Developers have announced growth in the number of bankruptcies due to the new bill

Friday, July 21, the state Duma will consider in the third reading the bill on the peculiarities of forming the compensation Fund of shared construction.

The main innovation of the document initially was considered the creation of this structure, which will replace the insurance system developers and each developer will have to transfer 1.2 percent of the amount of each contract equity (DDU). However, for the second reading, which took place on Wednesday, July 19, the bill was much modified, and now we are not talking about changing the rules, and the creation of a completely new work environment of developers, with effect from 1 July 2018.

As explained RBC representative of the Ministry of construction, while finalizing the draft took into account numerous requests of different parties. “The draft law was discussed at parliamentary hearings in the state Duma, which was a record and in composition (over 400 people), and the duration of the discussion,” — said the representative of the Ministry. Most of the amendments enter into force after the end of the transitional period, i.e. after 1 July 2018. “The expert community and participants of the housing construction market there is a time for change analysis”, — said the interlocutor of RBC.

New life for developers

According to the adopted in the second reading option, the requirements to the activities of developers are substantially tightened. One of the main innovations is the obligatory presence of the developer wishing to obtain a permit for the construction of new housing, not less than three years of experience in the market of construction of apartment buildings (as a developer, a technical supervisor or General contractor), and permits the commissioning of not less than 10 thousand sq. m of apartment houses. In addition, a dedicated Bank account must be in the amount of at least 10% of project construction costs.

These changes that were made to the bill in the course of its elaboration, surprised market participants, as they were not discussed with the developers and was absent in the previous edition, emphasizes the strategic development Director at FSK “Lider” Pavel Bryzgalov. “Of course, the new version of the bill aims to end up as to make the process of buying an apartment in the building, he said. — However, some amendments require further analysis, since it is not a clear mechanism for their implementation”.

“I’m sure for many, these amendments were unexpected, because initially the bill was tabled at first reading without such radical proposals, — adds the Deputy General Director for sales and marketing “Aircraft development” by Jan Kosareva. — While these points raise many questions that need to be taken in the course of the improvements project”.

What are the requirements the bill imposes on the developers

  • experience (minimum three years) participation in the construction (creation) of apartment houses as a Builder and (or) technical customer and (or) the General contractor;
  • availability of permits for the commissioning of not less than 10 thousand sq. m of apartment houses;
  • the stock on the date of the project Declaration to the Supervisory authority of funds in an amount not less than 10% of project construction costs on the Bank account of the developer, accommodated in the authorized Bank;
  • no liabilities for credits, loans, loans, excluding trust loans;
  • the developer may not exercise simultaneous construction at multiple resolutions;
  • the Builder, the technical customer and General contractor should have accounts in one Bank (specifically the Commissioner);
  • administrative expenses of the developer (rent, advertising, wages, Bank services, communications, etc.) may not exceed 10% of the cost of construction.

Only for large

The new requirements will result in withdrawal from the market of small developers and rising prices, said the lawyer of the Collegium of advocates “Yukov and partners” Alexey Vyruchaet. It is also possible that will increase the number of bankruptcies among developers who are not able to cope with the new requirements, he said. Agree with him Andrey Kirsanov, Deputy General Director of MR Group. “Large conscientious developers will not be so difficult to adapt to new, more stringent requirements prescribed in the new law,” he said.

Now the market shows record growth. For the first half of 2017, the number of contracts equity in Moscow amounted to 23.9 thousand In the same period of 2016 this figure was 66% lower by 14.4 thousand Figures of the current year was much higher cumulative annual sales beginning in 2013: in 2013 was concluded 21.3 per thousand of the PO, in 2014-m — 24 thousand in 2015, and 19.6 thousand Thus, deals with new buildings in the first six months of 2017 accounted for almost 30.3% of all residential real estate transactions.

“On the one hand, these requirements will close the access to the market of “casual” companies with little experience in housing construction and to what extent it will reduce the risk of problem buildings due to inadequate industry expertise and experience, — said Maria Litinetskaya, managing partner of “Metrium Groups”. But at the same time, of course, this measure will encourage monopolization. You may even have a separate market for the sale of legal entities-developers, which comply with the requirements of the law — they will become investors with no experience in housing construction, as an “entrance ticket”.

The meters will be more expensive

The new requirements require more detailed assessment, based on calculations of the expert community, discussions in working groups, said Vice-President of group of companies “Ingrad” Pavel Cherkasov. “The real estate market will need considerable time to prepare for such a number of complex innovations,” he adds.

In turn, Pavel Kirsanov suggests that some real estate companies associated with the banks, abandon the attraction of funds of citizens under construction that will increase apartment prices. “For large companies will not be a problem to fulfill other requirements of the new law, but for small and medium-it can become an insurmountable obstacle” — said Kirsanov.

Maria Litinetskaya believes that the requirement in the accounts of the developer 10% of construction costs prior to the implementation of the object will complicate the work of developers. “If we are talking about a project consisting of three standard 17-storey buildings P44-T, the beginning of its implementation the developer must freeze the Bank account not less than 225 million rubles, — she leads by example. — Hard are presented, and the requirements of the administrative expenses of the developer — not more than 10% of the cost of construction. Only the cost of advertising can reach 4% of the cost of the entire project, not to mention the wages of labour or the rent of the premises.”

The amendments do not look worked out, agrees Aleksey Vyruchaet. In particular, they imply that the market can’t get new developers, he says. “The amendments regarding the definition of “Builder”, reglamentary its activity will not restrict the number of players in the property market, but will close the market for new participants,” solidarity Pavel Bryzgalov.

“Despite the seriousness of the changes, we should not discount the possibility of adjusting the rate of legislative initiative,” — says the Manager on work with key partners real estate company Est-a-Tet novel Rodiontsev. “Traditionally given to the transition period, which fits the bulk of the projects within the foreseeable future, he reminds. — Those players that plan to stay and adapt to new conditions, get the time to adjust their activities and evaluation of promising niches in the industry that they will take, if the transition to the new rails will be done.”