Social housing for rent may appear in Ukraine: will it change the real estate market?
31 July 2024 20:01
In the near future, a new type of rental housing may appear in Ukraine – social housing, the price of which will be several times lower than for conventional rental. First and foremost, the availability of such housing will make it possible for those with low incomes to rent a full-fledged apartment. This was discussed in an interview with OBOZ.UA this was stated by Olena Shulyak, Chairman of the Verkhovna Rada Committee on the Organisation of State Power, Local Self-Government, Regional Development and Urban Planning. According to her, MPs are already preparing a relevant draft lawwhich will specify what kind of housing will be classified as social housing, who will be able to use such a service, and where the state will get the funds to finance such a project.
At the same time, according to real estate expert Ivan Kudoyar, it will be quite difficult to implement such an initiative, as Ukraine is already facing a number of problems in the housing sector, Kommersant Ukrainian reports.
“Ukraine already has such projects as eHouse and eRestoration. Although these initiatives do not relate to renting, they directly affect the housing market in Ukraine. And our state is no longer able to cope with them in full – people are being denied, in particular, under eHouse. It’s one thing to say, and another to implement these projects given the current market situation,” the expert said.
According to Ivan Kudoyar, the main thing is to find funding for such housing projects, including social housing.
“We need to understand that a thousand or ten thousand apartments will not affect the real estate market in terms of prices. We need at least one hundred thousand apartments, and this requires appropriate funding,” he said.
According to Olena Shulyak, to finance the social housing fund, an inventory of community-owned housing will be carried out, and international partners (the European Investment Bank) are ready to provide €200 million for this purpose, but the expert is not sure of the effectiveness of this project.
“Even if this bill is implemented and passed, it will not mean anything. There have already been many laws: on the demolition of Khrushchev, on red and green lines, and on hostels. Laws are being passed, but for some reason, those related to real estate either do not work or work very poorly in 90% of cases. That is why I would not take this initiative seriously yet,” says Ivan Kudoyar.
In his opinion, the initiative to create social housing for Ukrainians will be able to be assessed only in a few years after the adoption of the draft law.
“Even if we are given a billion for this housing, the main thing is that the system itself should work effectively, and it will take at least a few years to set it up, and we are now living in a situation where we do not know what to expect even tomorrow,” the expert concluded.
As reported by Olena Shulyak, social housing will consist of three types of facilities: high-rise buildings already owned by communities, high-rise buildings to be built with money from international partners, and high-rise buildings to be built in the future with social rent paid.
The price of such leases may be linked to the applicant’s income, the average market rent, the characteristics of the housing and the cost of its maintenance.
Socially rented housing will be available in several formats: it is planned to introduce both long-term and short-term leases.
Currently, Ukraine has some of the least affordable apartments. For example, while in Germany, according to Numbeo, 4.66 apartments can be rented for an average salary (i.e. 46 apartments for 10 average salaries), in Ukraine, only 1.64 apartments are available. This is the worst figure in Europe.
The cheapest, according to the real estate portal “Lun“real estate portal, it is currently cheaper to rent in Kharkiv – the cost of renting a one-bedroom apartment per month there is UAH 4 thousand. In contrast, Uzhhorod is the most expensive city in Ukraine in terms of rental prices today: a one-bedroom apartment there costs an average of UAH 17,700 per month. This is more expensive than in the capital or in Lviv: the average cost of renting a one-bedroom apartment there as of July is UAH 16.5 thousand per month, and in Kyiv – UAH 15 thousand per month.
Chernivtsi is next in the ranking with an average rent of UAH 12.3 thousand per month for a one-bedroom apartment, Ivano-Frankivsk, Kropyvnytskyi, Poltava, Rivne – UAH 12 thousand per month, Cherkasy – UAH 10 thousand per month, Khmelnytskyi – UAH 9.5 thousand per month, Ternopil – UAH 9.4 thousand per month.
