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President Vladimir Putin: Colleagues, good afternoon.

As we agreed, today we will discuss the development of the construction industry as well as the housing and utilities sector. These areas are essential for economic growth and for improving the quality of people's lives.

I would like to point out that our construction industry has enormous potential as a driver for the development of the regions and for Russia as a whole. We must fully realise this. To use this potential, we need to continue to clear bureaucratic barriers from all stages of construction and from the operations, introduce effective financial and investment tools, and expand the space for business initiative. And of course, like other areas in our life, we need to develop the construction, housing and utilities sector on a fundamentally new technological basis.

The set of objectives and the approaches to implementing them have been outlined in the presented draft Strategy for Developing the Construction Industry and Housing and Utilities until 2030. It also defines some measures with a forecast until 2035.

I would say that the Housing and Urban Environment national project should be extended to 2030 in light of the approaches set out in the strategy document.

One of the key basic areas of our work is to make housing more affordable. For every family, a flat or a house is not just a material possession but also a solid foundation for having and bringing up children, for a happy and prosperous life. It is not without reason that our ancestors used to say: ”He who has his own home is happy.”

According to surveys, more than 65 percent of Russians would like to improve their living conditions. And as you know, we pay constant attention to this issue.

For example, last year, in the difficult circumstances of the pandemic, our construction workers worked quickly and efficiently without exaggeration; more than 92 million square metres of housing was completed – I think 92.6 million. Over 4 million families moved into new flats and houses.

In this regard, I would like to thank all the workers in the construction sector, which amounts to hundreds of thousands, even millions of professionals in various fields.

This breakthrough in increasing the rate at which we complete new housing was possible because of preferential mortgage lending programmes, among other things. However, we all know that in April three times fewer mortgage loans were issued than in the same period last year. We talked about this at the forum in St Petersburg.

The average market rate on home loans is now over 14 percent. However, my colleagues and I have discussed this, and the Government is well aware of it; this may not even be just about rates. I can say that we are lowering the rate, as I said at the forum in St Petersburg, but again, analysts believe that this is not the only issue.

The thing is, the majority of people who were going to improve their housing conditions now, in these conditions – please excuse my tone – have not done so. However, this is not important, we will not be talking about how diverse the reasons are, but still, according to analyst’s estimates, at such high interest rates mortgages become difficult for most of our citizens, while it is the availability of such loans that ensures long-term stable demand for housing in new buildings.

At the recent economic forum in St Petersburg I asked the Government to consider lowering the preferential interest rates on mortgages from 9 to 7 percent, as you know. I am asking the Government, together with the Bank of Russia, our banking community as a whole, and the construction industry, to implement this measure as efficiently and quickly as possible.

In general, we need to ensure that the volume of housing completed this year is no less than last year, and that the increase in the mortgage portfolio is no less than 2.5 trillion rubles.

It is clear that not everyone can buy a flat or a house, so the regions need to increase the construction of flat rentals with support from the Government, and moreover, provide for the possibility of its subsequent purchase with preferential mortgage support or with instalments.

In order to implement this proposal, it is necessary to adopt legislative bills. It is necessary to carry out this work as quickly as possible this year and make the procedure of providing land plots for rental housing as easy as possible, preferably on special terms, and to provide for a mechanism for the effective market financing of such projects.

I want to ask the speakers today to focus on the work to relocate residents from dilapidated housing. This problem concerns and directly affects many of our citizens who have to live in unacceptable conditions, let’s be honest.

We have everything we need to increase the rate of relocating people from dilapidated buildings and to renew the country’s residential housing. We need to set ambitious goals while taking into account the budget capacities and the resources of the construction sector.

I know that our builders are ready to work even harder both on the construction of residential housing and on other major complex projects in order to promptly create a comfortable, contemporary living environment in our cities and villages. Again, it is necessary to lift any arbitrary barriers in this area.

The documents related to socioeconomic and territorial planning, as well as road and urban development are often still not synchronised, unfortunately. All this not only extends the timeframe needed for construction, but also makes decision-making more difficult and leads to the uneven development of territories because construction is often carried out without regard to future plans. As a result, the urban space is reduced, the general cityscape and unique features of cities and villages are ignored, while the load on the infrastructure increases.

The long-term consequences of this are not researched, but it often happens that people purchase a flat and then have to spend hours commuting to work or taking their children to a school at the other end of the city or cannot enrol kids in a kindergarten. They buy a nice flat but immediately face other problems. So, of course, it is necessary to try to prevent these things.

I want to ask the regional governors to report in detail on the work done locally in their regions, the streamlining of the urban development process and what hinders them from coordinating it with the territorial development plans. It is crucial that you resolve these problems. Then the money allocated through our infrastructure budgetary loan programme will be spent more efficiently. These are large amounts of money, and they need to be spent rationally.

The obstacles I have mentioned have been discussed many times, and it is good that there are real, notable changes for the better. In particular, several excessive permit requirements have been eliminated, useless restrictions lifted, and the number of land plots allocated for construction has increased significantly.

However, it can still take up to two years to make a decision on an urban development project. We need, especially now, to value our time so that the funds from both the state and the construction industry are used more promptly, so our citizens can see tangible results such as improved public spaces and new housing.

As soon as next year, we need to create a digital register of clear, comprehensive requirements for the construction sector, and ensure maximum transparency here.

Another specific goal is to gradually, in eighteen to twenty-four months, complete the construction of previously frozen projects. See, we always talk about this – about frozen construction projects. Finally, we need to organise this in an appropriate way, to provide additional funding for these purposes, if necessary. After all, we have always managed to find solutions, even in the most difficult conditions, that we do not need to launch new projects as much as we need to complete the existing ones.

Of course, the situation with unfinished projects needs to be addressed because this is ”buried“ money that has not yielded results. Construction sites that have been frozen for years create inconvenience and problems for people and degrade the appearance of cities and towns.

Further, certainly the state of affairs in the construction sector has become more complicated due to the sanctions. But together we should look for and find opportunities to maintain the pace of development in this key industry, including by supporting domestic building materials manufacturers. Our objective is to increase their share in the domestic market to 95 percent.

I can add that in terms of equipment for building materials companies and construction equipment, including excavators, graders and dump trucks, we are still heavily dependent on the import of components and machinery. I believe that, just as we started doing in the fuel and energy sector, we need to establish partnerships so construction enterprises can jointly invest in R&D and in the development of this equipment and guarantee large-scale production orders for domestic suppliers in the future. By the way, here we can use the sites of new industrial clusters with attractive regime and industrial mortgages. We also talked about this at the St Petersburg forum.

In addition, for the construction industry, “long,” affordable financial resources are important, both from the state and from the banking system.

Construction, housing, is a large field of work. Unfortunately, we are still lagging behind many countries, including our neighbours, in terms of providing citizens with housing.

To resolve the problem of housing, we really need hundreds of millions, in total, several billion square metres of new housing. Public demand for new housing, and above all for a better quality of life, is incredible. Moreover, the money invested here comes back at a good rate of return to the state budget and brings profits to banks and investors.

We need now – and this is very important – to change, to break many of the established stereotypes that prevent us from moving forward, and as I said, do this while maintaining a responsible macroeconomic policy, to create conditions for investing more in real assets, in development. And housing construction is just such an asset.

Colleagues,

The problem with upgrading housing and utilities sector remains difficult. The total deterioration of various systems is estimated at over 40 percent. I think I also talked about this in St Petersburg. Hence the inefficiency and losses, which ultimately fall on companies and people.

We have made many decisions here, looking for the best economic model, including for working with management companies. We gave them greater authority, then reduced it, then we created conditions for competition, then again we returned to establishing a single control centre.

But reality shows – and I think the governors will agree with me – that we won’t achieve any real change in improving housing and utility services while it’s all based on old, worn-out infrastructure. We can rearrange the chairs, as they say, or make other decisions, but basically, if the pipes are rotten, nothing will fundamentally change.

I believe that a large-scale upgrade of systems and other infrastructure is indeed the key to solving these problems in the housing and utilities sector and, most importantly, ensuring predictable, transparent and understandable utility rates for people. That is why, as you know, I proposed launching a comprehensive programme to upgrade housing and utilities. At its core, the goal is to consolidate and attract solid investment here; the volume must be increased many times over. At the same time, the country produces everything necessary to replace worn-out systems such as metal, machinery, domestic equipment and materials.

So, we will load the construction and related industries, create jobs for years to come, and people will see real changes for the better. In a word, we need to get down to business and address these seemingly insurmountable issues step by step without retreating. The specific goal is to achieve an annual reduction in the share of worn-out systems.

Such a plan may initially take, say, five years. Let’s discuss all these issues today.

And the Government has to think all this through and identify the sources of funding. We just talked with Mr Khusnullin, and I also talked with the Minister of Finance. Yes, financing is an essential element. It must be worked out with all agencies by the end of the year and we must begin to implement it next year.

Let’s get to work. I give the floor to Mr Marat Khusnullin.

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