The tightening of rural mortgage conditions in Tatarstan is set to have a significant impact on the real estate market in the region. With 533 rural mortgages issued in the region for a total of 2.7 billion rubles as of August 1, 2024, the program has been popular among residents looking to purchase housing outside of urban areas. However, changes to the program will now limit its availability to rural residents only, excluding those living in urban-type settlements close to large cities like Kazan.
The Russian Ministry of Agriculture has proposed adjustments to the rural mortgage program, aiming to restrict its use to truly rural areas. This means that individuals looking to build summer cottages or houses in cottage villages close to regional capitals may no longer be eligible for the program. The goal is to ensure that the program benefits those living in remote rural areas rather than those on the outskirts of cities.
The current rural mortgage program, operated by Dom.RF since 2020, offers favorable loan rates ranging from 0.1 to 3% with a maximum loan amount of 6 million rubles. However, the recent changes will require borrowers to purchase housing at least 50 km away from regional capitals and within a 30 km radius of cities with a population of over 100 people. This shift will make the program less attractive to urban residents looking for affordable housing options outside the city.
In Tatarstan, the rural mortgage program has been successful, with over 5,500 mortgage loans worth more than 15 billion rubles issued since its inception. The region ranks among the top three in terms of the volume of rural mortgages issued, with only Novosibirsk and Krasnodar regions ahead. Despite the popularity of the program, the share of transactions on the new housing market remains small, as the program is limited to buildings no higher than five floors.
Developers in the region have noted that the program’s restrictions have limited the purchase of apartments through the rural mortgage program, with most buyers opting for private houses instead. While the changes may encourage development in more remote areas, there is concern that rural areas near cities will miss out on the benefits of the program.
Real estate agencies in Kazan have reported a surge in demand for rural mortgages as residents rush to secure loans before the program changes take effect. Many residents have taken advantage of the program to purchase homes outside the city, enjoying a more rural lifestyle while still commuting to work in Kazan. However, the program’s limitations, such as long approval times and floating interest rates, have deterred some potential buyers.
Overall, the tightening of rural mortgage conditions in Tatarstan will reshape the real estate market in the region, focusing the program on truly rural residents and potentially driving development in more remote areas. While some urban residents may be disappointed by the changes, the shift aims to ensure that the program benefits those in need of affordable housing in rural areas.