State housing program in the country with the dynamic developing economy: experience of the republic of Kazakhstan

The changes carried out in the Republic of Kazakhstan during the years of independence have fundamentally changed the shape of the country, the guidelines of social development, have made significant changes in the social structure of society. Radical reforms designed to improve the standard of living of the population, mainly by moving towards a market economy, have had many negative consequences, with the exacerbation of all social problems, including housing.

Housing is one of the main bases of human existence, its life activity. In order to lead a healthy lifestyle, work fully, raise children, acquire and update knowledge, a person must have, first of all, housing, access to resources: social, economic, political, spiritual, etc., allowing him to lead a decent existence. Without taking these factors into account, any reforms, including housing, are doomed to failure. This, first of all, determines the relevance of the chosen topic, its scientific and practical significance.

In Kazakhstan, the housing issue has always been and still remains relevant. A number of factors contribute to this: lack of resources for expanded housing reproduction, lack of money in the majority of the population, continued urbanization and urban growth, etc.

The State Housing policy is mainly aimed at solving housing issues of socially vulnerable segments of the population, State and military personnel, as well as employees of budgetary organizations whose rights are established in the “Housing Relations Act”. Citizens who do not fall under the definition of "socially vulnerable" but, for objective reasons, cannot purchase housing on market terms have to solve their housing problems on their own. But the State programs are intended to help in these situations, as well. The Government of the Republic of Kazakhstan is developing more flexible housing programs, which makes it possible to have better results of implementation.

At the moment, Kazakhstan has one powerful state mortgage program, it is “NurlyZher”. Currently, two of its main directions are being implemented. The state program of housing construction «NurlyZher» Program itself included all previous programs, which touched upon issues of housing construction in Kazakhstan. These are the program "Development of Regions" and "Affordable Housing - 2020," as well as the programs "Development of Single Towns 2012 - 2020," Modernization of Housing and Communal Services for 2011 - 2020”, "Akbulak 2011 - 2020" and, of course, the housing niche of the state program of infrastructure development "NurlyZhol." Now it is all united under a single set of the state program “NurlyZher”.

So, within its framework two following directions like "Rental housing with the right of subsequent ransom" and "Commercial real estate" as support of private developers are actively worked out.

The program was launched in 2017 and is part of the Economic Development Strategy of the Country until 2025. It is planned to build about 100 million square meters of affordable housing in 9 years. The program is already being implemented by subsidizing mortgage loans from the state, which will allow construction companies to increase production volumes, and citizens of the country to get their own housing on relatively favorable terms.

At the moment five commercial banks such as "Bank CenterCredit" JSC, "ATFBank" JSC, "Sberbank" JSC, "VTB Bank" JSC and "“Housing Construction Savings Bank of Kazakhstan” JSC have already joined the program and provide subsidized mortgage loans.

Each year the state will allocate up to 10 billion tenge to the Kazakh Mortgage Company (KMC) to subsidize mortgage loans. Thanks to this, citizens will be able to get a mortgage not at the average rate of 16-20% per annum on the market, but at only 10%. Kazakhstan Mortgage Company is a subsidiary organization of Bayterek Holding and it works in the direction of subsidizing the rate of remuneration on mortgage loans. The applicant must have an initial contribution of 30% of the cost of the apartment. This amount must be in the borrower's bank account.

Kazakhstan Mortgage Company is the financial operator of “NurlyZher” Program. Since the start of the program, the company has been monitoring its effectiveness. As a result, the following changes were developed and made:

• The borrower can now provide as 30% of the initial contribution an equivalent additional deposit in the form of residential real estate owned by the borrower or third parties;

• The advance payment of the borrower to the developer when providing supporting documents is also counted as an initial contribution;

• The concept of primary housing is expanded for cases when the sale of housing from the developer is carried out by other legal entities.In the Republic of Kazakhstan there is “Housing Construction Savings Bank of Kazakhstan” JSC (hereinafter HCSBK), a specialized bank implementing the housing system. In this bank lending rates are already below 10% per annum, unlike many other banks. One of the directions of the «NurlyZher» Program is to subsidize the interest rate on loans received by the depositors of the HCSBK for the purchase of residential buildings. The rate after the subsidy will be 5%.

The following operations are possible in “Housing Construction Savings Bank of Kazakhstan”:

Subsidies are carried out only on loans issued by second-level banks at the rate of remuneration, which does not exceed the level of the base rate of the National Bank of Kazakhstan by more than 5%, effective at the moment of the decision on subsidies. nurlyhan kazakhstan housing program

The mandatory conditions for participation of the borrower in the program are: the term of lending up to 36 months, the target purpose - construction of housing, the maximum term of subsidy up to 36 months. At the same time, the term of the subsidy must correspond to the term of lending.

When receiving a loan subsidized within this direction, the private developer is obliged to offer at least 50% of the built housing to the depositors of the HCSBK at fixed sales prices for 1 sq.m.

Construction of credit housing through housing savings

In order to increase the availability of affordable housing for HCSBK depositors, including waiting lists in local executive bodies, further construction of credit housing will continue.

If the applicant for housing has long saved funds for deposit and collected 50% of the cost of housing, he has the right to receive a housing loan at the rate of 3.5 - 5% per annum. It is also possible for depositors of the bank to issue preliminary housing loans if there is a minimum amount of savings in the amount of 30% of the contract amount, as well as intermediate housing loans. At the same time, the interest rate on loans will be 5% per annum.

At least 50% of the built credit housing through the local executive bodies on the construction object is distributed among the waiting persons who are registered with the local executive bodies. They should also open an account in the HCSBK and start accumulating funds.

HCSBK has many offers for mortgage clients under the state program

The procedure and conditions of selection, as well as distribution of housing to the participants of the program are determined by internal documents of the bank on the basis of the point system.

Even before the facility is completed, the bank announces a vote that lasts usually a month. If the depositor of HCSBK is satisfied with the class of comfort of the object under construction, its cost and finishing, he gives his vote for it by submitting an application on the bank 's website in the section "Internet Banking." The vote follows the analogy of taking applications to a pool of home buyers.

After voting, points are calculated automatically and a pool of apartment buyers is formed. The pool is a list of depositors of the bank who can expect to purchase affordable housing within the framework of state programs. It includes those who scored the most points. The points depend on how hard and long the depositor has saved money in a savings account. If he was disciplined, observed the accumulation schedule and even the amount reported more than necessary, his assessment will be high.

*Development of individual housing construction

The participants in this direction are citizens who are in the queue to receive land for individual housing construction.

Individual housing construction accounts for a significant share of total annual housing entry. Within this direction, the priority will be the construction of individual residential buildings in a single architectural style in the regional centers through a single developer. Clients participating in the pilot project have the right to buy a finished house with a land

plot or to obtain a loan from the bank for its purchase. According to the information on the bank's website, as of December 2019, about 2 million people are saving money in the HCSBK for their own housing.

Loans at reduced interest rates are provided for the purchase of an individual house through a bank. In order to reduce the rate of remuneration on the loan to 5% per annum, the State will provide subsidies to 7% per annum of the lending rate on preliminary and intermediate housing loans for a period of not more than five years. After five years, on preliminary or intermediate housing loans, as well as on the transition to housing loans, the subsidy rate is terminated. For this purpose, HCSBK attracts loan funds from the market.

In general, «NurlyZher» Program has a deterrent effect on the prices of sale and rental of real estate in Kazakhstan, which has a beneficial impact on the economic situation in the country. The Ministry of Industry and Infrastructure Development believes that housing construction is actively developing, thus contributing to a significant improvement in housing conditions of citizens, an increase in the growth rate of construction, as well as the development of entrepreneurial initiatives.