Incidental housing costs: low in international comparison, but displeasure at price explosion

For several weeks now, citizens in Russia have been complaining more and more about skyrocketing utility costs. For example, a young woman in a video posted on social media says that her utility bills for January amounted to 30,000 rubles, equivalent to 332 euros. Previously, she paid 11,000 rubles, or 122 euros, for her three-room apartment. There have also been numerous complaints about skyrocketing heating costs for one-room apartments. In several cases, the bill amounted to 4,000 rubles (44 euros). Previously, heating costs in the winter season ranged from 1,500 to 3,000 rubles, or 16 to 28 euros. 

Last week, the Russian antimonopoly authority FAS announced that no further changes had been made to utility rates except for the planned VAT adjustment. The authority explained that the high bills could be due to higher energy consumption during the winter season.

Inflation according to plan

At the beginning of this year, utility rates across Russia were raised by 1.7%. The first increase is related to this year's VAT increase from 20% to 22%. Citizens will really feel the impact of the rate change in the fall. Starting October 1, the rate will be increased for the second time, with the increase varying from region to region. In Moscow, utility costs will rise by 15%, and in St. Petersburg by 14.6%. The lowest rate change will be 8% in the Siberian Republic of Khakassia, and the highest will be 22% in the North Caucasus region of Stavropol. In previous years, the tariff was usually adjusted on July 1. The state

justifies the second regional tariff change with inflation compensation and the need to renew dilapidated infrastructure networks. The funds are to be used to modernize equipment and pipelines. The tariff increases are part of the strategy to renew the housing and utilities sector, which envisages investments of 4.5 trillion rubles, equivalent to 50 billion euros, by 2030.

Tariffs have been rising for years

Last year, utility costs rose by an average of around 12% compared to 2024, according to calculations by the online magazine T-J of the financial institution T-Bank. In 2024, the increase was around 10% and in 2023 it was 8%. Last summer, nationwide gas and electricity costs rose by an average of 10.3% and 12.6%, respectively

. Gas prices were driven by a 10% increase in the tax on energy resource extraction. Energy suppliers passed this surcharge on to their customers. Russian gas and electricity prices are among the cheapest in the world. As of summer 2025, natural gas prices for Russian households were $0.009 per kilowatt hour, according to figures from data service provider Global Petrol Prices. By comparison, the price of gas in Germany is $0.13 per kWh, which is fourteen times higher than in Russia. In the US, the price is $0.04, and in China, it is $0.05. Russian households pay just under $0.07 per kilowatt hour for electricity. In Germany, the price of electricity is $0.38 per kWh – five times higher than in Russia – in China it is $0.5 per kWh and in the US it is $0.19 per kWh.

Maximum index against existential fears

Housing issues are sensitive and, for some of the population, are linked to existential fears. In order to avoid drastic increases in utility costs, each Russian region sets its own maximum index each year, which may not be exceeded when increasing fees for housing and municipal services. To clarify: if the regional index is 15% this year, as is the case in Moscow, and utility costs were previously 7,000 rubles (77 euros), then 8,050 rubles (89 euros) will be due from autumn onwards. Last year, an average family of three paid around 6,850 rubles in utility costs in Russia, approximately 76 euros. These figures are based on Rosstat data from 2023, including tariff increases in recent years.

In Russia, utility costs consist of hot and cold water costs, heating costs, electricity and gas consumption, and drainage costs for the use of the public sewer system. In many cases, building maintenance and garbage collection are also included. Heating costs account for 30% of total ancillary costs and building maintenance for 20%. Another 20% is accounted for by water and drainage costs, electricity (12%), gas, waste disposal, and building renovation (18% combined).

The housing industry: a major construction site

Mark Geller, managing director of the Association of Russian Property Management Companies, is well aware of the weaknesses of the Russian housing industry. He points to two areas in need of improvement: the deterioration of infrastructure and the existing tariff system. Geller describes the poor state of infrastructure as a "ticking time bomb." "In a number of regions, 60-80% of the infrastructure networks are worn out, which leads to frequent breakdowns," says the association's head. He goes on to explain: "The heating networks, water pipes, and elevators are a legacy of the Soviet 70s and 80s. According to preliminary estimates, Russia needs at least 4.5 trillion rubles (50 billion euros) for modernization, but in reality it will be even more."

Today's consumers do not understand what they are paying for, while property managers and energy suppliers cannot understand why the tariff does not even cover their costs, according to Geller. This leads to mistrust, conflicts, and risks of corruption. Managing Director Makel cites the billing system as another factor: "As long as you as a consumer cannot see how many cubic meters of water or kilowatts of electricity you are consuming, there is no incentive to save."

According to Geller, tenants actually only pay 30-50% of the actual service price. He sees fair market rates as only part of the solution. "Doubling the rates alone will not solve the problem. We need transparent rates with accurate recording of energy consumption," Geller demands. He is equally critical of modern consumer culture in Russia. The motto "my apartment, my business" is a thing of the past and a remnant of free privatization. "The state distributed home ownership to people, but did not explain to them how to take responsibility," explains the association's head.

This article first appeared in the exclusive newsletter of the German-Russian Chamber of Foreign Trade.

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