Taking its cue from Britain’s late champion of privatization, Margaret Thatcher, the government of Turkmenistan plans to create a generation of homeowners.
To the newcomer, Turkmenistan’s capital, Ashgabat, can appear a testament to pared-down simplicity: long and often empty roads lined with pristine, glaring white buildings. Acquiring apartments in those, or indeed any, buildings has long been fraught with complication. But upcoming reforms designed to fit with broader promises to liberalize the economy could soon make home ownership more commonplace.
The move has been long in coming. Shortly after ascending to power in late 2006, President Gurbanguly Berdymukhamedov promised to improve the quality of housing stock, implement a privatization program and open the field for a genuine real estate market.
Details of how the property market could change were laid out in amendments to the Housing Law published by state media in mid-March. In possibly the most noteworthy development, the government is reversing the ban on the privatization of state assets imposed in 1994, three years into previous President Saparmurat Niyazov’s rule over an independent Turkmenistan.
Under changes due to take effect on July 1, tenants will be able to buy the government-owned homes in which they have long lived – a measure enacted and widely embraced under Thatcher in the United Kingdom of the 1980s.
Although the precise motivations were never spelled out, Niyazov’s privatization ban appeared dictated by a desire to maintain state control over residential properties and thereby ensure the pervasive grip over all aspects of society that distinguished his regime.
Until now, only those granted migrant status were able to buy their homes. Ethnic minorities – most notably Slavs, ostensibly seeking a return to their historic homelands - were the primary beneficiaries of that loophole. Migrant status holders have for years been able to sell their privatized homes or rent them out, while not actually being obliged to leave the country.
While seeking to inject a spirit of enterprise through home ownership, the government also looks set to continue its social benefits. Changes to the Housing Law envision a resumption of the Soviet-era practice of providing citizens in need with improved accommodation at the state’s expense.
Precedence, on paper, will be given to certain categories of people, including those whose homes have been damaged by natural calamities, World War II veterans, and university graduates. Another privileged group are those designated with the title of “Ene Myakhri,” or Sweet Mother, who are raising at least eight children. Other beneficiaries include single mothers, families with twins, and teachers.
Families living in accommodation allowing for less than nine square meters per person will also be guaranteed the option, under the new rules, to trade up to a home with no less than 12 square meters per person.
Ashgabat has acquired its current styling through decades of grand remodeling that have seen the removal of acres of Soviet buildings. Many of the buildings affected were indubitably crumbling and substandard, but some of them were also much loved and deemed by their disgruntled former residents to be worthy of preservation.
The trend shows no sign of abating. In one recent case, a cluster of solid, four-story earthquake-proofed blocks in the center was cleared to make space for more of the ubiquitous white marble buildings that have become the city’s trademark. The new buildings, surrounded by wide roads, will accommodate military staff.
The state-led construction boom that began under Niyazov was particularly focused on erecting 12-story residential buildings intended for employees at government ministries, who were granted discounts of around 50 percent off the nominal price in these housing complexes not subject to the same privatization rules. Despite such concessions, many homes remained unoccupied, since average monthly salaries (today between $150 and $250) meant few could even imagine buying $25,000 apartments.
One month before his death, Niyazov approved a decree allowing Turkmen citizens seeking to buy such elite accommodation to take out 15-year loans on highly preferential terms. Berdymukhamedov later extended the loan repayment period to 30 years in an effort to “strengthen citizens’ solvency.” As before, no repayments are required at all for the first five years.
The value of houses soared as a result of currency reforms implemented in mid-2008 to harmonize official and street exchange rates for the domestic currency, the manat.
Still, home ownership is anything but a surefire panacea out of economic doldrums and has in the past bound many to long-term debts that will take a generation or more to pay off.
“After the expiration of the five-year grace period, our family will have to pay around $700 or $800 [per month]. The only hope is for the $500 monthly income from renting out the home we privatized as migrants,” said one elite home dweller, Charymurat.
Officials have not committed themselves to any comment about the current privatization drive, making it hard to understand the government’s motivations. One possible reason for the reversal of a two decade-long policy may, as some are quietly speculating, be that the state is hoping to bolster its coffers with a new wave of mortgage payments.