Moscow’s banks first started offering subsidized home loans to encourage Russians to colonize Crimea after its annexation, then the program was extended to other occupied territories following the full-scale invasion.
And as the occupiers seek to step up their drive to sideline local people and Russify Ukraine, they have expanded the categories eligible for cut-price mortgages to include all those who participated in the war on Russia’s side and some specific professions. But not Ukrainians.
When the home loans were introduced to Crimea in 2019, a workaround to avoid Western sanctions meant someone wanting to buy property had to register in Krasnodar Krai — in Russia — use a Sberbank subsidiary to search for real estate on the peninsula, then travel again to the bank’s branch at Krasnodar Krai to collect their official documents.
After the full-scale invasion, Sberbank lost its assets in Europe and refocused on the domestic market. Not hiding anymore, it opened ATMs and its first branches in Crimea in 2023.
A similar process is happening in other Ukrainian territories controlled by Russia. At least four Russian banks are now working there — VTB, Sberbank, Promsvyazbank, and Rostfinance.
Since 2023, Russia has offered 2% mortgages for newly built homes in the occupied territories of Luhansk, Donetsk, Kherson, and Zaporizhzhia. With Russia’s benchmark interest rate set at 21%, and rampant inflation undercutting the value of any loans, it’s a massive discount.
In March 2024, the program was expanded to include resale property for selected groups of people.
While all Russian citizens can get the cut-price mortgages for new properties in occupied Ukraine, loans for resale homes are limited to those involved in Vladimir Putin’s “special military operation” and their families. Preferential mortgages are also available for teachers, doctors, cultural workers, and employees of state service— including the FSB, National Guard, and Ministry of Internal Affairs — who are working in occupied areas.
Russian authorities have set up a portal to explain the program, which makes clear the loans are only available for properties in occupied Ukraine. Many people engaged in the war have asked if they can get the massive discount for properties in Russia as well, but are told they can’t.
With mortgages issued by VTB for properties in Russia close to 30%, the 2% mortgages in the Donetsk and Luhansk regions are by far the lowest rates the bank offers.
“This kind of mortgage program is also available in places like Chukotka, in Russia’s Far East,” said Petro Andriushchenko, advisor to the exiled Ukrainian mayor of Mariupol. “So they have a choice: 2% in Mariupol or 2% in Chukotka. It seems the decision is obvious to everyone.”
Before the full-scale invasion mortgages in Russia were also subsidized by the federal budget, he said, but funding for domestic homebuyers decreased as the focus shifted to persuading people to move to targeted areas of occupied Ukraine.
For example, Mariupol became particularly important for Moscow after the Kerch bridge was damaged. With the need for a land corridor and a logistics hub, Russia used the mortgage program to encourage people to invest there.
“When the Kerch Bridge lost its capacity, they changed their plans, and that’s when the restoration of Mariupol, so to speak, began,” Andriushchenko said. “If it hadn’t been for that, I’m sure nothing would have happened to it, and they wouldn’t have spent anything on it.”
The goal of the process is the removal of Ukrainians from the territory, says Kostyantyn Batozsky, founder of Ukraine’s Azov Development Agency.
“This is a traditional imperialist method of subjugating occupied areas and suppressing the conquered people’s will to resist,” he said. “They make them feel like a minority in their own land then later use ‘referendums’ to promote the narrative that there were never any Ukrainians in these territories. This is undoubtedly a war crime.”
Andriushchenko says Moscow has been targeting loyal populations in Russia for several years, using the lure of work and cheap finance to bring them to Mariupol while local workers are laid off.
“They are being offered well-paid jobs in construction, where work is still available,” he said. “Meanwhile, massive layoffs are happening in local administrations and municipal enterprises, like the city’s energy company. Entire communities are being replaced by Russians, who will work, live, and pay mortgages in Mariupol.”
Ukrainians who chose to stay in occupied areas, and even signed up for Russian passports, are also being passed over. They had expected to receive compensation for their ruined homes and are appealing for help, saying the Kremlin has not lived up to its promises and has made them homeless in their hometowns.
“Behind us, you can see a fence, and soon construction of a mortgage complex will begin here,” says a woman from Mariupol in a protest video posted on YouTube. “Not only the name of Azovstal Street has been changed, but also the numbers of our houses. This was done intentionally to deprive us of our rights to our property.”
Another group on the video says new houses are being built where the old ones were destroyed, but for prices they can’t afford. “The cost of the housing is 4-5m rubles (approximately $40-50,000). This amount is huge not only for pensioners but also for working people,” says a woman from Mariupol.
“As compensation for their destroyed homes, people are offered just over $20,000,” Ukrainian journalist and blogger Denis Kazansky explained. “With this money, you can’t buy any decent apartment, either in Ukraine or in Russia. Russia has simply taken Mariupol residents’ property, destroyed their apartments, and now offers them a pitiful handout.”
Locals say Russians are hesitant to move to the occupied Kherson and Zaporizhzhia regions because they fear liberation. Even so, property “nationalization” is happening there too.
“The confiscation of property continues. Lists are posted with a 30-day deadline for re-registration, and those who don’t comply face ‘nationalization’ of their property into communal ownership,” said Yurii Sobolevskii, first deputy head of Ukraine’s Kherson Oblast Council. “Russian businesses are slowly entering and there are more Russian officials arriving. Some businesses are coming in because they’ve been instructed to, while others, often with links to Russian officials, are seeking profit.”
Elina Beketova is a Democracy Fellow at the Center for European Policy Analysis, focusing on the occupied territories of Ukraine. She worked as a journalist, editor, and TV anchor for various news stations in Kharkiv and Kyiv.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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