Novosibirsk Applying Double Standards to Defrauded Homebuyers

Novosibirsk Applying Double Standards to Defrauded Homebuyers


The Novosibirsk region has the biggest number of defrauded real estate investors in Siberia. At the beginning of March, 98 unfinished houses across the region were listed in the Unified Information System of the Russian Ministry of Construction Industry, Housing and Utilities Sector (Minstroy.) A total of 47 of them are located in Novosibirsk. The local authorities will not be able to solve the problems of all the defrauded homebuyers due to insufficient financing.

In 2020, the amount of 1 bln rubles ($12,813,300) is to be allocated for completion of the buildings. Out of this amount, 300 mln rubles ($3,843,990) will come from the regional budget. The remaining sum will be earmarked from the Federal Fund for the Protection of Rights of Share Construction Participants. For the next two years, the allocations are expected to be less than 1 bln rubles.

For example, in 2019, in the Krasnoyarsk territory that has c comparable size of the population, a total of 2.48 bln rubles ($31.78 mln) have been allocated in order to solve the problems of hoodwinked investors. By March of this year, 1,500 homebuyers have received compensation for uncompleted housing there.

The list of houses in the Novosibirsk region, completion of which this year will be finances from the allocated 1 bln rubles, has not been made public so far. While the regional authorities are waiting for the signing of the agreement with the Federal Fund, defrauded homebuyers of Novosibirsk organize protests against the list and demand to stop the policy of double standards.

In March, 30 investors of the Zakamensky-11 housing construction co-operative came to the headquarters of regional government with a similar motto. They had posters saying “The Ministry of Construction has driven [people] into fear and despair,” “We demand our apartments,” “Tears + death + sweat + blood – 13 years of pain – Zakamensky, 11” and others.

The Zakamensky micro-district is the most problematic long-delayed construction site in Novosibirsk. From 2007 to 2013, the Neograd company was building a housing estate of four houses № 11, 12, 13, 16 for 1,500 people. In 2014, the company's executives were detained on suspicion of embezzlement of 1 bln rubles.

According to the prosecutor's office, the funds were spent on purchasing securities, granting loans and other purposes not related to construction. In August 2019, the court sentenced Vladimir Aksenov, head of Neograd, to 6.5 years of penal colony settlement. Other two top-managers of the company received 5.5 years in prison. By the time the verdict was passed, all three of them had already completed their sentences in a pre-trial detention facility.

Up to the present day, three of Zakamensky's four houses remain unfinisned. A total of more than 1 bln rubles is needed to finisf the construction. So far, regional authorities have invested 271 mln rubles ($3,472,404.3.)

Alexey Kolmakov, deputy minister of construction of the Novosibirsk region, said that the authorities were eyeing large-scale investment projects related to the houses. They presuppose the allocation of land plots to developers without any contests. The plots will be allotted under the obligation of partial or full funding for the completion of problematic buildings of Zakamensky and with the help of money from the Federal fund. In fact, houses №. 12 and 13 of Zakamensky are included to the lists of the Federal fund for this year. Anyway, house №11 was not.

A total of 225 families remain without housing. At the same time, three identical multi-storey buildings share the same land plot, infrastructure and playground. Julia Lobes, the leader of the initiative group of house №11, believes that all three houses should to be completed simultaneously. She demands that house №11 be included in the list of the Fund for the Protection of the Rights of Shared Construction Participants in 2020. However, it is difficult for homebuyers to establish a dialogue with officials. Regional authorities accused members of the Zakamensky-11 housing construction co-operative of not spending the money that had been previously allocated from the budget to support them.

The rally participants claim that the government is trying to make them look guilty in this situation. “They paint us as devilish people of some kind. Allegedly, we are collecting and spending money and building in a wrong way. Meanwhile, the authorities don't seem to have any plans to finish our house. Therefore, we have taken it into our own hands. We wouldn't have had to do it at all, though. After all, we invested our money,” said an outraged homebuyer who had come to the meeting.

Commenting on the possibility of receiving financial compensation instead of an apartment, participants of the protest actions said:

“We’re hearing some promises for a month already. We need our apartments and not compensations. We have to live somewhere. In addition, many of us will not be able to take out a mortgage again, for example, due to age restrictions. Therefore, compensation will not solve the housing problem.”

The organizers of the protest actions accused the mayor's office and the government of noncompliance with agreements. According to Julia Lobes, a member of the defrauded homebuyers’ activist group, the city administration has not connected the house to the heating. Three months ago, residents were promised to include the building in the list of the Fund for the Protection of Rights of Share Construction Participants. However, this year there are no homebuyers' applications in the list, and the authorities do not explain why.

The investors claim that there were no violations on their part. Zakamenskiy-11 itself was established by them in 2015 on the advice of the regional government. Also on the advice of the authorities: they invested additional 7,000 rubles ($89.69) per square meter of housing. A full amount of their investments was 75 mln rubles ($960,997.5.) However, the construction was not competed. At the time when the Zakamensky-11 housing estate was established, the house was 57% ready. And now its readiness is 65%. The homebuyers claim that they will not be able to complete the construction only by themselves.

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