Housing crisis in Armenia

In Yerevan's main square, right in front of the Government building, you can see protests almost every day. People armed with different banners come here to make their voices heard, they come with social, economic and political demands, everyone here tries to tell their life story.

This has always been a unique “pilgrimage site” where public demand seems to become palpable. After the Second Nagorno-Karabakh War of 2020, the number of “pilgrims” increased dramatically.

Despite sweltering July weather, the displaced people from the Hadrut region of Nagorno-Karabakh gathered here. It was not the first time that they were here – after the end of the war and the passing of Hadrut under the control of Azerbaijan, they have regularly been holding protests both in front of the Government building, in front of other state institutions, and the UN office. These actions have already become part of these people's lives.

You could feel the community spirit here, everyone is familiar, people have common problems and concerns, their lives are very similar in many ways. Being from Hadrut unites them, but they also share the same status of being forcibly displaced, which many cannot reconcile with, and those who can still do not lose hope to change this status sometime in the future.

While Levon Hayryan, the president of the non-governmental organisation Hanun Hadrut, is giving a speech, which to me sounds like geopolitical analysis, the women that came to the protest talk about their daily problems. Here I got acquainted with Esmira Madunts.

Esmira is also from Hadrut, she says that on October 8, 2020 she and her whole family had to flee Hadrut and came to Armenia. Now they live in Abovyan, a small town in the Kotayk region near Yerevan. Mrs. Madunts lives with her daughter's family in a one-room rented apartment. They’re five people which means there’s barely enough space for them to fit in the apartment, needless to say that personal space is non-existent.

“We demand that Hadrut is returned to Artsakh (Nagorno-Karabakh) so we can go back. If it’s impossible, let them build a building for us here, provide us with housing, build a community for refugees”, said Mrs. Madunts.

The landlord decided to increase the rent and instead of 60 thousand drams (~$150 USD), he is now demanding 90 thousand drams (~$225 USD). They had to agree since they knew they wouldn’t be able to find a new apartment. The family's financial situation was getting more and more difficult, and the prices were increasing everywhere.

The main message of the protest was about the housing crisis deepening every day. The government's efforts (40 thousand drams monthly to subsidize rent) were not enough to alleviate the social and financial problems of the displaced people from Nagorno-Karabakh. Dozens of displaced, financially vulnerable families were at risk of becoming homeless. From July until now, as the inflation increased, their situation has become more complicated.

The housing crisis in Armenia gained momentum immediately after February 24, when Russian dictator Putin decided to launch a full-scale attack on Ukraine.

Thousands of Russians escaped from Russia, many came to the countries of the South Caucasus. Some were fleeing from political persecution, some from the economic sanctions imposed on Russia. Since Armenia is a member of the Eurasian Economic Union (EAEU), there are simplified procedures for citizens of member countries both in terms of resident and work permits. For these and other reasons, Russian migrants decided to come to Armenia. The months of February-March are now considered the first wave of migrants.

Of course, Russians were welcomed in Armenia with open arms. Here, newly arrived migrants did not have any language issues as Russian is widely spoken across Armenia, there was no discriminatory attitude towards them, on the streets no one would yell at them and tell them to go home. However, landlords and real estate brokers took advantage of the situation and dramatically increased rent. If for migrants these prices were comparable to the Russian prices and more or less acceptable in the initial period, for Armenians such a sudden inflation was both painful and unfair.

“The landlord called my husband and told him we had to vacate the house by the end of the month because he had decided to rent the house to newly arrived Russians, otherwise we would have to pay more”, Narine Avetisyan, a secondary school teacher, told me in February. She lived in a rented apartment in the Erebuni district of Yerevan with her husband and their newborn and was on parental leave when we talked.

The owner of the house decided to increase the rent despite the fact that they had agreed upon renting the apartment for a long time. Narine and her husband are from the region, they worked and lived in Yerevan and they could not afford to pay more or find a new apartment because of the high prices.

Narine's family is one of the thousands of families who found themselves in a similar situation. When the wave of evicting Armenian tenants from their apartments and renting them to Russian migrants at a higher price had just started, I talked to at least a dozen families who shared very similar stories.

Many different groups were affected by the housing crisis – students, workers who came to Yerevan from the regions of Armenia, displaced people from Nagorno-Karabakh like Esmira, and other Armenians with various backgrounds in various situations.

Most of my friends and acquaintances rent like me. I was also afraid that the rent of my apartment would go up and I would have to return to my hometown Gyumri. Despite the fact that my landlords have shown a very humane attitude and have not increased the rent, the fear is still there.

I have always been very interested in the housing issue. Back in 2019, I did a little journalistic research into the rent prices in Yerevan. Since the real estate rental market is almost fully unregulated, this issue remains relevant until today. Even without comparing the prices I found out as a result of this research to the current prices, it is obvious that the rent has tripled and even quadrupled in a very short period of time.

On social networks people compared prices and were surprised that Yerevan prices are in no way inferior to New York, Berlin or Paris in this regard. Renting a decent apartment in Yerevan now would cost you ~$1500 USD and more. After the “Velvet Revolution” there was also inflation in the housing market, but at the time no one could have predicted the scale of global and local problems we would face just a year later.

The government is passive and, apparently, does not want to interfere in free market relations in any way. Tenants are vulnerable because they cannot expect that any state institution will protect their rights, in current reality this is almost impossible to imagine.

The vast majority of landlords do not sign legitimate contracts with tenants, because if they do, they will not only be unable to change the conditions at any time, set a new price and kick out the tenants, but they will also have to pay taxes.

Tenants will be able to fully protect their rights if a contract between a landlord and a tenant is signed, certified by a notary and registered at the Cadastre Committee. In this case, the owner of the apartment will have to pay 10% tax. This is regulated by the Civil Code of Armenia.

Usually, a contract drawn up by a broker and signed by both parties is presented as a “completely legitimate” contract. However, after signing, in most cases it is not validated and not registered in the Cadastre and, as we can see from thousands of cases, it will not protect you if the owner of the house decides to raise the price or rent the house to someone else.

In some European countries, tenants' housing rights are protected by law and various mechanisms are in place to control the market and protect citizens' rights. This, of course, was made possible by the long struggle of civil groups for their housing rights.

In the South Caucasus and in particular in Armenia, these mechanisms are still missing, and we cannot claim that the legislators intend to develop them in the near future, even though the problem is clearly acute and has affected thousands. There is also no organized struggle, no matter how many individuals complain; the housing crisis, unfortunately, has not led to the formation of a civil movement. Considering other, larger geopolitical and security issues facing Armenians, the absence of such a movement is, perhaps, legitimate.

Tenants are left alone, they have to face landlords seeking to maximize profit on the one hand, and economically challenging situations which have arisen as a result of the recent war and later developments, on the other.

In the absence of an organized civic struggle, people are trying to find solutions by themselves.

For example, Ashot Hayrapetyan, the admin of the “Apartments for rent” Facebook group with almost 60,000 members, told me back in March that he would try to find solutions. He reviewed the rules of the group and banned the group members from posting rent announcements with prices exceeding 200 thousand drams (~$500). At the same time, announcements worth up to 160 thousand drams (~$400) are free, and announcements worth 160–200 thousand drams are approved if the landlords donate 20 thousand drams (~$50) to any pro-Armenian cause and send the receipt to Ashot. According to the rules of the group, it is allowed for brokers to post an announcement in the group only for a monthly fee of 50 thousand drams (~$120), which they have to donate to any pro-Armenian cause.

The overwhelming majority of posts in the group are made by users looking for apartments at reasonable prices, but the group is active, many people really managed to find housing at an acceptable price. Ashot thinks these rules can be a temporary solution until the rental market is regulated.

Despite predictions that such a situation could not last long, rents not only did not fall, but also continued to rise exponentially.

When a partial military mobilization was announced in Russia in September, the second wave of Russian migrants came to Armenia. This time, among the migrants were not only ethnic Russians, but also ethnic Armenians with Russian citizenship. As a result, even garages and basements converted into apartments are being rented out in Yerevan, and the prices in major regional cities of Armenia, such as Gyumri, Vanadzor, Kapan and Dilijan, are the same as the prices in Yerevan in February.

An architect-urbanist Heghine Pilosyan, the author of the study titled “Is Housing in Armenia Affordable” published on the Urbanista platform dedicated to urban issues, defines in which case housing can be considered affordable.

Thus, she writes that “the universally accepted formula for both rental and ownership affordable housing is one wherein shelter costs consume no more than 30–35% of monthly disposable income of a household. In this definition, expenses for rental housing include utilities”.

According to the expert, this approach is flawed since “it does not account for the size of households and the per-capita expenses; lowest-income households may still struggle to cover their non-housing needs with the remaining 70 per cent – that is assuming they do find a housing option within the 30% ratio of their income; in higher-income areas, housing often costs way over 30 per  cent of income”.

Indeed, with the example of the displaced people from Nagorno-Karabakh, we see that this is very relevant: low-income groups are currently not only unable to find housing within 30% of their income (the people of Nagorno-Karabakh who moved to the peripheries, as a rule, do not even have an average income), but also struggle to cover the remaining expenses after paying the rent. Motivated by this, they organize protests and demand the government to find a solution to the housing crisis.

In fact, it turns out that there is a big gap between the price and the quality of the apartment, it seems that the tenants usually do not get an apartment of adequate quality for the price they pay.

According to the above mentioned study, “Most of the housing stock currently in exploitation in Armenia are the Soviet-era multi-apartment buildings. Around a third of the stock was built in the two decades between 1951–1970, another 46% was constructed in the following two decades – between 1970–1990 – preceding the collapse of USSR, and only 16% were added in the three decades following the independence. A portion of the housing stock was badly damaged in the 1988 Spitak earthquake”.

Just recently, the Migration service of Armenia has published the number of border crossings for the months of January – September of this year. The data shows how many foreign citizens entered Armenia, how many left Armenia and the difference between these numbers.

The numbers represent an interesting picture. Despite the widespread opinion that the number of Russian migrants in Armenia is quite large, as Russians can be seen everywhere, it turns out that the number of Russian permanent residents in Armenia is actually not.

According to the data, 786,684 Russian citizens entered Armenia from January to September of this year, and 744,508 left. This means that 42,176 Russian citizens stayed in Armenia.

Of course, the data for the last quarter has not been published yet, but we can also take into account that this total number includes tourists, maybe ⅓ or even ⅔ are tourists, and ethnic Armenians with Russian citizenship are part of this number as well. The numbers show that not as many Russians decide to settle in Armenia as it seemed.

When Russia started a war against Ukraine and Russians started coming to Armenia, many presented this as a good opportunity to develop Armenia's economy and strengthen it through human capital. But we see that many of these Russians actually considered Armenia as a transit country, many of them had to return to Russia.

Since there is no research on this subject, it is difficult to say with certainty why most Russian migrants decide to leave Armenia and what role the housing crisis plays in that decision. But if it is possible, for example, to rent an apartment in one of the cities on the coast of the Mediterranean Sea in neighboring Turkey and it’s going to be cheaper than in Yerevan, then the choice in this case is obvious. It should be noted that most of the Russian migrants who could afford to leave Russia work remotely, in the IT sector, and it is logical that for them rent prices play the biggest role in deciding to stay or leave a certain country.

It is interesting that every time people speak up about the housing crisis, there are always people trying to silence the discontent. They consider such a sharp increase in prices to be very normal and use the “demand-supply” formula, which is an almost universal answer in economics, as an argument.

Indeed, there is a great demand so landlords are trying to squeeze maximum profit, no one doubts this. Human greed has no limits, even in critical situations, when coexistence and solidarity are vital.

The problem is that the rental sector is not regulated at all, everything is left to “self-regulation” of the market, and this further deepens the housing crisis.

Coupled with the increasing inflation, the housing crisis, which is deepening day by day, violates the housing rights of the vast majority of Armenian and Russian non-wealthy or middle-class migrant tenants.

Without the necessary reasonable interventions, the impact of the housing crisis is felt not only by the vulnerable groups of the society, but it also endangers the hopes of making Armenia a comfortable country for all migrants including those with high qualifications who can have a great contribution to the development of the economy.

Current rental prices make up 30–35% of the monthly income only for high income households. As a rule, though, such people own apartments and do not have to rent. However, for the rest the reality is different – the unregulated housing market pushes most to the periphery, deepening poverty and making social inequality even more visible.

And as long as the displaced people from Nagorno-Karabakh, ordinary families and students who have to rent feel the consequences of the housing crisis, as long as Russian migrants leave Armenia because rent skyrocketed and as long as the decision-makers continue to pretend that there is no problem and everything will be “normalized” over time, Armenia will not be considered a country capable of protecting people's (housing) rights and creating opportunities for a decent life for people who have decided to live in Armenia.

Some are trying to solve the problem by publicly shaming landlords and brokers who charge high rents. This may work at a very local level, but it is not a sustainable solution to the problem.

It sounds obvious, but systemic problems really do require systemic solutions, which should be demanded from decision makers. Unfortunately, they are unable to find solutions or don't want to, or both.

While ordinary workers and tenants have various socio-economic problems and the government is offering little to no solutions besides waiting for the market to self-regulate, the housing crisis forces people to live and work just to pay the rent.