Country Profiles on Housing and Land Management - Moldova

Introduction

This document provides a comprehensive overview of the housing, urban development, and land management situation in the Republic of Moldova, highlighting key challenges and offering policy recommendations. The country has experienced economic growth but faces issues such as reliance on remittances and agriculture, a declining population, and a poor housing stock. The document emphasizes the need for effective implementation of existing legislation, cooperation with international organisations, and strategic planning to address these issues.

Economic and Demographic Context

Moldova has shown strong economic performance with a GDP growth of 8.9% in 20131. Remittances contribute significantly to the economy, consistently accounting for over 20% of GDP annually, and the agricultural sector contributes 12.2% of GDP. However, this economic model is considered unsustainable, and the country is aiming for a growth model based on investments and goods and services industries. Despite reducing poverty from 26.4% in 2008 to 12.7% in 2013, Moldova remains one of Europe's poorest countries. The population is decreasing, consistently ranking among the top five countries with declining populations, due to emigration, decreasing birth rates, and increasing death rates, with an estimated 30% population fall by 2050.

Legal and Institutional Framework

The Republic of Moldova has established a comprehensive legal framework for transitioning to a market economy, including laws on housing, energy performance of buildings, insolvency, condominiums, and real estate cadastre. Effective implementation of these laws is crucial, and cooperation with international organisations is recommended. Several governmental institutions are involved in housing policies, with the Ministry of Regional Development and Construction (MRDC) being the central authority for housing and urban development6.

Housing Stock and Conditions in Housing and Land Management

Moldova's housing stock is relatively new but generally in poor condition due to a lack of maintenance and capital repairs6. Most housing (67%) is individual, but multi-family housing is more prevalent in Chisinau and Balti7. There is a trend towards smaller apartments in new developments. Access to water and sanitation is low, with only 42.1% of the population served by public water supply systems in 2012, and 21.4% having access to sanitation, with the situation much worse in rural areas. Overcrowding affects 11% of families, though this is below the EU average, and many people live in homes with a surface area of between 50m and 90m.

Housing and Land Management, and Utilities

The management of multi-family houses faces challenges across social, technical, financial, legal, and operational areas, with local governments administering 70% of these properties. Despite a new law on condominiums, management and maintenance have not improved. Utility infrastructure for water supply is outdated, and modernising it could significantly reduce electricity consumption10. Heating systems are also outdated with significant energy losses. Municipal solid waste management is a major problem with weak legal provisions. The country is highly dependent on foreign energy resources, and the residential sector consumes around 30% of the total energy.

Policy and Financial Framework

The country lacks a comprehensive housing strategy, with policies mainly driven by the transition from a command-driven to a market-oriented economy. House prices dropped after the 2008 crisis, but remain unaffordable for many, and bank loans for housing are also unaffordable. Updated Master Plans are needed, but many are outdated, and funding and strategic planning for new plans need to be considered. The real estate registration system is well-established, with 85% of properties registered, which is expected to provide security of ownership rights, help with bank loans, and provide property information. Land and property are taxed separately, with a reform to unify taxation delayed to 2020, and completing the real estate register is a crucial part of this reform.

Recommendations

The document presents several recommendations, including:

• Promoting the effective implementation of housing legislation.
• Considering abolishing the law on the privatization of housing stock.
• Enhancing the capacity of local authorities for decentralization.
• Supporting the improvement of housing conditions, especially for privatized stock, by amending the Law on Condominiums.
• Promoting energy efficiency through financing and standards, such as the Moldovan Residential Energy Efficiency Financing Facility (MoREEFF).
• Developing policies to improve living conditions, particularly for vulnerable groups, and considering UN guidelines.
• Examining homeowners' debt and providing solutions like de-privatization.
• Improving utility infrastructure efficiency through modernisation and investment.
• Raising the profile of housing within the government by strengthening the housing division.
• Establishing a housing data platform for informed policymaking.
• Increasing the availability of current housing and the provision of new housing by an inventory of state and public properties.
• Implementing the Master Plans development initiative and monitoring implementation.
• Monitoring urban indicators and setting up policies to address pressing problems, such as waste management.
• Providing training and capacity building across local public authorities (LPAs) and service providers.
• Completing the real estate register and aligning registered properties with physical occupation of the property.
• Considering setting up an independent complaints office for registration issues.
• Enhancing the implementation of the new Insolvency Law.
• Complying with the EU INSPIRE Directive.
• Reviewing the Cadastru IT technical infrastructure.
• Using transparent methodologies for property taxation based on market value.
• Merging land and real estate taxes to improve tax collection.
• Addressing the land lease market and modernizing agricultural education.
• Transferring labour from agricultural to non-agricultural activities and focusing land consolidation in rural development.

For further reading: Country Profiles on Housing and Land Management Country Profiles on Housing and Land Management2 Similar post on ACASH