country. Not only for our country, but especially for our country. It is still a relevant task today in the new economic and social conditions.

Experts estimate that about 60% of Russian citizens need to improve their housing conditions. For the most part people seek to obtain housing built by municipal authorities and government agencies. Nearly 10% of Russian families are on various waiting lists today. And 2.5 million people still live in decrepit or dangerous housing.

In reality the situation is that given the current rate of the building of departmental and municipal housing it will take another 20 years to provide housing for those who are on the waiting list alone.

One can cite many figures and similar facts. They all point in one direction: the housing problem remains very acute in Russia as a whole. On the one hand, the former mechanism of housing allocation has practically ceased working. On the other hand, the housing market has not been fully put in place. In addition, the prices of housing are high and out of reach for the majority of Russian citizens.

We must however, look for ways out of this situation. It is our duty to take the housing problem off the shelf and to address it with a clear-cut plan in mind.

The State Council’s working group has submitted good material. We discussed it many times with the Governor of the Samara Region, and he has long been into this problem. I know that he has been trying to offer his program to the Government for a long time. Let us lend him an ear today.

In this connection I would like you to concentrate not on analyzing the causes of the current situation but on suggesting practical ways to change it. Especially as regards the creation of mechanisms that enable people to buy housing.

One such mechanism, of course, is mortgage loans, which is to be our subject of discussion today. Throughout the world it is the most effective and civilized mechanism of dealing with housing problems. The mortgage loan is a well-tried and reliable way of attracting private investments. And we are talking not so much about foreign as about domestic investors.

I suggest that we focus on the following during our discussion today.

First, I would like to stress that the system of mortgage crediting must be market-based and not subsidy-based. Only then shall we be able to attract the amount of funds matching the scale of the housing problem in the country.

However, the majority of the mortgage mechanisms and schemes already operating in the regions are oriented towards budget financing. That undermines the very idea of a mortgage and contradicts its main goals and principles. The Government, of course, is to play the leading role. It must contribute to the creation of institutions that are necessary to organize a market of mortgage loans and formulate a clear legal framework.

As for budgetary means they should be used to provide targeted subsidies to families who cannot afford a mortgage loan.

Another aspect of the problem is making mortgage loans accessible. Mortgage loans must become not only accessible but habitual, operating as the norm and not as an exception.

Assessments vary, but most experts believe that many families with stable incomes can afford to take out a mortgage loan, provided of course, that incomes grow steadily.

Besides, mortgage securities must be almost as reliable as government securities. The taxation of all the mortgage operations must take into account the long-term character of mortgage.

That dictates the need to finalize the necessary regulatory and legal framework. That is the third area of effort that merits special attention. I am sure we are going to discuss it because experts know that some elements of the mortgage system are not working and some need to be changed if they are to work.

The draft Housing Code is currently being finalized. It is necessary to speed up the drafting of the law on mortgage securities and to introduce amendments to the laws that have to do with mortgage directly or indirectly.

Another area where more work is needed is forming the infrastructure of mortgage crediting. A corresponding agency has been created and its experience and professional opinion must be taken into account.

I think you would agree with me that so far the word “mortgage” mystifies our citizens. And we must do some explaining, create mechanisms to explain the substance of this procedure, the essence of this mechanism. It is necessary that people come to believe that it can be used to solve the acute problem of housing.