EIB willing to help Ukraine launch social housing program

MOSCOW. April 22 (Interfax) - The European Investment Bank (EIB), in cooperation with the European Commission, is willing to help Ukraine launch social housing programs, EIB Senior Officer for Lending Operations Oksana Remiga said.

"The Restoration Ministry is pursuing a housing policy reform, which is aimed, in particular, at harmonizing Ukrainian practices with the best European ones. Social and affordable housing is among the things that are outlined in the bill, but which are essential for harmonizing the general framework. A separate bill will be drafted in the future," Remiga said.

"The EIB, in cooperation with the European Commission, is committed to assisting in launching this dimension. A 200-million-euro targeted loan is being discussed, which would be backed by a substantial investment grant from the European Commission, plus 12 million euros in a technical assistance package, which may be spent not only on developing, implementing, and monitoring technical solutions, but also on assistance in developing a regulatory framework," Remiga said.

An active discussion on a future shape of this sector is currently underway between experts involved in developing the program and technical assistance groups, she said.

"Together with the European Commission, we're now trying to promote a model that was used in Europe following WWII to solve the housing problem," she said.

A social housing model implies, in particular, that such housing must fully belong to municipalities, and this sector must be self-sufficient and financially sustainable, she said.

"What mechanisms can secure this [financial stability]? One of the simplest ones used in European countries is this: 80% of premises in a house under construction is allotted to social housing, which is to be rented by certain socially vulnerable groups at a concessionary rate. This housing cannot be bought. As for the rest of the properties, both housing and commercial ones, they are to be rented out at a market-based rate sufficient for maintaining the property's functioning," she said.

As income from commercial real estate is harder to earn in small populated areas than in large cities, it might make sense for smaller municipalities to unite into regional offices, she said.

Another key principle of a social housing policy is the prevention of ghettoization, she said.

"Such housing items should not be located compactly, these buildings should be fitted harmonically into a general urban landscape. It's also important to ensure social infrastructure and good transport links," Remiga said.

The EIB is not considering its involvement in affordable housing and social rent-to-own programs, she said.

"We're considering programs aimed at building and enhancing the quality of social housing packages in municipalities. I'd stress, however, that the EIB basically doesn't propose programs focused ultimately on providing loans to private individuals to buy housing. It's only about housing owned and managed by municipalities," Remiga said.

A social housing program in Ukraine may be launched no sooner than in the mid-fall 2024.

"The European Union and the EIB, which is the European Union's bank, have this rule: legislative structural changes first. However, due to an extremely critical situation in Ukraine, we're ready to work in parallel. As the work on the legislative framework is already ongoing, this enables us to launch administrative procedures in parallel. As soon as [framework] parameters of future legislation are clear, even before it's adopted and implemented, we could start working on projects," Remiga said.

The future 200-million-euro lending program for building social housing should be viewed as a pilot, she said.

"Considering Ukraine's demand for solving housing problems, it would take billions in reality. It's only after launching and adjusting a pilot project, when we can see how efficient it is and how well municipalities can manage this real estate pool, that we can speak about launching next phases. We're really interested in that," Remiga said.