Putin instructed to work out plan to abandon unfinished housing sales

UFA, 27 October 2017. /Bashinform News Agency, Olga Murtazina/. The President RF instructed the relevant ministries to elaborate an issue of smooth transition from the shared housing construction to a mechanism of project financing, RIA Novosti reports citing the head of the Ministry of Construction Mikhail Men. He said that it is necessary to prepare a "step-by-step transition through bank support from shared construction to project financing using banks, after the final stringent requirements to developers have been put into effect" (which comes into force on July 1, 2018). Besides, the developers should define the timing of this transition.

Thus, a plan will be created to abandon the practice of shared construction, when the developer uses the funds through the sale of apartments to citizens in an unfinished house. In Russia, 90% of housing is currently built this way.

Under the new scheme, only banks will finance construction, in which case the provision of loans will depend on the progress of construction. Situations will not occur when already paid housing is not completed. However, prices will rise, in advance, by 15-20% (the rate of bank loans is now 15-18%). The process of transition to a new scheme will, according to experts, take three to five years, the newspaper reports.