It is as Easy as Pie to Build Castles in the Sky

It is as Easy as Pie to Build Castles in the Sky

Photo: https://www.rosbalt.ru/

According to the Accounts Chamber, there are about 200,000 defrauded homebuyers in Russia who invested money in more than 3,000 objects in 76 regions. The Fund for the Protection of Defrauded Homebuyers’ Rights, in turn, reported that according to estimates for January 1, 2020, the completion of problem houses required 686 bln rubles ($9 bln.)

The forecasts of the Dom.RF firm are even more pessimistic. In order to help people, 722 bln rubles ($9.6 bln) have to be allocated from the federal budget alone. Despite numerous attempts of the federal and regional authorities to improve the situation, social conflicts and protest actions erupt here and there. This is happening since people cannot obtain the ownership of the apartments they have paid up.

For example, in the Krasnodar territory, scandals related to the resolutions to demolish the so-called squatter developments are still ongoing. The situation is clear. The developers begin construction either without approval documents at all, or seriously violate the conditions stipulated in them. For example, instead of 5 or 7 floors they build a real skyscraper. The sale process is in full swing, and people are investing enormous sums of money in real estate in a prestigious district.

Until recently, a well-known corruption scheme has successfully worked in the Krasnodar territory. The developer put up a residential building in violation of the documents obtained. However, this fact did not prevent the company from selling apartments. A real spectacle began when people wanted to get the documents. City officials formally refused to register the apartments. The defrauded homebuyers applied to court. The court ordered the officials to issue documents to people. Everyone got what he or she wanted.

However, suddenly the authorities stopped solving the issue in an official manner, and the courts stopped ruling in favor of the defrauded homebuyers. Apparently, someone stopped taking bribes somewhere.

After that, if construction is considered illegal, it is suspended, or the resolution to demolish the house is made. As a result, people are left without apartments and without money.

The defrauded homebuyers of the Nash Dom [Our House] housing estate in the township of Krasnodarsky came to Sochi. They wanted to meet personally with Vladimir Putin, who was expected to hold an official meeting with his President Aslan Bzhania of Abakhazia. A representative of the initiative group stood up with a large poster by the road to the airport.

The initiators of the action explained that they wanted to draw the attention of the Russian president to problem houses. The photo of the woman was placed in social networks. The protesters' poster says that 114 families bought apartments in this housing estate and invested a total of 37 maternity capitals in the construction. Now, these people have found themselves in the street.

It should be recalled that on October 22, demolition of building No. 6 on the Nash Dom housing estate in Krasnodarsky began. People claimed that they were not warned about the demolition. According to them, the last information they knew was that the court procedures were not over yet. The next day, the homebuyers tried to stop the demolition of the first house. They surrounded the building and began to interfere in the work of special vehicles. The house, which was recognized as an unauthorized construction object, was built on a land plot without proper documentation and in violation of town-planning regulations. The Krasnodar Territory Court prohibited the continued construction of the multi-storey house. However, the developer company managed to sell some of the apartments. It was fined 1 mln rubles ($13.160.) According to preliminary information, people’s protest action in Sochi failed to bring about the intended effect.

“The situation with homebuyers in the Krasnodar territory has a distinctive feature,” said Yuri Neverov, a lawyer from Krasnodar. “From the very beginning, the developers took to committing violations, which the authorities and watchdog agencies turned a blind eye to. Then the concept changed, and the authorities began to actively inspect the facilities and identify violations that prevented them from completing their work. People were simply hostages in this battle between business, law, corruption and big money. What solution can be suggested? As it was said in a popular film, pay them in full and accept defeat. The reason is that these people are left without money and their apartments are not related to the crisis or to business failures. It has not happened by chance. In fact, the cause lies in the social irresponsibility of business and officials. They should be responsible for this. First of all, in terms of money.”

In the Leningrad region, homebuyers of the Normann firm decided to go further. They not only went on a hunger strike but also wrote a collective letter to the Prosecutor's Office demanding an inspection by the St. Petersburg construction committee and the city authorities.

“We do not understand why the signing of the resolution on completion is delayed,” said Marina, one of the homebuyers and a member of the steering group. “We haven’t been given any official documents such as letters, the opinion of the committee on the issue, or an investor agreement with a bankruptcy supervisor. We hope that officials will be able to give more detailed comments to the prosecutor's office.”

Normann is building two residential compounds – the Three Oranges and Na Zarechnoi. They are at the first and third stages respectively. Construction of the objects began in 2013. Promises were given to commission the two houses in 2016. In early 2019, the developer went bankrupt. The cost of completion is estimated at 2 bln rubles ($26.32 mln.) It was promised that the investor's costs would be offset by a land plot. The RSTI company has volunteered to complete the construction. However, according to defrauded homebuyers, the officials have failed to sign an agreement on completion for more than a year. Starting from October 31, people went over to the measures of last resort. They started a hunger strike. At present, three persons are taking part in it. One woman was on the hunger strike for six days and ended up in the hospital.

“Who is a defrauded homebuyer?” Nadezhda Petridi, a lawyer of the St. Petersburg CTL law firm, told wek.ru. “It is a person who signed a shareholding agreement, paid money to the developer, and did not get an apartment. At the same time, defrauded homebuyers might be those who have not received an apartment and cannot get their money back, and those whose houses are built with a great delay. As far as I know, in other countries, there is no such thing as sale of apartments under co-investment contracts. In my opinion, a situation where a developer gets a loan at a bank, a house is built and put into operation, and people buy ready-made housing might be the most correct solution to the issue of defrauded homebuyers.”

Defrauded homebuyers in Novosibirsk have been picketing for weeks. The first protests started on October 12. Homebuyers of the Novomarusino, Raduzhny, PTK-30 and Avantazh housing estates as well as houses under construction in the streets of Tulskaya, Pechatnikov and Krasina in Novosibirsk are taking part in these pickets. Protesters ask for a meeting with the governor to solve the housing issue in 2020.

According to one of the protesters, building of some houses envisioned by the government program has not begun yet. She says that the mayor's office promised to commission the new houses by 2022 but a number of sites still have the construction pits.

It is also known that the homebuyers of PTK-30 are still demanding that Andrey Travnikov, the governor of the Novosibirsk region, sign the documents that would allow them to join the Dom.RF program. In their turn, the homebuyers of Tulskaya Street demand that they be given new apartments in the districts which would meet the initial terms of housing purchase. They also demand the revoking of extra charges and annulling of floor space cuts.

“Some people bought apartments with the floor space of 90 m²,” people say. “They were offered an apartment on Borodin Street for 60m but have to pay about 700,000 rubles ($9.212) extra.”

At the same time, they underlined that they would continue street actions until their problem was completely solved.

“Currently, the list of problem objects includes 2.942 houses in 73 regions of Russia,” said Alexander Yakubovsky, the head of the work group the United Russia party’s General Council, as he spoke about the protection of homebuyers' rights. “This is 17 544 000 m². Hundreds of thousands of people have to wait for years for their apartments. They rent housing, live with relatives and often pay mortgages. Some of them have had children during this time. Others, on the contrary, cannot afford to have kids.

“The issue of defrauded homebuyers is old and acute. People once fell for unscrupulous developers. The solution of this problem is one of Russia’s priorities. Other problems, including demography, are hinged on it, too.”

According to Yakubovsky, despite the efforts, the issue of defrauded homebuyers remains extremely acute.

“I believe that the issue should be included into the Unified Plan for Achieving National Development Goals,” he said. “It regards ‘Comfortable and Safe Environment for Life.’ Within its framework the plan is to improve living conditions for 5 mln Russian families annually. It is impossible to achieve this national goal without completely closing the issue of defrauded homebuyers. The terms of solving the problem are known. It is to be fully settled by 2024.”

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