A review of changes in the Russian legislation in the field of construction and real estate management in the first half of 2021

The review encompasses changes in Russian legislation in the field of construction, real estate, housing and utilities management. The review addresses the legal and regulatory framework of the shared equity construction legislation and guaranteed rights and legitimate interests of citizens participating in the shared equity construction; reusable project documentation, standard project documentation, the availability of technical specifications needed for the architectural and construction design, connections to engineering networks; the calculation of amounts payable by citizens and organizations for the maintenance of residential premises in apartment buildings in Moscow, the city of federal significance; the protection of rights and legitimate interests of owners of residential buildings in respect of the calculated amounts of utility payments, as well as the improvement of relations in respect of the operation and modernization of the state information system of housing and utility services, protection of state information resources; a decision making procedure as part of the legal framework for the remote participation in meetings of members of civil communities, etc.

Research of the problems of project financing of construction of residential real estate using the escrow account mechanism

The article shows the current situation in the real estate market. The publication considers the main problems of financing investment and construction projects, as well as the use of the escrow account mechanism. The study also proposes the main ways to solve the existing issues. The main focus of the research paper is on the lack of explanations regarding the ability of banks to dispose of money in escrow accounts, credit conditions, as well as the growth in real estate prices when developers switch to a new mechanism of settlement with shareholders. In addition, the authors analysed the pricing policy of developers before and after amendments to Federal Law No. 214-FZ, dated on December 30, 2004 “On Participation in Shared-Equity Construction of Apartment Buildings and Other Real Estate Objects and on Amendments to Certain Legislative Acts of the Russian Federation”. The study presents the possible consequences of introducing amendments to the law, switching to escrow accounts.

Transforming housing construction: project cost management challenges

Problems related to the transformation of housing construction based on the transition from shared-equity construction to project financing are being investigated. Along with the socio-economic benefits for consumers and an increase in the stability of the housing market, there are phenomena that negatively affect developers. The changes that affected the legislation governing the relationship between equity holders and developers affected not only the introduction of escrow accounts, but also amended the requirements for the contract of shared-equity construction, the composition of the rights and obligations of the parties to the contract, the methods of securing activities, and increased liability for violation of the terms of the agreement of shared participation. This creates new economic conditions for the activities of developers. The analysis of the changes established by the law by the analysis of differences in legal regulation of activity of builders in two periods became a research objective: when obtaining the construction license before and after the date of introduction of new norm. As a result of the analysis, contradictions are revealed and assessment of their consequences is made for activity of builders. The basic principles for successful transformation are justified: stage, awareness and system, feedback. The conclusions were drawn and concrete proposals were made to amend the legislation, including elimination of contradictions in the dual legal regulation of the activities of developers using various project financing schemes, in agreement with banks for the phased disclosure of escrow accounts, the introduction of costs for transport and engineering infrastructure into the project budget, as well as interest on loans for its creation and others. These measures will preserve the effectiveness of housing construction and the sustainable activities of developers as a result of the transformation of the industry.

The Issue of Determining the Amount of Insurance Compensation if the Insured Event Accurs under the Developer’s Civil Liability Insurance Contract

The author considers different ways for determining the amount of insurance compensation to be paid to the participant of shared-quity construction in case of occurrence of an insured event in the form of recognition of the developer’s insolvency (bankruptcy) or foreclosure of a collateral. The purpose of the paper is to identify approaches to the determination of this amount used by insurers at different stages of implementation of the mechanism of the developer’s civil liability insurance and to analyze these approaches’ legality. The author analyzes actual jurisprudence in cases involving insurers and participants in shared-equity construction. It is established that at the first stage in the legislation there were no rules for determining the amount of insurance compensation in this area, and insurers determined it at their discretion. At the second stage, when the minimum amount of insurance compensation was consolidated in law, insurers faced controversy caused by a mismatch between the amount originally paid by the construction participant under an equity participation agreement and the amount to be paid. The author concludes that, at the second stage, the disagreement concerning the amount of insurance compensation is caused by the insurers’ abuse of right.

The Misallocation Problem of Subsidized Housing: A Lesson from Hong Kong

Providing affordable housing has become one of China’s key national policy agenda items. The shared-equity model in Hong Kong, implemented since the late 1970s, has assisted many families in owning a home in the public housing market. However, little attention has been paid to their welfare after acquiring their subsidized units. This study aims to examine how shared-equity homeownership distorts residential mobility through in-kind subsidies. Panel data analysis reveals that the more in-kind subsidies owners receive, the longer they would hold on to their units in spite of spatial mismatches. Private owners, on the other hand, would trade their units without such distortion. Conceptually, the lower mobility of assisted owners could be interpreted as a new source of misallocation in Glaeser and Luttmer’s welfare analysis. Practically, this throws into question the sustainability of a subsidizing homeownership policy: does the government ultimately want assisted homeowners to move from public housing to private housing in the future (for which high mobility would be intended)? If so, new thinking on how to make in-kind subsidies transferable is needed.

DIRECTIONS OF INTERACTION MECHANISMS DEVELOPMENT BETWEEN DEVELOPERS AND STATE AUTHORITIES WHEN WORKING WITH PARTICIPANTS OF EQUITY CONSTRUCTION

Цель статьи - выявить механизмы взаимодействия государства и застройщиков при работе в рамках действия Федерального закона «Об участии в долевом строительстве многоквартирных домов и иных объектов недвижимости и о внесении изменений в некоторые законодательные акты Российской Федерации» от 30.12.2004 N 214-ФЗ. Научная новизна исследования - разработка предложений по дальнейшему развитию указанных механизмов на основе результатов анализа обнаруженных групп проблем, с которыми сталкиваются застройщики в настоящее время в процессе реализации своих функций. Автором сформирован перечень направлений по вопросам совершенствования механизмов регулирования рынка строительства и взаимодействия застройщиков с органами государственной власти. The article considers the mechanisms of interaction between the state and builders during the work within the implementation of the Federal law «on Participation in Shared-equity Construction of Apartment Houses and Other Real Estate Objects and Introduction of Amendments to Some Acts of the Russian Federation» dated back to 30.12.2004 N 214-FZ. The aim of the study is to develop proposals for the further development of these mechanisms. The results of the analysis identify the groups of problems that developers currently face in the process of carrying out their functions. The author has formed a list of mechanisms improvement of the construction market regulation and interaction between developers and state authorities.

Escrow accounts as a means for stakeholders to protect their funds invested in housing construction projects

Subject. Shared-equity investment in the primary housing sector is one of the most popular vehicles to finance housing construction projects. Objectives. We identify and analyze positive and negative aspects for co-investors of housing development projects in using escrow accounts. The article analyzed issues and possible solutions resulting from the innovative interaction of parties to housing construction projects in Russia. Methods. Studying the use of escrow accounts as a mean to make the finance of housing construction projects legally secure, we apply methods of logic, statistical and comparative analysis. Results. The article indicates positive and negative aspects of using escrow accounts and enlists risks associated with the purchase of housing when its construction is in progress. We describe how individual co-investors can protect their invested funds. We suggest the escrow account mechanism should be more thoroughly elaborated to secure the finance of housing construction projects. Conclusions and Relevance. The facility is novel for Russia. People are very wary of such innovations, especially in the housing segment. Would-be buyers should have clearer information about changes in the housing purchase procedure. Co-investors should be explained what requirements they need to meet when choosing a lending institutions and a developer, documentation on a shared-equity construction. It is crucial to communicate all details and technicalities about negative aspects of the financial facility.