Impact of Rural Housing on the Economy of the Rural Community
Tashkent, Uzbekistan (UzDaily.com) - In today’s selector, President Shavkat Mirziyoyev noted that apartment buildings will be built in rural areas of the Republic of Karakalpakstan and all regions (in territories adjacent to cities and regional administrative centers). In particular, it implies the construction of multi-storey affordable housing in the amount of 8,336 apartments. It should be emphasized that this initiative to develop the decent rural housing sector can improve the lives of people without adequate housing and at the same time bring benefits to the local economy.
In practice, there are several different methods for improving housing conditions in rural areas, in particular:
- local governments can provide public housing to those in need. In particular, the President instructed the Ministry of Finance to allocate funds to commercial banks and mortgage loans to the population for a period of 20 years (including the twentieth year) with a grace period of 6 months (at the request of the client). The size of the down payment on the mortgage loan will be at least 15 percent of the cost of the purchased apartment. For the poor, subsidies will be provided from the state budget in the amount of 10 percent of the estimated cost of housing to cover part of the down payment on a mortgage loan to improve housing conditions;
- people in need can themselves join a self-help program to build their own housing. In particular, it implies the allocation of loans with a grace period of 6 months for a period of 20 years for the purchase of building materials and the construction of a total of 6,500 individual residential buildings and 500 in one district of each region and the Republic of Karakalpakstan. Subsidies will be allocated from the state budget to cover part of the interest rate in excess of 10 percentage points in the first five years on mortgage loans for individual housing for low-income citizens and those in need of housing improvement.
- a private or non-profit group can build affordable housing for the local population. The President noted that systematic control over the holding of tenders will be ensured to identify business entities engaged in the construction of apartment buildings in rural areas, and to ensure the transparency and openness of the activities of the territorial selection commissions.
All of these activities contribute equally to rural economic development through the following channels:
1. Building or renovating homes requires the services of different groups of people and services from a wide variety of industries. Initial land development activities usually include architects, lawyers, financiers and other consultants. When a project enters the construction process, construction workers and specialized personnel like plumbers and electricians are needed. The development of rural housing creates jobs for those already living in rural areas and encourages others to enter the labor market to meet the new demand for construction-related occupations. According to preliminary estimates, each sum spent on construction creates an additional demand for 1.97 soums.
2. Housing requires an increase in transport and trade services that can benefit the local economy. For a construction project, building materials must be produced and people must be hired to transport these goods.
3. Starting life in a new home is often accompanied by the purchase of new appliances, new furniture and moving services. Later, other improvements to the house itself may be made, including landscaping.
4. New construction in rural areas is often accompanied by improvements in local infrastructure such as paved roads, electrification, and water / sanitation, which contribute to the further development of housing.
Trust that these activities will contribute to the further prosperity of the rural areas of the country and the improvement of living conditions for living.
Center for Economic Research and Reforms