Fair and Square new Apartment

Fair and Square new Apartment

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Russian authorities promised to solve the lingering problem of defrauded homebuyers by 2023. According to experts, in total, Russians invested more than 3.5 trillion rubles ($42.37 bln) in shared construction, not all of which, alas, were spent effectively.

Authorities intend to put an end to cheating

In recent years, the issue of defrauded homebuyers has become hot-debated, and its solution aims to relieve social tension. According to Konstantin Timofeev, Territory Development Fund’s CEO, Russia will spend about 300 billion rubles ($3.63 mln) to solve the problems of equity construction participants. Last year, 103.5 billion rubles ($1.25 bln) was allocated. In 2022, it is planned to allocate about 27 billion more rubles ($326.89 mln), and about 26 billion rubles ($314.78 mln) in 2023.

The Unified Register of problematic objects now includes 2,178 buildings. The restoration of the rights of equity construction participants is required on 1,499 objects.

Commenting on the situation, Deputy Prime Minister Marat Khusnullin said that the problem is not even financial, and there are many legal nuances.

“There are a lot of people who call themselves shareholders, but de facto they are not. They, let us say, fell for a scam. The crook collected money, although he did not get a construction permit. Just ditched customers. Strictly speaking, they are not shareholders, but affected citizens. We are trying to help them and looking for opportunities together with the regions,” said Khusnullin.

“It is important to finish all the projects under construction (we've talked about this many times), and, of course, we must allow new defrauded shareholders to appear by no means,” said President Vladimir Putin.

The regions are happy to get rid of this headache

According to authorities of the Samara region, there are now 3,070 people in the region who are considered to be participants of share construction. The list of problematic objects includes 32 houses. According to the regional government, 746 shareholders will receive cash payments. Another 1,770 will receive apartments. Their houses will be finished. This is referred to 11 problematic objects. In addition, in 2022 could provide payments to 287 shareholders of two more apartment buildings. It is planned that the problem of defrauded homebuyers in the Samara region will be solved by the end of 2023.

According to Valery Savchenko, the Minister of Construction and Architecture of the Stavropol Territory, there are 48 problematic objects and 2,198 affected citizens at the moment. Of these, it is planned to restore the rights of citizens in 23 sites, and it is already decided to complete the construction for 18.

Integral in Bashkiria intends to send almost 900 million rubles ($10.9 mln) for compensation payments to shareholders. It is to be noted that cash compensation is planned to be paid to about 280 shareholders. The problems of all defrauded participants of share construction in Moscow should be solved till the end of 2023.

“As of today, there are 27 problematic objects left in Moscow. We go into the details, peculiarities and prospects of each of them on a daily basis. The problems of all the affected shareholders must be solved by the end of 2023. This year, we plan to complete the buildings in the Tsaritsyno, Vanilla, Sky House on Mytnaya street and a number of others residential complexes,” said chairman of Moscomstroyinvest Anastasia Pyatova.

There are 171 long-term construction projects in the Krasnodar territory. Governor Veniamin Kondratyev said that in 2022 1 billion rubles ($12.11 mln) will be directed to the Territory Development Fund (TDF) and more than 1.2 billion rubles ($14.53 mln) in 2023. This will allow attracting more than 8 billion rubles ($96.86 mln) from the state budget to complete 17 objects under the agreement with the fund.

The rights of almost 1,000 defrauded homebuyers are to be restored in the Nizhny Novgorod region in 2022, said the Governor Gleb Nikitin.

According to him, the region has developed and implemented several mechanisms of assistance to defrauded shareholders. At the beginning of 2019, when the implementation of the “road map” was launched, there were 7,000 such Nizhny Novgorod residents. Now, there are only 17 objects in the regional register of problematic houses that is 1,500 shareholders. As of March 2022 there were 34 deceived shareholders registered in Yamal. Their rights will be restored by the end of 2022. Dmitry Artyukhov, the Governor of the Yamal-Nenets Autonomous District, has taken this issue under his control, says the website of the government of the Yamalo-Nenets Autonomous District.

How St. Petersburg solves this problem

St. Petersburg came up with a solution to get rid of defrauded homebuyers. Smolny decided that there are no more such people in St. Petersburg, and they can close the register of those who gave developers money for new housing and did not get an apartment. The registry was closed on March 31, 2022. From this moment, defrauded homebuyers cannot count on voluntary assistance from the city in return for their money invested in the apartment. Now, there are 149 people on the registry.

“I know for sure that there are defrauded homebuyers, who have been waiting for their apartments for more than 15 years, and they are not put on the register and they are not dealt with separately. There are apartments that have been sold three times,” said activist Elena Khudyakova.

Solving the issue of defrauded homebuyers in 2020 was one of the election promises of Alexander Beglov, who was elected governor of St. Petersburg in 2019. After the city authorities solved the issues with the citizens on the registry, formally there would be no more cheated shareholders in the city.

People are waiting

According to the Tyumen region prosecutor's office, the rights of more than 600 Tyumen residents who invested in the construction of four apartment buildings have not yet been restored.

Three houses are being built by the developer Sibstroyservis, which only after the prosecutor's office became involved in the case at the end of last year, put a long-built house in the Olympia housing estate into commission in Tyumen. The construction had been underway since 2018. 200 people had been waiting for three years to receive their real estate.

Several dozens of customers of the MF-Story construction company also filed complaints to the Department of Rospotrebnadzor for the Tyumen region. The shareholders claimed that their housing rights had been violated. They had taken several million rubles in mortgages to buy housing, but after a few months the work had not started.

In Ufa, the deceived shareholders in the Hermitage on Gorsovet, House on Lenina, and Belaya Reka housing complexes appealed to President Vladimir Putin after the second developer of their houses announced the suspension of construction, recalling that the construction was guaranteed by the Head of the Bashkortostan Republic, Rady Khabirov.

The construction of the Zolotye Kupola residential complex in Omsk began about 15 years ago. In late 2021, former CEO of the developer Vladimir Drokin was accused of fraud on a large scale and sentenced to 2.5 years in prison, as shareholders did not receive apartments, the developer sold people’s apartments, and the money were stolen.

Civil claims from defrauded homebuyers were satisfied by the court in the amount of 32.3 million rubles ($391,056.1). The Investigative Committee is investigating another criminal case, the theft of more than 1 billion rubles ($12.11 mln). This money belonged to another 220 shareholders of the Zolotye Kupola complex.

The Dubrov Park complex is recognized as the most problematic in Vladimir. At the moment, it is not clear what will happen with almost 2,000 shareholders. The developer of Dubrov Park complex persuades people to agree to a draw.

“They persuade us to give up our claims, so that Igor Drugov would not be put in jail or bankrupted. He assures us that he will finish everything. We are waiting for a meeting at the White House to hear specific dates and sources of funding,” said Sergei, a co-owner of building № 1 on Lower Dubrova. “Our house has been without windows for over a year. There is no progress in finishing works. There is no work at the construction sites. And in other buildings, too,” he added.

At present, shared ownership construction in its traditional sense is a thing of the past. It has been replaced by the shareholder-bank-builder system, and in this algorithm, the financial institution acts as an intermediary. It is at the accounts of the credit institution that sharecroppers' funds are deposited. After the construction work is completed and the house is commissioned, the developer becomes entitled to these sums of money.

“Now about 61% of apartment buildings in Russia are built on escrow accounts, and this share will increase,” said Konstantin Timofeev, CEO of the Territory Development Fund. “We hope that by the end of 2023 the bulk of developers will use project financing. And only then we will be able to say that there will be no more citizens who suffered from unscrupulous developers.”

However, more recently cases of fraud have been reported with escrow accounts, so it seems to be too early to speak of well-being in housing construction.

* The Bashkort public association was declared an extremist organization, banned in Russia by the decision of the Supreme Court of the Republic of Bashkortostan of September 16, 2020.

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