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Modernization of housing policy, construction of affordable housing and mortgages on favorable terms — development of housing construction in Kazakhstan

Wednesday, 14 April 2021, 14:24:10

Today at a briefing at the Central Communications Service, First Vice Minister of Industry and Infrastructure Development Kairbek Uskenbayev, Chair of the Board of Otbasy Bank JSC Lyazzat Ibragimova spoke about the implementation of the Nurly Zher State Program of Housing and Communal Development.

According to the First Vice Minister of Industry and Infrastructure Development Kairbek Uskenbayev, 15.3 million square meters or more than 140 thousand dwellings were built in 2020 in the republic.

Investments in housing construction increased by 33.6% compared to 2019 and amounted to 2 trillion tenge.

For 1 tenge of public funds, 5 tenge of private investment was attracted.

State support was provided to 38.4 thousand families in the form of social housing and soft loans under the programs 2-10-20, 5-10-20 and 5-20-25.

"In the current year, instead of the planned 15.2 million sq. m we undertake to build 17 million square meters under the Nurly Zher program. This has been adjusted taking into account the adopted pre-election platform of the Nur Otan party ‘Path of change: a decent life for everyone!' Housing conditions will improve 163 thousand families, of which 43.5 thousand people on the waiting list will receive state support. They will be provided with 22.5 thousand units of social housing and 21 thousand soft loans. In total for 2021-2025 we will build 103 million sq. m. of new housing,’’ Uskenbayev said.

According to the results of the 1st quarter of this year in the construction industry, despite the introduced lockdowns, there is a positive development trend. The volume of construction and installation works in comparison with the last year increased by 113.1%. The growth of construction activity is observed in 16 regions, with the exception of the Mangystau region.

As the vice minister noted, the impetus for construction is due to the anti-crisis measures taken, which ensures the entrepreneurial activity of construction companies and the employment of the population.

“In the 1st quarter of this year, 2,870 thousand sq. m of housing were commissioned, which is 8.6% higher than the same period last year. More than 23 663 dwellings were commissioned, including 8,637 individual houses. The increase in the volume of housing commissioning in comparison with last year is noted in 16 regions, with the exception of Pavlodar region,” Uskenbayev noted.

Investments in housing construction compared to last year increased by 33.8%.

According to the vice minister, in order to stimulate housing construction and reduce the cost of the state, the state equips housing development areas with engineering networks, including land plots allocated to citizens for individual development.

For 2021-2025 It is planned to provide the necessary infrastructure for 235 thousand land plots, of which 125 thousand land plots are in regional centers and small towns and 110 thousand land plots in rural areas.

Annually, it is planned to allocate 130 billion tenge from the republican budget to bring the engineering and communication infrastructure to residential areas.

One of the new directions for the development of housing policy is the creation of a full-fledged institution of development and support on the basis of House Construction Savings Bank on the instructions of the Head of State - Otbasy Bank, with the transfer of waiting lists to local executive bodies.

The main operating principle of Otbasy Bank will be aimed at increasing the affordability of housing, especially for socially vulnerable segments of the population.

“Today the Housing Construction Savings Bank has been transformed into Otbasy Bank and on its basis a Housing Center has been created, which will centrally maintain, register and record all those in need of housing, as well as the distribution of housing by date of staging among existing waiting lists in accordance with the stairs availability of housing. The base of the Housing Center will be integrated with state databases of individuals. Re-inclusion in the Base is not allowed, citizens can participate in state programs only once,” Uskenbayev explained.

The number of citizens on the waiting list for housing is growing annually by an average of 50 thousand and today is 559 thousand people.

People on the waiting list with an income below 1 subsistence minimum per family member, mainly large families, orphans, families with disabled children, and other socially vulnerable segments of the population, will be provided with housing through the mechanism of subsidizing private rental housing.

People on the waiting list with an income above 1 living wage, mainly civil servants, state employees, single-parent families and other people on the waiting list, will acquire housing through obtaining soft loans for new housing.

A new direction in the development of housing policy is the introduction, on behalf of the Head of State, of a mechanism for subsidizing rent in private housing stock for those on the waiting list.

This mechanism will involve the Single Housing Construction Operator, which forms pools of rental housing, and will manage the housing stock by concluding agreements with tenants.

“Together with private developers, social real estate funds will be created in the primary market. For example, for a housing pool for 10 thousand apartments, subsidies of 5.3 billion tenge per year will be required. After the formation of housing pools, the shares of these funds, backed by real estate, will be offered to the market with a guaranteed profitability,” Uskenbayev specified.

To implement the mechanism for subsidizing rent, it is proposed to strengthen the powers of Otbasy Bank.

It is planned to subsidize rent from rent of private housing stock in the amount of 31 MCI for the cities of Nur-Sultan and Almaty, 21 MCI for other regions and 15 MCI for rural areas.

Additionally, within the framework of improving the housing policy, the following is considered:

  • formation of pools of rental housing and the stimulation of the creation of private social real estate funds;
  • attraction of market funding (deposits of the population, pension savings) and subsidizing loan costs;
  • conclusion of off-take contracts with developers for the purchase of housing (at the prices of the Nurly Zher program);
  • introduction of a project financing mechanism for private developers;
  • granting the local executive authority the right to seize land plots for the construction of housing and social facilities (schools, hospitals) at the expense of the developer's own funds, subject to the provision of 50% of the volume of housing under construction according to the price parameters of the Nurly Zher program.

Also, in the case of the construction of these objects on the developer's own plots, it is proposed to provide alternative land plots or reimburse the developer's costs.

At the same time, land plots for construction will be provided in accordance with the Rules for organizing and holding tenders (tenders, auctions) for the sale of a land plot or the right to lease it.

It is also proposed to introduce a mechanism for the construction of housing in the countryside.

This mechanism, according to the instructions of the Head of State, provides for subsidizing 50% of the employer's costs in the construction of housing for workers in villages.

According to the operational data of the local authorities, the need is 2 855 dwellings in 76 districts. For subsidies, 14.3 billion tenge will be required from the republican budget.

In addition, measures are being taken to renovate the existing housing stock of the republic.

In 2020, 8.6 billion tenge was allocated to 8 regions (Aktobe, Zhambyl, Kostanay, Kyzylorda, Pavlodar, West Kazakhstan regions and the cities of Nur-Sultan, Shymkent) for the overhaul of 249 residential buildings.

At the end of the year, the share of condominiums requiring renovation dropped to 21.5%. This year, an additional funding requirement of 19.5 billion tenge was announced.

As Uskenbayev noted, since the current year the majority of citizens have been given an unprecedented opportunity to improve their living conditions using lump-sum pension payments.

To implement the mechanism, amendments to the legislation on the pension system were adopted and the necessary documents were approved on the definition of authorized operators and their functions in the person of Otbasy Bank and second-tier banks, as well as mandatory norms for authorized operators to control the targeted spending of funds by citizens.

In turn, the Ministry of Industry and Infrastructure Development, together with the Ministry of Labor and Social Protection of the Population, the National Bank, the Agency for Regulation and Development of the Financial Market, Otbasy Bank developed the Rules for Using Single Pension Payments to Improve Housing Conditions in accordance with the legislation of the Republic of Kazakhstan.

The main condition for improving living conditions is determined by the acquisition of housing (including repairs) or construction through various mechanisms.

According to the rules, there are 5 purposes for the use of pension savings by citizens:

- for full calculation when purchasing a dwelling, for civil transactions related to the acquisition of a dwelling (sale and purchase agreements, privatization, exchange, installment plans), under agreements on shared participation in housing construction (if there is a guarantee or upon concluding an agreement on the transfer of a share in an apartment building if there is an act), as well as for the construction of an individual residential building, including the acquisition of a land plot;

- as an initial payment for obtaining a mortgage loan, for the purchase of a home, debt repayment, mortgage refinancing through banks;

- for obtaining, refinancing, repayment of mortgage debt, for the purchase of housing or the construction of individual housing with the acquisition of a land plot under the housing construction savings system;

- for the purchase of a home within the framework of financing by an Islamic bank and repayment of debt for such financing;

- to pay off debt under long-term lease agreements for dwellings with the option to purchase, provided within the framework of housing construction programs and anti-crisis programs.

To date, the ministry, based on the results of the analysis of the implementation of the mechanism and incoming applications, has prepared a draft on amendments and additions to the rules. The project will be adopted in accordance with the established procedure after agreement with all interested bodies and accredited organizations.

“I would like to note that the successful implementation of the measures taken will provide an integrated approach to improve and improve the living conditions of citizens with the provision of high-quality utilities and an effective management system for the construction and housing and utilities sector,” Uskenbayev added.

When asked by journalists about why a lot of imperfections or poorly executed works are often revealed in houses put into operation, Uskenbayev replied that the ministry plans to take a number of measures in this direction.

“Yes, we often face such problems, we turn to the akimats, since the local State Architecture and Construction Control Departments are related to the akimats,” Uskenbayev noted.

At the republican level, according to the vice minister, systemic measures have been developed. First of all, this is the introduction of digital control methods. With digitalization, all responsible and control bodies, including technical supervision and State Architecture and Construction Control, will be connected to the common base in digital format. In the future, all construction companies that carry out construction in the republic will be connected to it. At the first stage, these will be companies that work with budget programs, at the second, all the rest.

If now all the journals of technical, copyright and other control directions are kept in writing and, except for narrow specialists, no one has access to them, the entire course of production should be registered in digital format in the electronic portal. Those who control the progress of construction and law enforcement agencies will have access to this data. For shared construction, people who have invested in construction and equity holders will be admitted to the base. There will be video recording and photo recording, which will later remain in the base of the company serving the house. The base will be connected to the Safe City system.

“In addition, there is a need to strengthen the responsibility of all market participants for high-quality work. We must personify and strengthen the responsibility of each person by name. This year we will make an appropriate proposal on this matter,” Uskenbayev noted.

Also, journalists asked questions about unscrupulous recipients of housing. Often, apartments received under the state program are either resold or rented out. Why does the state program fail to fulfill its intended purpose, that is, the allocation of apartments to the needy? Will there be time limits on the sale of such properties or other measures for buyers?

According to Uskenbayev, there were tasks to restrict the sale of such housing, including those purchased using pension savings.

“But there is a second side: people say we bought, we paid money, why are you restricting our rights. Therefore, now the ministry is not facing such a question,” Uskenbayev answered.

Within the framework of the Nurly Zher program, measures have been taken to increase the availability of drinking water to the population.

In 2020, over 300 projects worth 113 billion tenge were implemented in the regions. This made it possible to increase the level of centralized water supply to 97.5% of the urban and 90.1% of the rural population.

At the end of the year, access to water supply services was provided to 94.6% of the population of the republic.

4,500 km of water supply and sewerage networks have been built and reconstructed.

This year, 319 projects are being implemented to develop water supply and sewerage systems for 125 billion tenge.

When considering applications for concessional lending, social justice principle will be used — Ibragimova

“We have 50 billion tenge, according to our planned calculations, this is about 5 thousand families of only three categories: large families, families raising children with disabilities, single-parent families. On Monday, it became possible to apply online without leaving home. And 19,833 applications already meet the conditions,” said the chair of the board of Otbasy Bank JSC.

In total, according to her, 23,109 applications were filed.

“3,276 applications were rejected — 517 are not on the waiting list and do not fit any of the categories, 2,624 people are in the category of civil servants, state employees, military personnel, so they also do not fit; 123 people are in other categories, three people who are in the war veterans category. Most likely, their children or relatives submitted applications on their behalf,” she concluded.

New homeowners will be selected based on their queuing date in each region. They will start with those that stood in line at the beginning of the 2000s. Further, their solvency will be assessed.

“The principle of social justice will be observed: whoever is the first to stand in line will be the first to receive an opportunity for a soft loan. 15 million tenge is the maximum amount in the cities of Nur-Sultan, Almaty, suburban areas, Shymkent, Aktau, Atyrau, in other regions the amount is 10 million tenge under this program. It is very convenient — real estate can be purchased in the region where the borrower entered the queue, both in the primary and secondary markets. There are no restrictions on the acquired property. We are also implementing the Shanyrak program, last week we received the second tranche of 120 billion tenge. This program is for all categories who are in the queue, including those people who submitted an application and did not correspond to Baqytty Otbasy,” the head of Otbasy Bank explained the distribution mechanism.

According to the plan, during May of this year. about 8 thousand apartments will participate in the Nurly Zher program, information will be on the website baspana.kz.

Inbragimova was also asked how the program for the early withdrawal of pension savings affected the housing market. She replied that according to the latest statistics, about 50% of all funds that were sent from the UAPF are resources aimed at buying out housing, that is, these are transactions in the secondary housing market.

“There was a forecast that there will be many mortgage transactions, but out of more than 100 thousand applications for a mortgage, only 4 thousand applications were submitted to our bank in 3 quarters, and about the same number of applications to second-tier banks. That is, the total volume did not exceed 10 thousand applications. Therefore, the excitement associated with the use of pension savings will actually end at the end of April. Now we receive about 2.5 thousand applications per day. The amounts indicated in the applications have decreased. If in January-February the amounts were indicated in the amount of 15 million tenge or more, now, on average, applications are indicated in the amount of 1-2 million tenge,’’ she explained.

For reference: 79 projects for 55.7 billion tenge to provide urban settlements with water supply and sanitation and 240 projects for 69.3 billion tenge — in rural settlements.

Through the implementation of these projects, it is planned to bring the indicator of the provision of access to water supply services to 98% of the urban and 91.8% of the rural population.

As a result, access to water supply services will be provided for 95.7% of the population of the republic, including residents of 4,601 rural settlements.

Also, within the framework of the Nurly Zher program, measures were taken to improve the comfortable living environment of citizens.

As part of the modernization of housing and communal services in 2020, 11.3 billion tenge was allocated for the implementation of 19 projects for the reconstruction and construction of heat, water supply and sanitation systems in 5 regions (Shymkent, Atyrau, West Kazakhstan, Karaganda, Kyzylorda regions).

This year, 2 projects will be implemented for 1.7 billion tenge (Karaganda region).

At the end of 2020, the deterioration of water supply and heat supply networks decreased to 55%, in 2021 it is planned to reduce it to 53%.

The most pressing problem is to ensure the smooth operation of sewage treatment plants.

Currently, there is a need for the construction and reconstruction of 53 WWTP for the amount of about 366 billion tenge.

It is planned to implement 28 WWTP projects for a total amount of 307 billion tenge in 25 cities with a population of more than 45 thousand people through the transfer of water utilities to trust management and within the framework of service contracts.

In the remaining 24 small towns, projects with a total cost of 59 billion tenge are proposed to be financed through transfers from the republican budget due to low investment attractiveness.

The implementation of WWTP projects will improve the quality of life of the population, ensure 100% coverage of the population with wastewater treatment in cities until 2025, as well as ensure the protection and improvement of the environment.

To ensure the monitoring and management of the housing and communal infrastructure, the E-SHANYRAQ information system is being introduced. The functioning of such an ecosystem will provide transparency in the provision of utilities and in the relationship of residents with management companies.

The necessary rules for the centralized collection of information and storage of data in the E-SHANYRAQ information system have been approved. Currently, work is underway to develop technical documentation.

Comprehensive measures are being taken to digitize the construction industry and housing and communal services.

Since last year, the automation of the reporting process and the control mechanism within the E-Krylys information system has begun, with the loading of registers of technical supervision and engineering and technical personnel and connection to the system of GASK bodies.

The created unified platform for submission of reports by technical supervisions made it possible to track them by objects of labor activity and suppress the facts of rendering services in different regions of the country.

This year, further work on the digitization of construction processes will continue with the launch of the system into commercial operation by the end of the year.


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