For More Than a Year, Citizens Rented Apartments in Azerbaijan with Obligation to Sell Them

Baku/25.03.21/Turan: This process began on January 25, 2019, 1 year after President Ilham Aliyev signed a decree "On the creation of a mechanism for renting out residential premises with the obligation to sell", that is, in January 2020.

The purpose of the decree is to create opportunities in Azerbaijan for citizens in need of housing with the subsequent ownership of a rented apartment.

The mechanism of renting out residential premises with the obligation to sell them has been working for many years and has become widely practiced in most countries, including Turkey, Germany, Bulgaria, Spain and the United States, as well as in post-Soviet countries - Russia, Ukraine and Kazakhstan.

But what about Azerbaijan? How many people were able to use this mechanism in a year? Is the procedure and prices for renting an apartment affordable for everyone?

A few days ago, changes were made to the existing procedures and rules for renting out residential premises with the obligation to sell them, Turan was told in the Mortgage Guarantee Fund. The ministry stressed that this was done in order to improve housing conditions and provide citizens with housing, as well as increase its availability.

The Fund noted that, according to the changes, for a positive assessment of the credit history, it is no longer required that the applicant "has no overdue obligations for more than 90 days during the entire credit history." “After this change, a citizen will be able to concentrate more of his income on monthly payments and choosing housing,” the Fund said.

According to another change, only the age of the applicant will be taken into account when determining the maximum term for a lease with an obligation to sell to an applicant who applies with a family member. Under the previous conditions, when an older family member approached the applicant, the lease contract was concluded for a shorter period due to the age of the family member, this influenced the increase in the monthly payment and the choice of housing. "In general, regardless of the number of family members, the term of the contract will be calculated in accordance with the applicant's age."

Under other changes, taxpayers with a flat rate will also be able to take advantage of the rental mechanism. Stable taxpayers include hairdressers, tailors, shoemakers, photo, audio and video providers, musicians and others in similar activities. “The essence of the new approach is that these persons will no longer need to provide information on income, and their stable income will be determined by the period of their activity.

The average monthly income of fixed taxpayers will be calculated in accordance with the composition of the minimum wage and the period of their activity. That is, the average monthly income of taxpayers operating from 6 months to 1 year and paying taxes on time will be equal to two minimum wages - 500 manats, from 1 year to 3 years - four minimum wages -1000 manats, and for taxpayers, operating for more than 3 years, the average monthly income will be equal to 6 minimum wages - 1,500 manats."

The Fund noted that over the past year, 1253 apartments were offered for rent in Baku, Sumgayit and Khirdalan in stages. To date, more than 650 apartments have been provided for the use of citizens.

Despite the fact that the department did not provide any information on apartment prices, it was noted that the monthly rent for apartments in Baku starts from 411 manats, in Khirdalan - from 333 manats, and in Sumgayit - from 297 manats. All apartments are being commissioned with repairs, connected to public utilities and communications. Apartments are sold to citizens without interest.

Some experts point out that, unlike other countries, any homeowner in Azerbaijan cannot sell their living space according to this mechanism. Because the Mortgage Guarantee Fund itself offers apartments, which affects the price of these apartments.

According to unofficial data, the average price per square meter of apartments, handed over with an obligation to sell, is about 1350-1850 manats. In this case, the prices offered by the Mortgage and Guarantee Fund are about 10-15 percent higher than the prices of apartments sold for cash.

Economist Nemat Aliyev told Radio Azadlig that if this mechanism is available to those who want to buy housing, then it is undoubtedly a positive mechanism. “This is especially positive for young people who cannot start a family due to housing problems. But I have no doubt, and the calculations show that the prices for apartments for rent with a commitment to sell are higher than normal market prices. In this case, again , the purchase of these apartments will not be beneficial to citizens. "

Recalling mortgage loans, the expert noted that only 300-400 people were able to use it in 1 year from the date of the start of issuing this type of loans.

“The conditions were very difficult, especially since after the expiration of the loan it became clear that the cost of housing was 2 times more expensive than the market price, although the goal there is that citizens, especially young families, could buy cheap housing. On the other hand, they themselves banks were not interested in issuing these loans. So this mechanism did not work," he said.

Aliyev noted that even after making additions and changes to the rules, these apartments will become inaccessible to most citizens.

“These apartments can only be obtained by hired workers and fixed taxpayers. By setting these conditions, the state encourages tax evaders, of whom there are many, to pay taxes. This is a positive point. But there is another side to this. The working-age population in Azerbaijan exceeds 6 million people. The number of those working under a labor contract is about 1.6 million of them. The number of people employed in entrepreneurial activities, that is, those working under VÖEN, is about 1 million 700 thousand people, but not all of them are former taxpayers. This means, again, most of the able-bodied population will not be able to become the owners of these apartments, although it is these people who need housing. This means that the mechanism will not work again," said the expert.

Aliyev believes that in order to make the mechanism workable, first of all, it is necessary to provide people with work. - 0 ---