Mechanisms for rebuilding destroyed housing in wartime

Ukraine continues to suffer terrible blows on its territory. Part of Ukraine is occupied. Much of the infrastructure has been destroyed. The worst thing is that people continue to die.

The state promises compensation for destroyed housing. In March, the relevant bill was submitted to the Verkhovna Rada, on April 4 it was adopted as a basis. As of June 7, the law has not yet been adopted. But, even if adopted, there is a long way to determine the size and mechanisms of compensation for destroyed housing as a result of the criminal actions of the Russian Federation.

The volume of destroyed housing is huge, the amounts are measured in tens of billions of dollars. Today, our state does not have such money and will not have for the period of continuation of hostilities. The investment attractiveness of such projects is extremely low, due to the obvious risks of wartime and the lack of compensation mechanisms for destroyed housing.

The task of determining fair compensation is non-trivial. A large amount of destroyed housing stock, which was built in the Soviet Union, was outdated and substandard at the time of construction. Today, such housing is not technically and structurally acceptable, nor is it energy efficient. To build something like this is criminal.

The cost of housing depends on its location, in the city center housing has always cost more. How to determine the cost of housing in the center of Volnovakha, Severodonetsk, Kharkov? In what period will we be able to observe a reasonable adjustment in the value of real estate without taking into account the danger from the enemy?

It is important to note the impact of infrastructure on the cost of housing. Hospitals, schools, kindergartens, cafes and restaurants, shopping centers, etc. No less important is the service life of housing – energy efficiency, durability, reliability of structures and communications. This also affects its cost and theoretically should affect the amount of compensation.

Market mechanisms should play a decisive role in the construction of new, modern housing in Ukraine instead of the destroyed one. It is necessary to find a balance between social component and commercial efficiency, profitability of the project. All projects for the construction of housing should be commercially effective for the long term, otherwise it is possible to build poor-quality, cheap temporary housing, the value of which will decrease greatly over time, and this will be an irresponsible waste of scarce resources.

On the example of dozens of projects, it is necessary to study and develop compensation mechanisms that will take into account the whole range of issues. It is necessary to make construction projects commercially efficient and payback. With minimal state assistance (for example, state guarantees), developers and developers will be able to search for and attract financial resources, non-profit organizations of refugees and IDPs, will be able to organize additional funding for such projects through grants and charitable assistance.

Several successfully implemented projects will be able to become an example of complex solutions. Lay the foundation for the regulatory framework for the construction of a renewed Ukraine. Ensure the availability of the necessary statistical material, study the real needs of people and reach a reasonable compromise between the desired and the realized. Develop systems of complex complex financing of construction projects, taking into account the possibility of lending to both future homeowners and developers and developers, taking into account the capabilities of the compensatory mechanism.

Those who are trying to carry out this work now are worthy of state and initiative support.