Kazakhstan • 08 November, 2019
How to get affordable housing in Kazakhstan?
Over the years of independence, 141 million square meters of housing have been commissioned in Kazakhstan. The state is developing a unified model of housing development throughout the country, where the main principle is to increase the affordability of housing, especially for socially sensitive segments of the population. The first President of Kazakhstan – Elbasy Nursultan Nazarbayev, in order to improve the living conditions of the population and create affordable opportunities, initiated the introduction of new mortgage lending programs, which further increased the availability of housing mortgages, primeminister.kz.
Nurly Zher State Program combines new mechanisms to support housing construction. In 2018, the 7-20-25 program was launched, which over the course of 5 years should help 650 thousand families or more than 2 million citizens to acquire their own houses. In 2019, at the initiative of Elbasy, a new program called “Baqytty Otbasy” was launched with a preferential rate of 2% and an initial payment of 10%. By the end of the year, at least 6 thousand families will purchase housing under this program. First of all, large families and families raising children with disabilities. From 2020, 10 thousand such families will be provided with housing annually.
In the Address to the people of Kazakhstan “Constructive Public Dialogue – the Basis of Stability and Prosperity of Kazakhstan,” the Head of State Kassym-Jomart Tokayev instructed to develop a unified housing policy that will correspond to different levels of family income. Within three years, it is necessary to solve the issue of providing housing to low-income large families in the waiting lists. At the same time, citizens who do not have enough income to purchase their own property should be given the opportunity to live on a social lease.
For these purposes, the state will allocate more than 240 billion tenge by 2022. By the end of the year, the government has been instructed to create a unified national accounting system for waiting lists for rental housing, as well as to receive preferential housing loans under the Baqytty Otbasy program.
The waiting is expanding annually by 50 thousand people, with the introduction of social housing for 20 thousand families. In this regard, the Nurly Zher program provides for the introduction of a graduation system for providing housing to citizens, depending on their capabilities and status. For example, rental housing without redemption will be provided to those in the waiting lists who have no income or have income below the subsistence level per family member (29.7 thousand tenge).
Baqytty Otbasy will be available to those in the waiting list whose income does not exceed a 2-fold subsistence level (59.4 thousand tenge) for each family member.
Loan housing from the local executive bodies will be sold to people on a waiting list with income per family member from two times to 3.1 times the subsistence level of living (92 thousand tenge).
Citizens with incomes exceeding 3.1 times the subsistence level will be able to use the tools of the programs 7-20-25, Baspana Hit, Orda from JSC IO KIK, Svoy Dom from JSC Housing Construction Savings Bank.
These approaches will ensure targeted state support and increase the efficiency of housing construction planning.
In 7 Years, Waiting Lists for Housing in Akimats of Cities and Regions Increased by 3.5 Times
The Baiterek Holding plays a systemic role in taking large-scale measures to build affordable housing for the general population, as it is the only operator in the implementation of the Nurly Zher state housing program.
For example, akimats, due to funding received through the mechanism of issuing their bonds, ensure the construction and sale of credit housing at fixed prices.
This mechanism allows you to wrap funds according to the “revolving” principle every 2 years and re-direct them to new construction without additional allocation of resources. Annually, 100-110 billion tenge are turned in this system, which allows akimats to ensure the commissioning of 12 thousand loan housing.
Housing Construction Savings Bank, in turn, stimulates demand and implementation of housing built by akimats by issuing preferential housing loans to the population at 5% per annum. The down payment is at least 20% with the possibility of using housing certificates. To date, the bank system has 1.46 million contracts with an accumulation amount of 716.7 billion tenge. Over the entire period of activity, over 208 thousand loans worth 1.52 trillion tenge were issued, of which 18.3 thousand loans worth 139 billion tenge were issued over the period of the implementation of the Nurly Zher state program.
Since 2005, the level of housing provision has increased by 23% and amounted to 21.6 m² per 1 person. On behalf of Elbasy, it is necessary by 2030 to bring this indicator to UN standards - 30 m² per 1 person. On average, taking into account changes in the population, it is required to increase the housing stock by 66% by 2030 compared with its current value. For this it is necessary to maintain the pace of annual commissioning of new housing at the level of 8-10%.
There is an interesting trend: the more the state builds social housing, the larger the queue becomes.
Today, the waiting lists in akimats have increased by 3.5 times (as of Jan. 1, 2012 — 147 thousand, as of July 1, 2019, — 512 thousand people). This is due to demographic processes, urbanization and labor migration.
On average, demand grows annually by 50 thousand people with the supply of social housing for about 20 thousand families.
According to forecast estimates, an accelerated reduction in priority over the next 10 years will require about 6 trillion tenge, which will provide 552 thousand people with housing. In this case, the funds are repayable.
To do this, a ladder of housing affordability is built depending on the income of the waiting list, taking into account the cost of living.
In the first direction, waiting lists that do not have income or have an income per family member below 1 living wage will be provided rental housing without redemption.
In the second direction, waiting lists with incomes per family member up to 2 times the subsistence level will be offered soft loans at 2% per annum, for a period of 25 years, with an initial payment of 10% (2-10-25).
In the third direction, waiting lists with incomes up to 3.1 living wages per family member, akimat credit housing at 5% per annum, for a period of 25 years, with an initial payment of 20% (5-20-25).
In the fourth direction, citizens with incomes exceeding 3.1 living wages per family member will be able to take advantage of soft loans at 7% per annum, for a period of 25 years, with an initial payment of 20% ("7-20-25") and market products (Baspana-Hit, KIK-Orda, Your Home HCSB).
These approaches will ensure targeted state support and efficient use of funds.
In June 2019, a separate program “Rental Housing for Teachers and Doctors” was launched. The source of financing is the income of Kazakhstanis and market attraction of resources. Due to mixing of funds and reduction of operating expenses, it is planned to allocate up to 40 billion tenge for this product in the next 2 years. This will provide about 3 thousand doctors and teachers across the country. In this case, the rental rate on a monthly payment will be 3.1% per annum.
Thus, as of Oct. 1, 2019, the waiting lists in akimats included 526 thousand people, which is 3.5 times more than the same indicator in 2012. At the same time, the main share — 44% is socially vulnerable segments of the population and 42% are government employees, employees of budget organizations and military personnel.
How to Get Housing under Nurly Zher State Program?
The Nurly Zher program is aimed at a comprehensive solution of housing issues of various segments of the country's population. The program includes the construction of rental housing without redemption, the construction of credit housing, the development of individual housing construction, the promotion of housing construction by private developers.
To purchase credit housing built by local executive bodies, you must:
- to be a contributor to HCSB;
- have savings or make a one-time down payment of at least 20% of the cost of purchased housing;
- have the citizenship of the Republic of Kazakhstan or the status of oralman;
- have permanent registration at the place of residence in Nur-Sultan and Almaty, at least the last two years on the date of application for applicants applying for housing in these cities;
- confirmation of lack of housing;
- confirmation of solvency.
As part of the Nurly Zher program, for the first 9 months of the year, 4,330 apartments, or 258.1 thousand m², were built in the line of credit housing against the 38.3% annual plan.
According to the “rental housing” line, 2 344 apartments or 137.6 thousand m² to the annual plan of 15.6%.
Cities of Nur-Sultan and Almaty hold leading positions in housing construction.
If the applicant meets the requirements of the Program, he is granted a loan at a rate of 5% per annum for up to 25 years. Down payment for a preliminary housing loan — at least 20% of the cost of purchased housing. To obtain an interim housing loan — at least 50% of the cost of housing purchased.
Price parameters for the construction and sale of credit housing of the local executive bodies for 1 square meter in fine finish: up to 180 thousand tenge in the cities of Nur-Sultan, Almaty and their suburban areas, Shymkent, Atyrau, Aktau, Turkistan, up to 140 thousand tenge in other regions.
HCSB depositors, including those who are in the waiting lists of the loal executive bodies, can apply for participation in the program. In the absence of demand among those in the waiting lists of the local executive bodies, housing is sold to other investors of the HCSB.
Housing built in the framework of the program, due to its low cost in relation to the market value, is in great demand among the population. Since the beginning of the HCSB program, 19,300 loans have been issued.
As of September 2019, 8.8 million m² of housing was commissioned from all sources of financing, which is 99.8% compared to the same period in 2018. The percentage of housing commissioned by the annual plan was 67.7%. A total of 76,484 housing units were commissioned in the republic, including 32,779 individual houses.
The increase in housing commissioning compared to last year continues in 9 regions of the country. The leaders in housing commissioning are Turkestan (130.3%), Kyzylorda (120%), Almaty (116.6%), North Kazakhstan region (116.4%), Kostanay (116.2%), Atyrau (116.2%) , Pavlodar (110.9%), Aktobe (109%) regions and the city of Shymkent (112.6%).
In the capital for ten months of 2019, more than 980 apartments were commissioned due to state investments. Of these, 250 credit apartments, more than 730 rental apartments. By the end of this year, the city akimat will introduce more than 650 credit apartments.
Construction of credit housing through the system of housing savings
Since the beginning of this year, 364 apartments have been provided, of which 182 are on the waiting list of the city akimat (14 large families). In November of this year, in this area it is planned to provide 250 apartments, of which 125 are on the waiting list of the city akimat.
Non-repurchased rental housing
In this area, in 2019, 351 apartments were provided, including: 191 — for socially vulnerable groups of the population, 160 — for large families. In November 2019, 433 apartments are planned to be provided in this area, of which 87 apartments are for large families.
At the same time, the Akimat of the city is working on the acquisition of 1,050 apartments on the real estate market, for renting them without redemption, for a period of up to five years for working youth.
In 2019, within the framework of the Nurly Zher Program, more than 1,200 loan apartments were distributed through the bank, 305 apartments from the line of rental housing with redemption.
Also, in 2019 from the municipal housing stock of the city 282 apartments were distributed within the framework of Nurly Zher without the right to purchase.
Within the framework of Baqytty Otbasy, 284 families received housing certificates.
In July 2019, the issuance of housing loans to the waiting list of local executive bodies in the categories of "single-parent families," "large families," "families with or raising disabled children" began at 2%.
1,790 applications were accepted under the Program. Currently, the Bank is considering 312 directions of the city's waiting list, 109 credit loans have already been issued.
Today, more than 10 thousand young people and young families of the city are in the queue for housing. This year, 6,480 million tenge is provided from the republican budget; it is planned to commission 904 apartments with a total area of 58,500 m². The construction of 6 houses for 304 apartments is underway, the construction of which is scheduled to be completed in November 2019.
How to Get Housing under 7-20-25 Mortgage Program?
The 7-20-25 program is currently the most profitable mortgage program with a low interest rate on the loan — 7%, the down payment is set at 20% of the cost of housing (the maximum cost of housing is 25 million tenge for Astana, Almaty , Aktau, Atyrau, Shymkent and 15 million tenge for other regions), the loan repayment term is increased to 25 years.
On behalf of the First President – Elbasy, in 2018, the National Bank developed the 7-20-25 mortgage program. The program is intended for a wide range of people to purchase housing in the primary market at an annual rate of 7% with an initial contribution of 20% of the cost of housing for 25 years.
7-20-25 provides new opportunities for improving housing conditions for each Kazakhstani citizen with affordable credit conditions. For the first time in Kazakhstan, a housing program has been adopted, designed exclusively for the primary market from the developer, which the program participant chooses himself. The borrower is not charged a fee for the provision and maintenance of a loan. As well as insurance of the collateral property and the life of the borrower is not mandatory, if necessary insurance, all costs must be borne by the bank that issues the loan. None of the previously existing mortgage products had similar lending conditions.
To obtain a loan under the 7-20-25 program, an individual must be eligible for several conditions:
- citizenship of Kazakhstan
- lack of housing in the territory of the Republic of Kazakhstan on the right of ownership
- the presence of a permanent confirmed income from entrepreneurial or labor activity
- lack of mortgages.
In total, from the beginning of the implementation of the Program, as of Oct. 24, Nur-Sultan, 5,980 applications worth 81.9 billion tenge were received from citizens wishing to purchase housing in second-tier banks, of which 3,790 were approved by banks as lenders applications worth 52.3 billion tenge — which is the highest indicator among all regions of Kazakhstan.
In order to support the corps of qualified professionals working in the field of (health, education, culture and sports, providing special social services, the police department), the Akimat of Nur-Sultan covers part of the down payment in the form of a housing certificate with a face value of 1 million tenge for the purchase of housing. Currently, the above areas of activity from the budget of Nur-Sultan issued 397 housing certificates in the amount of 397 million tenge.
Who can Get Housing under Baqytty Otbasy Program?
In Kazakhstan, there are about 340 thousand large families with four or more children, of which 31,725 thousand families are officially in line in akimats as needing housing. Since July 2019, a preferential mortgage lending program “Baqytty Otbasy” was launched for this category of citizens at 2% per annum. This is an unprecedented support of low-income large families, which was initiated by Elbasy. The down payment is from 10% with the possibility of using housing certificates from akimats. Baqytty Otbasy is intended for lending to large families, single-parent families and families with or raising disabled children with low incomes.
At the same time, the cost of housing should not exceed 15 million tenge in Nur-Sultan, Almaty, Shymkent, Atyrau, Aktau and up to 10 million — in other regions.
As of today, with the plan for issuing 50 billion tenge for 2019, the Housing Construction Savings Bank has accepted 4,589 applications for 46.6 billion tenge, of which 2,875 loans worth 29.3 billion tenge have been issued.
Starting from 2020 to 2023, in accordance with the instructions of the Head of State, the annual issuance plan will be at least 10 thousand applications per year or about 100 billion tenge.
- loan rate — 2% per annum;
- down payment for a preliminary housing loan — at least 10% of the cost of housing purchased; for an interim housing loan — at least 50% of the cost of housing purchased;
- loan term — up to 20 years.
- purpose of the loan — the purchase of housing in the primary (including credit housing through local bodies) and secondary markets;
- the maximum loan amount for the purchase of housing in Nur-Sultan, Almaty, Shymkent, Aktau, Atyrau is not more than 15 million tenge, in other regions not more than 10 million tenge;
- collateral — acquired housing or other property that meets the requirements of the HCSB.
Akimat of Nur-Sultan covers part of the down payment in the form of a housing certificate with a face value of 1 million tenge for the purchase of housing in the primary market. To participate in the program, 2,365 referrals were issued (834 large families, 1,143 single-parent families, 388 families with children with disabilities), of which 521 credit loans worth 7.2 billion tenge were issued (198 large families, 239 single-parent families, 84 families with disabled children), from the indicated number 50 housing certificates of 1 million tenge each were issued to cover part of the down payment.
What Conditions does Askeri Baspana Program Offer?
The HCSB developed the program “Askeri Baspana" — soft loans at 8% per annum. As you know, from January 2018, amendments to the legislation were made to allow military personnel to accumulate in the HCSB due to received housing payments. Housing can be purchased in the primary and secondary markets. To date, 86.4 thousand special accounts with a total revenue of 149.3 billion tenge have been opened by military personnel. The bank issued 6.5 thousand loans for 99 billion tenge.
Separate programs for socially significant professions are also being implemented. Since June 2019, a program for the provision of rental housing with the right to purchase has been launched for teachers and doctors. The total funding for 2019-2020 is 40 billion tenge, which will allow to purchase 3 thousand apartments on the market. Rental housing is provided without down payment at 3.1% per annum. The right to early redemption of housing is provided without any penalties. Today, the ministries of health, education and science are compiling lists of employees who will be provided with housing, including by region.
How can Working Youth Get Rental Housing without Right to Purchase?
As part of the implementation of the Youth Year, on behalf of Elbasy, the Nurly Zher program included mechanisms for financing the construction of rental housing without redemption for working youth in the cities of Nur-Sultan, Almaty and Shymkent.
The applicant, in order to receive rental housing without the right to purchase, provides the following documents to the authorized body:
- application in the form in accordance with the annex to these Rules;
- a copy of the identity document of the applicant (the original is presented for identification);
- copy of education certificate;
- copy of marriage certificate (if any);
- copy of the birth certificate of children (if any);
- certificate of absence (presence) of real estate for the applicant and all family members;
- certificate of employment;
- income statement for the last six months, confirming the applicant’s monthly income of at least 40 monthly calculation indices;
- documents confirming the length of service in accordance with Article 35 of the Labor Code of the Republic of Kazakhstan;
- a statement of the availability and number of the bank account and a statement of the balance and movement of money in the bank account;
- documents confirming the applicant’s personal achievements in various fields of activity (if any).
Scoring is carried out on a point system:
- to the applicant who has mastered the profession according to the list of 100 specialties most demanded by the market – 10 points;
- if there is a family – 5 points, for each year in a registered marriage – 2 points;
- in the presence of one child – 1 point, for each subsequent child – 2 points;
- when carrying out individual entrepreneurial activity for at least 1 year – 5 points, for each year – 1 point;
- in the presence of personal achievements of the applicant in various fields of activity – 2 points;
- for labor activity in budgetary organizations (state institutions and state enterprises) – 5 points, for each year of service – 1 point;
- for each year of savings in savings accounts (deposits) in second-tier banks – 2 points.
If the points are equal, the advantage is given to applicants who submitted applications earlier by the date of application.
How Digital Technology Affects Housing?
In June 2018, Baiterek Holding launched an Internet portal for monitoring facilities funded by the Nurly Zher state program and its own Situation Center. The portal is intended for local executive bodies that post electronic information on the progress of construction of residential facilities in the regions. All this data is visualized in the interactive Situation Center in real time. These solutions allow remote monitoring of all facilities under construction using video cameras, drones and other technologies. Smart cameras with high accuracy recognize the equipment at the facilities, the stages of construction and the movement of labor. Now you can track the development of allocated funds and develop appropriate solutions based on data analysis.
Today, the electronic database includes about 300 facilities under construction, each of which has detailed information.
A special mobile application has been created for representatives of technical supervision, which allows you to download data from the phone while on the construction site.
The discipline of filling is reflected in the schedules of production work, you can see how many times the representative of technical supervision was at the facility.
In addition, on the example of this project, you can see how digitalization saves resources. The previous construction monitoring format required 8 working hours per week to collect information and another 8 hours to compile and analyze our experts.
The new portal reduces this time by 8 times. Today it takes only 1 hour to receive information and 1 hour to process it. The digital monitoring format will annually save about 30 million tenge of the holding budget.
There are great opportunities to reduce the cost of housing and infrastructure through the use of the so-called "Online Marketplace," which on their platform will be able to directly connect customers and suppliers without intermediaries.
The holding has already begun work in this direction. This will reduce operating costs for all parties by an average of 20%.
At the same time, the introduction of a system of long-term offtake-contracts at fixed prices will make it possible to ensure workload of house-building plants and domestic manufacturers of building materials.
Marketplaces should be as open as possible and provide the full amount of information that simply neutralizes unscrupulous suppliers.
Given that the share of building materials in the cost of construction is more than 55%, the construction price per 1 m² of housing can be reduced by an average of 10%.
Similar platforms need to be created for the real estate market, where the population, commercial banks, developers, private developers and government agencies will also be able to unite on a single platform and provide their services.
Since August 2017, the Baspana.kz real estate Internet portal has been launched through the Housing Construction Savings Bank, which has unified all HCSB clients, construction companies and government agencies on its platform.
Now Kazakhstanis can remotely receive online advice on the terms of the Nurly Zher state program, information on finished and under construction objects, cost per square meter and bank products.
The portal has already registered more than 153 thousand users, posted 356 objects under the state program Nurly Zher.
In total, over 222 thousand applications for participation in the pool of home buyers were submitted through the online platform, more than 17 thousand apartments were sold to the population at fixed prices, the total amount of 155 billion tenge. About 29 thousand apartments worth 277 billion tenge are under implementation.
With the expansion of the IT services line and the introduction of Smart Home system elements, the scale of the affordable housing ecosystem will increase significantly.
For example, the full-fledged introduction of the Unified Housing and Utilities Information System “E-SHANYRAQ” will allow residents to participate in managing the home online, ensuring transparency and monitoring of the targeted use of funds by management companies.
Residents in real time will be able to verify the accuracy of billing based on meter readings and approved rates. The installation of smart metering devices will reduce the cost of services by an average of 35%.
Thus, the full-scale digitalization of the construction industry, the use of SMART-technologies and the widespread availability of communications are some of the key factors on the basis of which the Ecosystem of affordable housing is formed, which, in turn, stimulates related industries.
Ultimately, this will facilitate productive employment, job creation and equal access for the population to economic and productive resources and opportunities.
What You Need to Know about Shared Construction?
For private developers, the main issue in housing construction is affordable financing.
Today, one of the key problems in housing construction is "expensive" funding for developers and the requirement for a secured collateral base from commercial banks.
If in 2009 the share of construction in the portfolio of banks amounted to more than 20%, today this figure has decreased by 3 times and does not exceed 7%.
Baiterek Holding as a financial operator has the ability to attract market resources, mix with current financial flows and reduce the cost of funding for private developers without any “intermediaries”.
It is possible to support construction companies through subsidizing and guaranteeing credit resources.
For example, through subsidizing loans to developers, the Damu Fund supported 87 projects totaling 91.6 billion tenge. This made it possible to reduce the cost of market loans for construction companies by 50%.
In addition, a new mechanism for guaranteeing shared housing construction through the Federal Housing Fund (Housing Guarantee Fund) allows bona fide private developers to raise public funds at 0%.
For citizens who want to purchase housing on the commercial market at the expense of their own or borrowed funds, guarantees are provided for the completion of shared construction. First of all, it is aimed at safeguarding citizens' funds and protecting against unscrupulous developers. To do this, in 2016, a new Law on shared participation in housing was adopted.
Under the Law, raising funds from the population for shared construction is allowed only with the permission of the akimat or the guarantee of our subsidiary, the Housing Construction Guarantee Fund.
If the construction company received a guarantee of the Fund, this information will be posted on the website www.hgf.kz. Today, projects totaling 137.9 billion tenge have already been approved. This made it possible to protect household deposits for the purchase of over 9.8 thousand apartments in the commercial market.
If there is no such guarantee, then the developer must have the permission of the akimat to raise funds from shareholders, this information must be clarified in the relevant akimat. This must be done without fail, otherwise all responsibility and all risks fall on the shareholder.
By the way, according to the law, a developer can get permission from the Akimat to attract funds from equity holders only in two cases: if he erected a building frame at his own expense, which is 40-60% of the total project cost or if he received bank financing.
If the developer does not show the guarantee of the fund, and the akimat declares that the relevant permission has not been issued for this object, we advise you not to take the risk by investing money. It will be more correct to apply to law enforcement agencies.
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