Mircea Baciu
As we know, at present the demand for housing exceeds the supply by about 30%, and the growth of real estate prices, especially in 2025, makes it much more difficult to buy a home. Today, a young family has to pay 60-70% of their income for a mortgage or refuse to buy a house at all.
To solve this problem, decisive action is needed, as well as comprehensive approaches. And to determine the best solutions, it is enough to analyze the experience accumulated in this area by neighboring countries.
Romania and Ukraine have made significant progress in regulating sales and combating speculative sales in the real estate market. For example, Ukraine uses tax policies to limit speculative resales: 0% tax on the first sale within a year and ownership of real estate for more than 3 years; 6.5% tax on ownership of real estate for less than 3 years or repeated sales within a year; 19.5% tax for non-residents in case of ownership of real estate for less than 3 years.
Romania applies a simple scale: 3% of the transaction value for ownership of real estate for 3 years or less; 1% for ownership of real estate for less than 3 years. The tax is withheld by the notary at the conclusion of the transaction.
Ukraine is focused on supporting long-term ownership and real buyers: a zero rate is possible, but otherwise a relatively high tax burden. Romania offers the simplest and lowest possible taxation system: 1% and 3% fixed price, without complex profit calculation and actual tax exemption in certain situations.
The measures to which Moldova could resort are within the competence of both the mayor’s offices of municipalities and the government.
The first measure within the competence of the mayor’s offices is to auction small plots (0.5 ha). For this purpose, city halls will form a reserve of urban land, divide it into plots of 0.5 ha and organize open auctions to which only legal entities and individual enterprises with proven construction experience ≤ 10,000 m² will be admitted. As a result, the monopoly of large developers will be eliminated; small and medium-sized construction companies will be attracted to the market; the supply and diversity of projects will increase.
Another necessary measure is the development and adoption of new urban planning plans with the sale of plots within the city limits or in municipalities. This will result in the reclassification of agricultural land in the suburbs into residential areas; the allocation of large neighborhoods that will be divided into sections for different developers but with a unified infrastructure plan. In this way, the shortage of land in the center of cities will be reduced; land prices in the center will be limited; and demand will be redistributed.
Another necessary measure is the creation of new neighborhoods with turnkey infrastructure. The city authorities could build roads, communications, social infrastructure (schools, kindergartens, polyclinics) themselves or jointly with investors before the construction of housing. As a result, the attractiveness of suburbs would increase; young families would get affordable housing with developed infrastructure.
Itis also necessary to simplify and speed up the issuance of building permits. This would reduce bureaucratic barriers and the time required for a developer to start work, while maintaining quality control and compliance with urban planning regulations. A solution in this regard could be the so-called “single window” system, where all approvals (town planning plan, network connection, environmental impact assessment) would be processed through a single electronic portal. It is also necessary to strictly regulate the terms: up to 30 calendar days for objects up to 5000 m²; up to 60 days – for large objects. Electronic interaction with the municipality would avoid personal visits and paper references.
Particular attention in this regard should be paid to the principle of “tacit consent” – if the authority has not given a reasoned refusal within the established deadline, the permit is considered to have been issued. It is also necessary to simplify the package of documents for small projects (construction and reconstruction), i.e. reduce the list of requirements for buildings up to 3-5 floors high.
At the state level it is necessary to modernize the “First House” program. In this regard, it is necessary: to limit participation only to the purchase of housing with an area of up to 100 m² and a price not exceeding the established limit; to give priority to families with children and young professionals; to correlate the issue with regions with active new buildings; new neighborhoods, housing in municipalities.
Another measure could be the introduction of a tax on quick resale (following the example of Ukraine). It could be set at 6-10% of the value of property owned for less than three years. As a result, the number of speculative transactions would be reduced and the market would become more stable. This tax would be temporary – for example, for three years.
It wouldalso be a positive measure to launch joint projects between the state and developers within the framework of public-private partnership. In this way, housing construction would be stimulated with the participation of the state to accelerate the expansion of supply and provide socially affordable housing without overheating the market.
A possible form of cooperation could be the transfer of land on long-term lease or free of charge subject to construction. The state or municipality would provide a plot of land for construction without a tender, and the developer would undertake the construction of the project and transfer a certain percentage of apartments (e.g. 15-30%) to the state for social programs (“First House”, housing for young families, resettlement from the assistance fund). The state could also subsidize infrastructure, covering the costs of roads, utilities, schools, kindergartens. In turn, the developer would build residential buildings and sell part of the apartments at the market price and the other part at the subsidized price.
In this context, so-called mixed financing also deserves attention. In this regard, a common fund could be created, into which the state would contribute land or funds, and the developer would contribute money, taking over the implementation of the project. Profits would be distributed in proportion to the contributions.
If these measures are implemented within 3-5 years, the following effects will be achieved: price growth will stabilize at 3-5% per year (instead of 15-30% jumps); the share of speculative transactions will decrease by 20-30%; 10-15 new developers from the small and medium segment will enter the market; the share of new neighborhoods in the sales volume will increase from 5-7% to 20-25%.
Dear Mr. Prime Minister!
In conclusion, I would like to assure you that Moldova will be able to avoid further overheating of the market if it synchronizes real estate policy and tax regulation. Ukraine has demonstrated that a quick resale tax works. Romania – that simplicity and low rates simplify administration.
For Moldova, it is important to combine both approaches, complemented by an active urban development strategy. And then, surely, the problem raised in this open letter will be solved, and the economic and social consequences will only be favorable.
I hope that this open letter will be properly understood and appropriate actions will follow.
Respectfully,
Mircea Baciu,
entrepreneur from the Republic of Moldova
