Tatarstan investors may be attracted by mortgage at 2% in the Far East

However, not all experts agree and cite both the pros and cons of buying housing in the remote part of Russia

Tatarstan investors may be attracted by mortgage at 2% in the Far East Photo: Aleksey Kunilov (oblgazeta.ru)

The Ministry for the Development of the Russian Far East and Arctic on Wednesday published the conditions under which one can become a participant in the preferential mortgage at 2%. In the near future, the Russian government is going to prepare amendments to the bill on reducing rates in the region — this task was set by Russian President Vladimir Putin at the Eastern Economic Forum. Realnoe Vremya tried to find out whether investors from Central Russia will be interested in preferential mortgages, whether they will benefit from investments in the Far East.

They are going to tie young people to an investment unattractive region

The conditions for obtaining a preferential mortgage at 2% in the Far East have been announced. Young families, including incomplete and childless, can apply for it. The main thing — it should be citizens who have not yet turned 36 years old, and spouses who have been married for at least a year. In addition, at least one of them must have a residence permit in one of the Far Eastern regions.

Both the recipients of the Far Eastern Hectare and the buyers of an apartment in a new building have the opportunity to issue a mortgage. The size of the loan is up to 6 million rubles, the term — up to 20 years. The government is now clarifying the maximum size of the loan and discussing whether young families need to make a down payment to this programme.

They are going to subsidize the interest rate on the loan at the expense of the state program Socio-Economic Development of the Far Eastern Federal District and Fund for the Development of the Far East and the Baikal Region JSC. The list of participating banks is still under formation, but Sberbank and VTB have already declared their readiness to work under the programme.

Russian President Vladimir Putin set the task of lowering rates in the region at the Eastern Economic Forum. Photo: kremlin.ru

The government resolution is still being finalized in the ministry of finance. Vladimir Putin instructed to make the necessary amendments to Russian legislation by December 15. The project is to start this year. Preferential loans for the purchase of an apartment or the construction of a house in the Far East is to be issued until 1 January 2025.

“I am not sure that investors would benefit from such transactions”

Realnoe Vremya asked experts in the field of real estate whether the preferential mortgage in the Far East would attract investors from Central Russia and Tatarstan in particular. Some experts do not see anything tempting in investing in housing in a remote region, where there is a large outflow of population. Others do not rule out some interest in buying property at such a record low rate.

For example, Deputy Director General of Unistroy Iskander Yusupov refers to those who consider it unlikely that investors from Central Russia will rush to buy new buildings in the Far East:

“Why are such measures taken? There is an outflow of population. Consequently, the demand for housing may be low, otherwise it would not be stimulated in this way. They do not develop a similar programme in Moscow or Tatarstan. It is not enough to buy a property, it is necessary then to sell it with the desired profitability or to rent profitably. I am not sure that investors would benefit from such deals.”

“Buying at 2 per cent? They still have to be paid, and there is also the down payment. But what if the dynamics are negative? Suddenly the price of the apartment for the next year falls, who then sell it? It is a difficult question. When the market is functioning well, it is possible to sell an apartment in a short time, even if the mortgage is not repaid. Selling to those who already buy housing at a reduced 2 per cent with a weak market?” Head of FLAT real estate agency Ruslan Khabibrakhmanov.

Director General of Schastlivy Dom real estate agency Anastasia Gizatova, analyzing what is happening in the Far East, understands that they want to bind young people to the region by solving the housing problem. But the main problem is not the high cost of housing, but the absence of a good life in this area, high wages, decent work. People still move to Moscow, where there is no preferential mortgage and the cost of apartments does not fall, but grows. Anastasia Gizatova is just concerned about the artificial regulation of demand for real estate in the Far East, which she considers investment unattractive and investments in its real estate risky.

Head of the Federal Mortgage Agency Radik Garifullin, in principle, does not consider it advisable to invest in real estate with the help of loans, albeit preferential. In his opinion, the size of the mortgage benefits will suit only the target audience.

“It is a question of a discount not on housing, but on the credit. The conditions of the mortgage are best for a particular family — in our case, conventional investors. By purchasing their property, new borrowers, if they do not fit the criteria of this preferential lending, will not be able to qualify for the same conditions. And the scheme will not work for a new buyer, and accordingly, the bank will lend it under ordinary, non-preferential terms. It turns out that the subsequent buyer will be able to purchase the property together with the debt to the bank. The investor will not be able to avoid this scheme.”

It is advantageous if the rent covers the mortgage

Director of Novostroyki Kazan agency Oleg Zakharov considers the preferential rate attractive:

“In general, 2 per cent is a cheap loan, it is always profitable. You can buy an apartment and rent it. If it will bring 5-6 per cent, this percentage will make the acquisition profitable. It is clear that then, roughly speaking, every second can buy an apartment and make money on it. It is clear that the goal of the programme is to keep people in the Far East. The region is not ours, I cannot say what investment component is there. But hypothetically, investors, buying up housing and renting it, could thereby reduce the overall level of rental property. I do not rule out that the government will impose strict restrictions on the purchase of apartments under such conditions. But if housing will be actively built — then it’s an interesting idea. Thanks for the tip! You just need to know the region and understand the demand.”

Sales manager at Assistant real estate agency Andrey Serpionov admits the interest of investors in buying up housing in the Far East, but sees difficulties in reselling:

“Let's say you bought an apartment for 3 million rubles and in the next five years decided to sell it for 3,5 million. You will have to pay 13 per cent to the state from the difference of 500,000 rubles, which is about 65,000 rubles. Additional costs for a potential investor will entail real estate insurance, life insurance when buying an apartment on credit. Don't forget about monthly interest repayments.”

The initial amount of the down payment also bothers Andrey Seprionov, if any will be in the programme. In connection with the preferential mortgage, the expert raises the question of whether another bank can buy this mortgage when reselling the apartment? In his opinion, for the purpose of resale, it is easier to invest real money in housing. And yet, if the investor acquires real estate on a preferential loan in the Far East for rent, then the purchase makes sense.

Experts admit the interest of investors in buying up housing in the Far East, but see difficulties in reselling. Photo: Oleg Tikhonov

“If the monthly loan payment is equal to the rent, it turns out that the investor will buy the apartment during the term of the mortgage. In 20 years, he will have his own apartment — it is a feasible income or a long-term investment that works for itself. If the rent with a margin exceeds the monthly mortgage payment, the investor will begin to receive income provided that there will be no interruptions in the renting,” said the expert.

By Ekaterina Ablaeva