St. Petersburg native, Professor Irina Sharkova shares more about housing privatization in Russia.

SHARKOVA: St. Petersburg was fast to start privatization, for example of housing or first small enterprises. It's actually started in 1987 with Gorbachev signing the law for small enterprises. And that's kind of when activities such as kiosks, small trading activities, would start. And St. Petersburg was catching up very quickly, basically, on many instances, not only equal to Moscow but also ahead, for a variety of reasons. I'd say, then, with privatization of housing, generally the trend was similar to what was happening in Moscow in larger cities. And houses…depending on the location of the housing in the city, how attractive the area was, people would privatize sooner or later.

If you are living in a nice apartment somewhere in the central part of the city, it makes sense to make it your property. If you're living in a shabby housing somewhere…the apartment complex is not well taken care of, then you might as well continue doing it like that. Why would you care about maintaining it as is? So now, let's say if, in the early '90s…in 1991, '92, about 16 to 20% of the housing was already privatized and now the statistics are that well over 50% are in private hands now.

…[R]ental housing was available, although it was not official in the past… It was possible to do even before, only it wasn't legal; it wasn't official and this wasn't recorded. Now it's certainly changed and clearly, if you have your housing and your property, you're allowed to do pretty much what you want. Sometimes what you want includes major restructuring to the extent that the carrying walls, you know, the carrying walls of the whole structure would be sometimes moved and then, of course, other residents would get concerned… And then there will be some kind of restraining order on the activities in the apartment of an owner who probably slightly overstepped the boundaries. But generally, yes, you can rent housing and this is a serious source of income in cities such as St. Petersburg or Moscow or other larger cities…

The Privatization Process
…you do have to go through a process, applying for privatization of the housing. So you'd have to fill out the forms and you have to pay a small fee basically for the processing of the documents. There was sort of a progressive scale of that fee, depending on how, what the size of the housing was relatively to how many people were living there, for example. There are large apartments probably would be privatized for slightly higher fee.

But generally, whatever you had, you would inherit in this sense. You'd privatize. And as a result of which, those people who were in the position of power or were more advanced in communist society, they automatically kind of, and forever, they became proprietors of nicer housing. So this, kind of the inequity that existed during Soviet times got a more permanent character through the process of privatization. And those people who didn't have a lot of housing, for example, who would have two, three people living in a room, they also can privatize it and they would. However, their conditions would stay the way they are; you don't really have much choices or much chances to improve your housing once it happens.

The [rents have] gone up as well. They used to be, throughout the last two decades of Soviet times and the early years of Perestroika, they used to be at the level of about 10% or even less than 10% of your monthly income. Generally, the rents were not measured as a percentage of income; they were measured, depending on the number of square meters in the apartment. So there are always certain established fees or rents for square meters, for the area of the apartment. And this, again, for many families, especially for those families whose careers were already more advanced, for example, in their 40s or 50s, they would receive, they would probably pay about 5%, 7% of their income. …Since then, though, the rents have been increasing.

The goal that's been pursued through these increases is to make the municipal housing and state housing more or less, if not profitable, but at least to be able to cover most of the expenses at the expense of people who live there. So of course the amount of rent that the government, city governments take is not adequate for that yet but it certainly has been increasing. And relatively, especially relatively to the increases in the income of people, it really was very noticeable, because if we start at the beginning of the decade, if we start with about 5 to 7 to 10% of one's income, so now it's more like 50%, maybe 60% in some cases. So rents have grown quite a bit.

…privatization of existing housing will probably go quite slow because the best of the existing housing or the housing that was built before '90s already was privatized. So what you have now are the apartments that, in the housing that's poorly built and people really don't want to invest that much. They can be forced to, but not voluntarily. However, there has been a growing share of the housing that's built by so-called private constructors or by basically private firms for individuals. And this has been picking up. So as the process of new housing construction by private constructors accumulates, then the proportion of the private housing in the total housing will be increasing.

So it's probably building not so much because of the privatization of existing, poorly built, low quality housing but because of the construction of the new housing that's already well-built, that's already private. And that's how the balance will be changing. It also could be that this housing, the poor quality, there is another process that's underway.

The poor quality housing that was built, say, during Khrushchev time or early Brezhnev time… there was talk that Khrushchev's housing actually was built for 25 years. Well, 25 years are well over. So this housing, of course, it cannot be replaced at once but it is being replaced in Moscow. It's started to be replaced in St. Petersburg. Once it's replaced, what happens is that people who used to live in such housing, they are entitled, or at least according to current regulations, they are entitled to receive new state or municipal housing in return. So once they receive it, then there will be an incentive to actually privatize it because this housing will be probably not luxurious but at least it will be built according to new standards, according to new models and so on and so forth. So there will be, again, the proportion of the privatized housing will be increasing. But it will be increasing, not because current left-overs are privatized but because they are substituted either by newly built housing, which is already private immediately from the beginning, or by the housing that was, that is built by the state and then later privatized. So that will be the answer.