A HOUSE FOR EVERYONE

The reforms in public administration sector, especially in the provision of public services, have considerably simplified the relations between the officials and the citizens. The objective is to maximize the effective use of the e-government capabilities in order to reduce the bureaucracy for both sides and to eradicate corruption and bribery.

Hence the leading role of the ASAN service centers, focused on the provision of public services such as the issuance of identity cards, passports, driver licenses, the bills of sale, and various utility certificates through the government agencies.

The recent decree issued by President Aliyev regulates a number of issues concerning the mortgage lending and determines yet another important aspect of ​​these reforms.

Thus, the decree approves the charter of the Azerbaijani Mortgage Fund (AMF) and the procedures for granting the mortgage loans financed through the AMF, including the concessional loans.

In order to simplify these procedures, it has been decided to create the electronic mortgage system (e-mortgage) under the e-government portal, which will be implemented starting January 2017.

Among other things, the decree stipulates that the new system must i) contain information about the conditions and the documents required to obtain mortgage loans; ii) include a mortgage calculator; and iii) provide the means for electronic application and registration of the loans.

The system must also include individual accounts for persons applying for mortgage loans, and the means for execution of payments.

The Ministry of Communications and High Technologies is instructed to ensure the integration of the new system to the e-government portal, which will allow the banks to obtain data concerning the recipients of the loans.

Not only do the enhancement and simplification of the loan granting procedures contribute to improving the housing conditions of the citizens but they will also revive the construction sector of the country.

The mortgage loans is the primary solution for the housing problem around the world.

In Azerbaijan, the recipients of housing and social loans granted through the AMF enjoy interest rates of as little as 8 and 4 per cent, respectively, which is a bliss. For instance, the Russian Agency for Housing Mortgage Lending can ensure the interest rates of 11.5-12 per cent for mortgage loans at best.

Meanwhile, the rate at which the mortgage loans are being granted is far from perfect. Since 2006, the AMF has granted mortgage loans with a total value of AZN 730.8 million to 18 thousand recipients. The process of granting the loans, though, has slowed significantly over the past six months.

A simple calculation shows that only 1.8 thousand people could receive the mortgage loans, although during the parliamentary discussions a few years ago, the announced number of applicants was equal to 100 thousand. But at current pace of lending, it will take several decades to ensure mortgages loans for every applicant. However, one must take into account the population growth in the country.

The necessity to restore and to accelerate the process of mortgage lending is, in fact, beyond the discussion. It is worth noting that the resumption of mortgage lending should improve the situation not only in the housing market but in the economy as a whole. Each manat invested in the construction industry attracts additional four manats into the related industries.

This process has already been witnessed in 2010 when the mortgage lending had been restored after a three-year break. Therefore, the start of active mortgage lending through the AMF can lead to yet another spike of revival both in the real-estate market and the construction sector, which eventually will have a serious economic effect by early 2017.

In any case, one requires certain funds to be able to return the loan when buying an apartment. But this is a real problem for low-income families. Therefore, the State Housing Agency (SHA) has been created to solve the housing problem of this category of population in Azerbaijan. Its main mission is to provide housing for the low-income families on very favorable terms.

As President Aliyev mentioned at the last meeting of the Cabinet of Ministers dedicated to the results of socio-economic development during the first half of 2016, this is a very serious social initiative.

"The organizational issues are being solved. The land plots are being allocated, so that SHA can start the construction works as soon as possible. The low-income families will enjoy housing provided under long-term concessional conditions. This is a very serious social initiative, which must be extended over a wider scope. There is a need for this in every region, every district. At the same time, this initiative will have a significant impact on the construction sector since it suffers from a very large gap resulting in loss of jobs", said president Aliyev.

He added that the entrepreneurs must also be ready for large-scale works regarding the construction of social housing.

"All construction materials must be manufactured in Azerbaijan. In fact, a considerable part of them is being manufactured nationally but the volumes of production and the demand are going to increase. The private sector must also be ready and organize itself in a manner that will ensure realization of our plans. Otherwise, we will have to purchase construction materials overseas, which is not what we want", said the president.

One may ask whether the scale of housing construction will lead to "overheating" the real-estate market. The statistics, however, show the opposite. In Azerbaijan, the housing area accounts for 18 sq. meters per capita being less than in Kazakhstan (21 sq. m) and Russia (23 sq. m) but significantly lower than in the European countries (49.7 sq. m) and the US (65 sq. m).

Therefore, the country will need many more new apartments to ensure that the housing issue is solved completely. Moreover, given the rapid growth of the local population, the construction companies and the related sectors of economy will be able to run the business for several decades.