MOSCOW, Jul 16 (PRIME) -- Russia runs the risk of a rising number of defrauded real estate investors and failures to finish construction of troubled houses, the Audit Chamber said in a report published on Thursday.
“Taking into account a lower purchasing power of individuals and an uptick in bankruptcies of small and medium-sized construction companies, there are risks of a rising number of troubled construction sites and consequently, a rise in the amount of defrauded investors,” the report said quoting Auditor Svetlana Orlova as saying.
The report also includes the estimate of the fund for protection of rights of shared construction participants, which shows that 3,137 residential houses were to be finished as of January 1, 2020, with the cost of finishing standing at 686 billion rubles. Bank DOM.RF calculated that construction of troubled houses would require about 722 billion rubles from the federal budget in 2020–2024, but the budget only allocates 3 billion rubles to the fund in 2020 and no money in 2021–2022.
Only 31 Russian regions out of 76 troubled provinces earmarked financing for finishing the houses, but only 40 billion rubles. “The lack of financing, especially during the coronavirus spread, creates significant risks of failures to implement planned measures,” Orlova said.
The Audit Chamber recommends the government conduct inventory of defrauded real estate investors together with the regions as there is no valid data on their amount. The regions have not been keeping a list of these people since mid-2019 due to changes in legislation.
Orlova also said that the high wages paid to the employees of the fund for protection of rights of shared construction participants are not justified by the results the fund shows.
“Results of the fund’s activity as a development institution may be characterized as rather moderate. Over the three years of its work, construction of slightly more than 3,000 residential houses were finished, and compensations were paid only to some 1,300 defrauded investors,” she said.
(70.7998 rubles – U.S. $1)
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