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The word agrarian is typically used as a synonym for backwardness. The region of Belgorod, however, is strongly refuting that notion. While some real estate analysts believe that the liberal market system for buying apartments is failing, Belgorod has found a solution for cheap housing. Here, socially oriented housing politics are quietly emerging and developing. Every resident of this region can buy an inexpensive plot of land and build a house by taking out a small loan — almost like in Communist days.

Land? It's Almost Free!

Belgorod is an average-sized city of regional important that sits near the border with Ukraine. Its population is a little over 350,000 people, and the landscape is mostly agrarian. This city itself does not have important architectural landmarks and is not especially known as a big tourist destination. It is in fact a socialist city that has been built completely from the ground up within the last 60 years because Belgorod was almost obliterated during World War II. The city was occupied by the German forces several times and then was retaken by Soviet forces. After the war, only a dozen buildings survived.

What's more, the main points of interest in the city are related to the war. The largest tank battle in history, at the Battle of Prokhorovka, took place close to the city. Groups of 2,000 German and Soviet tanks met at the site practically by chance, and the battle was so bloody that grass reputedly did not grow in the area for many years after the slaughter.

Though the city is lacking in tourists, Belgorod has become a pilgrimage site for Russian officials. They come with the intention of learning the reason behind Belgorod's building miracle and how the not-particularly-wealthy Belgorod region managed to create a socialist-type system for constructing residential buildings. They want to know, what was the cause of Belgorod's construction miracle?

In Belgorod, the issue of expensive land is practically resolved. Russia is the biggest country in terms of land area, but, paradoxically, there is an artificially created land deficit. Land near big cities is bought up wholesale by landlords, who keep property prices high in the area. For this reason, for the majority of Russians, buying a plot of land and building a house on it is beyond their reach. In Belgorod, this issue of prohibitively expensive land was solved by undertaking two main steps.

Step 1: Beginning in 2002, on the orders of the Belgorod city administration, the local government bought 26,000 hectares of agricultural land near cities in the region. The decision took some audaciousness: If federal authorities had wanted to force the issue, they could have held the governor accountable for managing the city's budget arbitrarily. Nothing like that happened, however. As a result, speculators have not been able to buy land in towns in the area, and the region's authorities now have a vast reserve of land that can be used for building economical housing.

Step 2: After buying up land, the Belgorod region's government started selling land near the cities at low prices. Any person who has lived in the Belgorod region for more than three years can purchase a 1,500-square-meter plot of land and build a house on it. The plot of land costs only 100,000 rubles (about $3,500). In addition, people don't make the payment all at once. The first payment is 25,000 rubles ($900), and the remainder is paid over several years. The cost of land under this program is, on average, 10 to 15 times cheaper than the market rate.

For land buyers, there are other pluses to this program. The land is located near cities (sometimes as close as 10 kilometers from Belgorod), the region assumes responsibility for laying down and providing essential infrastructure, including roads, gas, electricity, water and sewage. As a whole, the total investment per house is about 400,000 rubles to 500,000 rubles ($14,000 to $18,000). The government subsidizes the installation of this infrastructure. Some components of the infrastructure — roads, water, sewage — are built by the specially created Belgorod Mortgage Corporation, with the construction funded by the city budget. The other components, gas and electricity, are built by local infrastructure monopolies.

The program contains a mechanism for deterring land speculation. Naturally, a person can only buy one plot of land. In the official agreement between buyer and seller, there is also a written encumbrance. The buyer of the property must finish construction of the house and begin living in it within five years. Also, the property owner is not allowed to sell the property within three years after completed construction.

Meat-and-Potatoes Mortgages

"We need to build individual houses, not multistory buildings where people live like in an ant farm. Every person should live in his own home," said the governor of the Belgorod region at the time, Yevgeny Savchenko. In other words, cheap land with installed infrastructure is an important aspect of the program, but it isn't the only one.

There also is, for example, a financing system. In the 1990s, when Russia was practically in a state of economic ruin, building a home would have almost comical beginnings. People in rural areas were given credit in the form of construction materials — and then they repaid their debt with agricultural products such. Eggs, meat, fruits and vegetables were the currencies.

In parts of Russia, people have been talking about "stroisberkassa" as an alternative to a typical mortgage loan, but in Belgorod, this system has been in place for a long time. Stroisberkassa is a collectivized bank for construction-related lending, in which the people lending and giving money are shareholders in the bank. In essence, it is a cooperative in the form of a bank.

A consumer cooperative named Svoi Dom is already operating in the region. Once in the cooperative, a person has to contribute a share in the range of 50,000 rubles to 300,000 rubles. After the required base amount is accumulated, credit is then given out in amounts ranging from 100,000 rubles to 600,000 rubles in periodic tranche payments, after a waiting period, and thus all of the money that was invested is returned to the investor. "The waiting period to receive credit in the beginning of the program took about a year, but today it has been cut down to three months. Credit is given for a period of seven years, and the interest rate is only 1 percent a year!" remarked Stanislav Litvinov, head of the Belgorod Mortgage Corporation, the regional company responsible for assisting home construction.

The cooperative extends credit  only for individual homebuilding, and it was created specifically with public-sector employees and young families in mind. In principal, it is now open to other people as well, but the interest rate for loans to people in those other professions will be somewhat higher. Svoi Dom doesn't differ from the typical stroisberkassa in many ways, but one is that the cooperative tracks how the financed money is spent. For example, if the homebuilder puts in a foundation for his house, he then receives the next tranche payment. For public sector employees in particular, there is a special program of subsidies. Through this program families with more than one child can receive anywhere from 100,000 rubles to 300,000 rubles from the regional administration, and young specialists who live in rural areas can receive 150,000 rubles. These funds are invested shares that come out of the cooperative.

A year and a half ago, a non-profit mortgage program for federal employees was reintroduced. "When building a house, it is very important to constantly have control over the process," said Anatoly Popkov, general director of the state enterprise Belgorod Regional Fund of Support for Individual Residential Construction.

"We have noticed that it is difficult for public employees to have this control because of how much time they spend at work. Because of this hindrance, more than 200 small individual homes have been built through the mortgage program, which the federal employees bought themselves through Svoi Dom," said Popkov,  who is also chairman of Svoi Dom.

The homes that are built are not very big — only 60 square meters to 100 square meters in living area. The cooperative, however, has accomplished a very low level of self-sustainment — a box-shaped house with a roof costs only 10,000 rubles ($350) per square meter. In other words, a doctor or a teacher can purchase a home of 100 square meters, with land, for only 1.1 million rubles ($39,000).

New Suburbs

In the suburbs of Belgorod, dozens of new communities on land that was initially purchased by the government are now being built. The process of house construction looks like this: After providing plots of land, the Belgorod Mortgage Corporation makes temporary roads, and people begin building homes. The homes that are constructed are typically not very big — not more than 100 square meters in living area. "People have had their fill of big houses. Now nobody builds palaces of more than 200 square meters. Today it is more common to have houses of 60 square meters to 100 square meters, which are expanded later if necessary," said the head architect for the Belgorod region, Vitaly Pertsev.

The first such communities were comprised only of individual homes. The plan was for residents to use the local stores, schools and kindergartens located in Belgorod. In principal, construction of new schools was also possible, but there was a problem. Constructing individual housing units typically produces a low population density, and there are not enough people currently living in the communities to fully use the buildings and the infrastructure built for them.

Once residents in Belgorod realized this was a problem, they tried to set up new construction projects in Belgorod in a different way. Now, new settlements are not simply a sea of individual homes but are designed as more-compact clusters. In the center of the cluster is a set of medium-sized dwellings with kindergartens, schools and stores. Neighborhoods consisting of individual homes are arranged around this central area.

"In the new projects, we are trying to use the ideas of 'new urbanism,'" Pertsev said. "This idea means that people should live, work and rest in one geographic area. We need to decrease as much as possible the number of times that a person needs to visit downtown Belgorod."

 For this reason, he said, the new towns have schools with kindergartens, recreational zones and public infrastructure within walking distance. "Near the residential clusters we will reserve a territory for new clean industries, where jobs will be available," Pertsev added.

Along with the program of house building, regional governor Savchenko has initiated a new type of support program — family-oriented communities. These are built by followers of "Ringing Cedars of Russia," who adhere to the published writings of author Vladimir Megre.

According to Megre, towns should be made up of land plots of no less than one hectare, and an entire family should live in that amount of space. Then the residents can create an ecological system with a pond, garden and similar elements. The numerous followers of this practice believe that these eco-settlements, consisting of entire families, are the most humane form of living. In the Belgorod region, under the supervision of Governor Savchenko, a law about supporting family-oriented communities was enacted in 2010.

The Governor Factor

The socially oriented residential program exists in the Belgorod region less than 10 years. A couple of trends have emerged over that time. There is a lot of housing being built in the region — about one square meter per person, far higher than the figure for Moscow. Also, more than 70 percent of all new housing in the area is individual housing. Construction of multistory apartment buildings is in decline.

What's more, housing has become something affordable for the region's population, and this has drastically changed the social feel of the region for the better. There is a low level of crime, and roads are high-quality. The region is cleaner and better-maintained than the surrounding areas.

Some people believe the social benefits of this housing systems are serious. "Men practically don't drink. Everyone receives a plot of land and begins construction on it. There is no time left for nonsense," said Alexander Krivov, director of the National Urban Building Institute and a former deputy minister of Russia. Governors of neighboring regions are concerned about their own economic prospects, because specialists are relocating from their regions to Belgorod, since it now has a higher standard of living and more opportunities.

Praise for the region's governor, Savchenko, runs high. "He is a genius — wise, strong and uncorrupted, and that is why there is a special atmosphere in this region," Krivov commented.

"There is no cynicism, no sell-outs, and no soullessness. The governor … does everything possible for improving life in the region," he added.

Entrepreneurs have taken notice that Savchenko is open to discussion and is perceived as a hard worker.

"Savchenko is a unique governor in Russia," said Viktor Linnik, head of the company Miratorg. "We came to the Belgorod region with French entrepreneurs to make a deal for purchasing a manufacturing facility, and we received an invitation for a meeting from the governor on that same day."

Linnik said they "had a good discussion," with the governor asking them about their plans. "He promised us his assistance. … It was unbelievable," Linnik said.

Six years ago the region was visited by the person responsible for the national project Dostupnoye Zhilyo, or Affordable Housing, Dmitry Medvedev, then-deputy prime minister of the Russian government.

After his visit, the federal government took an interest in the concept of low-story housing for the rest of the country. President Dmitry Medvedev himself was inspired by the programs in Belgorod and has suggested replicating this experience in other regions. But it looks like that plan might not work: The right governor and officials need to be in place.