Lower house approves shared-equity construction bill with escrow accounts

According to the draft law, a developer will receive the equity holders' funds only after the facility is built in line with established requirements and put into operation. A company will be able to collect funds from individuals if a number of conditions are met: registering in the Unified Information System, signing a master agreement with an authorized bank, and publishing a project declaration. Equity participation agreements will be notarized and subject to state registration. If a developer collects money in violation of the law, equity holders will have the right to demand it back along with interest for its use. The replacement of a developer or a bank is also provided for when necessary.

Following the first reading in July, amendments were introduced into the text. Not only the agreements themselves, but also amendments and additions to them will have to be notarized. If housing handover deadlines are missed, a project can be classified as problematic without a six-month waiting period, and a developer will not be able to remove it from the register merely by paying compensation without rectifying the deficiencies. Deadlines for drafting subordinate regulations have been set for more than 10 cross-referencing provisions.

The new rules will apply to projects whose construction permits are issued after the law enters into force. During the July debate, head of the Economic Legislation Department of the Ministry of Justice Zhamshid Mirzaev stated that research organizations acknowledged the risk of higher construction costs, adding: "Yes, housing prices will rise in the future, but if citizens are unable to get an apartment, they will be able to simply go to the bank and retrieve their money."