The launch of escrow accounts for individual housing construction in Russia is fraught with “consumer extremism”. These are situations where home buyers deliberately do not accept items in order to reduce the cost or do not pay for the house at all. This opinion was expressed by Maxim Lazovsky, the founder of the Lazovsky House company, in a conversation with socialbites.ca.
Federal law requiring the use of escrow accounts for individual home construction (IHC) transactions will go into effect on March 1, 2025. An escrow account is a bank account where money is held until transaction conditions are met. Funds are blocked and transferred to the seller or another party only after all obligations are met.
According to Lazovsky, “consumer excess” resulting from escrow accounts will create problems for developers and end consumers.
“It seems that only the developer is harmed by this situation, but in fact, it is the consumer who is harmed in the end. The developer cannot operate at a loss and, faced with consumer excess, begins to include the following risks in the estimate: legal support expenses, time costs, possible construction and technical inspection expenses. Thus, the total construction cost increases by approximately 10%. As a result, one consumer gets a free house and everyone else pays for it,” Lazovsky said.
According to him, to resolve all disputes, a construction inspection is needed, where an independent expert will decide whether the developer did everything right and whether the house meets all the requirements and standards. The expert explained that currently in Russia there is not a single state institution dealing with such issues.
Lazovsky pointed out that in the field of individual housing construction there have already been incidents and even legal proceedings related to incorrect inspection. On October 8, the appeals court of the Moscow City Court began hearing the high-profile case. According to the court decision based on the investigation, the contractor, who built a house for 5 million rubles, owed 6 million rubles to the customer.
Real estate expert, chairman of the mortgage committee of the Moscow Association of Realtors Konstantin Barsukov Of courseTo increase the residential area in Russia, it is necessary to focus not only on apartment buildings, but also on the construction of individual residential buildings. The demand of Russians for this type of housing is growing, especially when it comes to suburban areas.
Previous experts recorded This year there is a massive increase in demand for individual housing construction among Russians.