Report: Russian govt may ban sales of unfinished housing from 2020

MOSCOW, Jun 1 (PRIME) -- The Russian government may ban sales of unfinished housing already in 2020, business daily Vedomosti reported Friday citing participants of a meeting chaired by President Vladimir Putin on Wednesday.

The president’s position is “to get away from shared construction,” one of the participants said.

The measures are aimed at protecting buyers from actions of unfair developers or in the situation of bankruptcy of developers.

Previously, the law encompassed abolishment of shared construction in Russia from July 1, 2019, but a source said that Putin demanded to do it earlier, almost this year. “A possibility to sell only completed housing from 2020 was also discussed,” the daily said.

Amendments to the shared construction law adopted in late 2017 encompassed that developers will be able to receive money from sold housing only after the delivery of finished apartments to buyers from July 1, 2019. In case housing is bought at the stage of construction, money is to be held on special accounts at banks with both sellers and buyers having no access to them. In case of a license recall from a bank, the Deposit Insurance Agency (DIA) will return up to 10 million rubles to buyers, while developers will have to finance completion of construction with own or borrowed funds.

Aton analysts said that as a result of new measures offer on the real estate market will decrease, while prices will grow significantly.

VTB Capital analysts that the number of unfulfilled contracts of shared construction on the Russian real estate market exceeds 100,000. Urban Group, which is currently on the verge of bankruptcy, is the most recent example, they said. If developers have to finance construction purely with own and borrowed funds, the price of housing will grow by around 20%.

Oleg Stvolinsky, head of Real Estate Worldwide’s Russian office, told PRIME that the new decision will evoke serious problems at developers and may lead to bankruptcy of many of them.

(62.0188 rubles – U.S. $1)

End