In Ukraine, social rental housing may be introduced to resolve the issue of internally displaced citizens and persons in need of state support in resolving the housing issue. The head of the Verkhovna Rada Committee on the organization of state power, local self-government, regional development and urban planning, the head of the Servant of the People party, Elena Shulyak, spoke about this.
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The mechanism is based on a lower market rate of payment, and all proceeds from rental payments will be directed to a revolving fund, from which new housing will be built in the future.
According to Shulyak, a similar instrument is included in the bill on the basic principles of housing policy, which was recently presented to the public.
The principle of affordable, that is, social renting is based on the fact that communities are the landlord. The company, which will have the appropriate housing stock on its balance sheet, will provide it for rent, payments from which will be sent to local budgets – revolving funds, in which they will be accumulated for their intended use.
This can be either improvement of housing fund that is already on the balance sheet, or for new residential properties that will be used for the same purpose.
Social rental mechanisms are quite popular in EU countries, but Ukraine needs to adapt them and develop a legal basis for this, noted the head of the relevant committee.
For example, in the EU, a social housing rental agreement is concluded between a local government body and employer. The compulsory health insurance company, which provides housing for rent, conducts annual monitoring of the tenant’s income for the previous year. In the event that the average monthly total income for the previous two consecutive years has become higher, this is grounds for termination of the contract.
In the Netherlands, Austria and Denmark, social housing makes up more than 20% of the total housing stock, and in the UK, France, Iceland, Ireland and Finland it ranges between 10-19%, and in Hungary and, for example, Finland, the social rental sector. housing accounts for more than 50% of all rental housing.
In Ukraine, its share barely reaches 1.5%, which is critically low, given all the challenges caused by a full-scale invasion.
Taking this into account, the parliamentarian considers social rent very promising for Ukraine, where now, firstly, there are a huge number of internally displaced citizens, and secondly, the housing issue has not been resolved for decades.
“Of course, we must understand that the European practice of social renting is the result of long-term and consistent policies implemented over the years. Ukraine, in turn, imitated housing policies that for years amounted to the direct transfer of apartments to new owners. Most state and municipal programs have been aimed at subsidizing property ownership rather than affordable rentals. That is, we have a lot of work ahead,” Shulyak noted.
Currently, 98% of residential real estate in Ukraine is privately owned, so affordable rental housing stock has not been formed. That is why the state, according to Shulyak, is clearly aware of the need to reformat the housing stock.
Financing
The financing necessary for this can be obtained, including from the seized assets of Russia abroad. We are talking primarily about the assets of Russian oligarch Konstantin Malofeev seized in the United States, but speaking in general, Shulyak noted, we are talking about tens of billions of dollars.
“We need to create conditions for our citizens to return. And for this we need money, which we will have if the frozen assets are transferred. We agree to discuss constructive options. You can transfer not the assets themselves, but, for example, income from them. That is, they will remain abroad, where they will be stored, but will work in favor of Ukraine. Now we are at the stage of active negotiations on this matter,” said the head of the Servant of the People party.
Property seized from citizens of Russia and Belarus and collaborators can also become a source for filling the housing stock for social rent .
In addition, a significant amount of abandoned housing stock can be modernized and transferred to appropriate funds to meet housing needs. Funds from international technical assistance and development agencies can be used for the development of social housing.
Thus, financing of social rental mechanisms can come from various sources and will not always require the construction and purchase of housing as such – it can be both modernization and insulation of previous non-residential spaces or buildings that are in poor condition.
In addition, the integration of Ukraine into the European Union can help in creating a housing stock for social rental – in particular through the funds of the European Fund for Social Development, which is a key element of the EU regional policy.
At the same time, the first pilot projects to launch social rental mechanisms in Ukraine are already being tested. Thus, with the support of the German government, the “Housing” project was launched in the Lviv region by the International Organization for Migration (IOM) under the UN. The program provides for the creation of housing for long-term residence of IDPs on affordable rental terms.