Armenia Housing Study Prepared by: Hayastan Stepanyan, legal expert, UFSD and Armen Varosyan, housing expert, UFSD Contents Foreword ________________________________________________________________________________ 4 n stei ll Acknowledgements _______________________________________________________________________ 5 I m RA Executive summary _______________________________________________________________________ 6 z E Introduction and methodology _____________________________________________________________ 9 Context analysis Background information on the Republic of Armenia _______________________________________ 10 Housing stock of Armenia before independence ____________________________________________ 11 Housing situation after independence _____________________________________________________13 Condition of current housing stock in Armenia _____________________________________________15 Vulnerable groups in Armenia lacking access to decent housing _____________________________16 Housing analysis The property rights regime _______________________________________________________________17 The housing finance regime ______________________________________________________________ 19 The housing subsidies regime ____________________________________________________________21 Residential infrastructure _________________________________________________________________23 The regulatory regime ___________________________________________________________________26 Position statement and recommendations Property rights recommendations _________________________________________________________30 Housing finance recommendations _______________________________________________________31 Housing subsidies recommendations _____________________________________________________31 Residential infrastructure recommendations _______________________________________________34 Regulatory recommendations ____________________________________________________________34 Housing solutions Government of Armenia housing solutions ________________________________________________35 Best practices ___________________________________________________________________________38 The Monument of Sardarapat celebrates the Republic of Armenia’s battle for independence, which took place from May References ______________________________________________________________________________41 24 to May 26, 1918. Sardarapat is 40 kilometers west of Yerevan, and the battle is considered to have stopped the Turkish advance Annexes ________________________________________________________________________________45 in Armenia and prevented the nation’s destruction. Photographers: Kim MacDonald and Ezra Millstein. Cover photography by Zaruhi Tonapetyan. 2 Armenia Housing Study Acronyms AB ........................Apartment building GoAm ..................Government of Armenia nRC ......................norwegian Refugee Council ACRA.................... Armenian Credit Reporting HFHA ....................Habitat for Humanity Armenia PD .........................Passport Department Agency HFHI ..................... Habitat for Humanity PmU .....................Project management Unit ADB ......................Asian Development Bank International PPP .......................Public Private Partnership AmD .....................Armenian Dram HIG .......................Housing improvement grants PRSP .................... Poverty Reduction Strategy ARC ......................American Red Cross HOB ......................Heat-only-boiler plant Paper Armenian SSR .... Armenian Soviet Socialist HPC ......................Housing purchase certificates RoA ......................Republic of Armenia Republic HPP ......................Hydropower plant RoA nA ................National Assembly of the ASWC ................. Armenian Water and Sewerage IDA ....................... International Development Republic of Armenia Company Agency RD ........................Road Directorate CBA ......................Central Bank of Armenia IFC ........................ International Financial SCREC .................. State Committee of Real Estate CHP ......................Combined heat and power Corporation Cadastre CIS ........................ Commonwealth of ImF .......................International monetary Fund SDC ...................... Swiss Agency of Development Independent States IRD ....................... International Relief and and Cooperation CJSC ....................Closed joint stock company Development SDP ...................... Sustainable Development CPS ......................Country Partnership Strategy IUE .......................Institute for Urban Economics Program DCA ......................Development Credit Authority KfW ......................Kreditanstalt für Wiederaufbau SmE .....................Small and medium enterprises DGF ......................Deposit Guarantee Fund lG .........................local government SWm ....................Solid waste management DIGH .................... Dutch International Guarantee lTV .......................loan-to-value ratio TPP .......................Thermal power plant for Housing MLSA ...................Ministry of labor and Social UCO .....................Universal Credit Organization EBRD .................... European Bank for Affairs UFSD .................... Urban Foundation for Reconstruction and MMPAA................Mortgage market Participants’ Sustainable Development Development Association of Armenia UI ..........................Urban Institute EQz ......................Earthquake zone moD .....................ministry of Defense UnHCR ................ United nations High EQzRP .................. Earthquake zone Recovery mOTC ...................Ministry of Transport and Commissioner for Refugees Program Communication USAID .................. United States Agency for FC .........................Financial cooperation moUD ..................Ministry of Urban International Development FmC ......................First mortgage Company Development USSR ................... Union of Soviet Socialist FSAP .................... Financial System Assessment mTA......................Ministry of Territorial Republics Program Administration VAT .......................Value Added Tax FSDP .................... Financial Sector Deepening nBF .....................non-bank financial sector WB .......................World Bank Project NMC .....................national mortgage Company WTO .....................World Trade Organization GAF ......................German Armenian Fund nPl ......................non-performing loans Ym ........................Yerevan municipality GDP ......................Gross Domestic Product nPP ......................nuclear power plant Armenia Housing Study 3 Foreword Over the past two decades, Habitat for Humanity, a Christian nonprofit organization dedicated to fighting the scourge of poverty and inadequate housing, has built or improved more than 350,000 affordable homes worldwide. While this is clearly an impressive achievement for a nonprofit, we know that it is impossible to At Habitat, meet the goal of “decent housing for all” through Habitat’s building efforts alone. we believe we To eliminate poverty housing from the face of the earth, our mission calls us to go beyond building and need genuine refurbishing homes. At Habitat we believe we need genuine partnerships and participation with individuals, communities, corporations, nonprofits, local and national governments, and other institutions. Increasingly partnerships and through our programs in 90 countries where we work, we are aiming to influence the overall housing policy and practice to enable a functioning housing sector that works for everyone. participation with individuals, To start, we all need reliable information on the housing environment and a good understanding of the primary housing needs. This Armenian Housing Study, conducted around a methodology developed for communities, Habitat for Humanity’s emerging global housing policy index, is one of the first steps in this direction in corporations, Armenia. It is an attempt to analyze the context and environment that affects housing issues in Armenia, and to identify the most vulnerable groups affected by current housing policies and practices. The housing nonprofits, local policy index looks at five key policy areas and is based on extensive research and studies from many of the and national world’s leading housing policy experts and institutions. governments, Through the data and analysis in this report, we aim to improve our understanding of the housing and other environment and need in Armenia. We believe the analysis and recommendations are useful to policy makers, development professionals, nonprofit organizations and donors who are willing to work together institutions. to find lasting and sustainable solutions to the large demand for decent housing that is portrayed in this document. This study is obviously not a panacea for the housing issues in Armenia, but we hope you will find it a helpful guide to developing working solutions to bring about positive change. Don Haszczyn Area Vice President Habitat for Humanity International Europe and Central Asia 4 Armenia Housing Study Acknowledgements Research was carried out by staff from the Urban Foundation for Sustainable Development in Armenia. ■ Authors: Hayastan Stepanyan, legal expert, ■ Acknowledgments from the authors: Atayan, Housing and Communal Policy department and Armen Varosyan, housing expert. In preparing this study, the Armenian Housing head of