Parts and property: installment homebuyers can lose both their homes and their money
Buyers of real estate in installments in the current realities may be left both without money and without housing. This fall, the share of installments for square meters reached 30-35%, and in the near future, against the backdrop of rising costs of credit money may become the main form of housing sales, experts believe. From the elite offer for one or two years for wealthy Russians interest-free installments from the developer is becoming a mass phenomenon with a low first payment and a term of 8-10 years. And this creates significant risks for buyers. At the same time, the sale of real estate in installments does not fall under the forthcoming special regulation of these services, "Izvestia" found out. Introduced in August in the State Duma, the relevant bill involves the participation of an intermediary, which developers are not, said the editors in the Central Bank. Human rights activists are sure: in order for the regulation to apply to all types of installments, it is necessary to change the approach.
Why installments for real estate will not fall under special regulation
In August, two bills were introduced in the State Duma, which are aimed at regulating the installment service. The goal is to protect buyers who choose the form of payment in installments. The drafts are supposed to establish requirements for the service agreement, the free provision of the service, a ban on the difference in the cost of goods between the seller and the intermediary, a limit on the amount of penalties, requirements for informing the consumer, etc.
At the same time, the sale of real estate by the developer will not fall under the new regulation of the Central Bank, follows from the response of the press service of the Central Bank in response to the request of "Izvestia".
- The bill will regulate such activities provided that it is carried out through an intermediary, which is one or another installment operator, - said "Izvestia" in the Central Bank. - If the installment is provided from the balance sheet of the developer itself and the intermediary in these relations is not, it, as now, will be regulated by the law "On Protection of Consumer Rights".
Also, noted the Central Bank, even if such operators in the real estate sector will appear, it is doubtful that they will fall under special regulation. In the draft law "On activities to provide installment service" is planned to set a limit on the term of payment first in six months, and then in four, and this method of buying real estate will be available only to very and very wealthy customers, stressed the press service of the regulator.
- However, we cannot predict whether such products will appear on the market or not," the Central Bank said.
However, as clarified in the Bank of Russia, the companion project with amendments to several existing laws, including "On Protection of Consumer Rights", will help to protect and buyers of real estate. It is the second draft provides, for example, a ban on setting different prices for goods from the seller and purchased in installments. However, as follows from the text of the document, these restrictions will not apply to sellers. The project "is prepared in order to regulate the activities of installment service operators and to ensure the protection of the rights of consumers who use the services of such persons", is indicated in the explanatory note.
Thus, when a developer sells real estate in installments will remain the current regulation, which no longer corresponds to current realities and does not protect consumers sufficiently.
Why installment payments for housing have become massive
It was possible to buy real estate in installments before, but this service was a rarity (the share was 5-8%) and even a kind of exclusive offer, most often in the premium segment. This form of payment is used both in the primary market (as a rule, at the stage of construction before the commissioning of the object), and in the secondary market, when the contract is concluded between individuals. However, the latter option is still extremely rare.
At the same time, interest-free installments when buying at the construction stage this year has increased dramatically in times. And, as real estate experts predict, in the near future it may become the main payment option. There are several reasons for this: the end of the mass program of preferential mortgages, tightening of the down payment, increasing the key and, as a consequence, the rise in the cost of credit money for both borrowers and developers. Therefore, the latter are forced to develop the form of payment by installments in order to attract the funds of shareholders for construction.
Against this background, the share of interest-free installments from developers in the fall has grown to 35% of the total volume of transactions in the primary housing market. If the situation worsens, this figure will grow and in 2025 may reach 40-50%, says Anna Sokolova, commercial director of OM Development.
In the new economic conditions the number of such transactions will grow, possibly up to 45-50% of the total sales volume, agreed Nikolay Sedov, Sales Director of EFFECT development.
And according to Regina Dydalina, Executive Director of the federal company "Etazhi", in the next couple of months the share of installments in the primary market may grow to 60-70%. According to her, the service of installment payment is of great interest now, which allows either to buy an apartment with a minimum down payment or to accumulate it before the house is commissioned, transferring a fixed amount to the developer every month.
Developers have not only become much more often resort to selling in installments, but also changed the terms of this service. So, if earlier the first payment was not less than 30-50%, now there are variants even with a 10% installment. And the term of installments has increased from one or two to eight years.
According to Regina Dydalina, it is not excluded that in the future developers may intensify sales by installments without the participation of banks, if the number of unsold apartments in already commissioned buildings will grow.
- For large developers, this option of selling their properties may become an alternative to traditional mortgages," she believes.
At the same time, participants and experts of the real estate market are sure that additional regulation of installments in this area is not necessary. For example, Ilya Kolunov, Deputy General Director for Commercial Affairs and Public Relations of Garden Ring Group of Companies, believes that the current conditions allow selling real estate, using this tool as flexibly as possible for each specific object and region.
At the same time, market participants do not see any special risks for the buyer. However, they are certainly there, noted top broker Whitewill Ekaterina Levina. First of all, they relate to cases when a person can not pay the installment. But in these situations, assure the interlocutors of "Izvestia", related to the real estate market, developers, as a rule, agree to return the money paid. Is it so?
What are the risks of buyers of real estate in installments
Lawyers and human rights activists believe that the legislation, which now regulates installments for the sale of real estate, leaves a large field for freedom of action on the part of developers.
According to Philip Danko, General Director of the consulting company O2Consulting, installments from the developer at the construction stage are currently regulated by the Civil Code of the Russian Federation (Art. 489 - in terms of rules for contracts providing for payment by installments), Law No. 214-FZ (in terms of regulation of shared construction and protection of shareholders' rights) and the Housing Code of the Russian Federation (in terms of general rules for real estate transactions).
However, the requirements to the contract differ significantly from those planned under the new draft laws on the regulation of installment payments. Thus, now the seller must specify the price of the real estate, the procedure, terms and amounts of payments. The contract must spell out the rights and obligations of the parties, including the terms of termination of the contract in case of non-payment, as well as the consequences for late payments, the possibility of accruing penalties and fines.
The other terms and conditions are agreed at the discretion of the parties, said Ekaterina Baglaeva, a lawyer at Yukov & Partners. She explained that, as a general rule, the seller has the right to demand payment of overdue payments, as well as interest on the overdue amount, to withdraw from the contract and demand the return of the real estate (unless the buyer has already paid more than half of the price). Also, as a general rule, goods sold in installments are pledged (valid from the moment the goods are handed over until they are paid for) to the seller to secure payment for the goods, the lawyer added.
Under the new terms, developers will also accept 10% of the apartment's value as the first payment.
- If the first payment is less than half of the value of the object, the developer has the right to cancel the contract. In this case, he is obliged to return the money to the buyer, but this may be subject to the deduction of fines or other sanctions. Moreover, most contracts stipulate that if the buyer fails to make subsequent payments, he loses the money he has already paid," explained Philip Danko.
Since the amount of penalties is not regulated, the developer, referring to the article of the Civil Code "On Freedom of Contract", can set the amount of penalties that will exceed the amount of the first payment, warned an expert of the project "People's Front" "For the Rights of Borrowers" Alexandra Pozharskaya. In fact, a person may lose both square meters and invested money.
- In addition, having bought an apartment in installments and failing to cope with the fulfillment of obligations, the consumer is deprived of the opportunity to take a mortgage loan on it, - she stressed. - In the case of installments, the bank will not approve a mortgage on real estate with an encumbrance in the form of collateral - in our country there is no practice of re-mortgaging property, as in the United States.
Only partly buyers of real estate in installments protects and the law on consumer rights, said Alexandra Pozharskaya. Therefore, nothing prevents, for example, set different prices for buyers in the mortgage or for cash and in installments, there is no norm that would protect against the imposition of additional services in the form of, for example, non-core consulting, the cost of which can not be returned in case of delay or termination of the contract.
- There is no guarantee that the contract will not include obligations to pay commissions for insurance, which will cover only a small part of the risk in the event of an insured event. That is, in fact, everything for which the financial market and in the future the BNPL market will be subjected to supervisory response measures, is not taken into account in real estate installments, - said Alexandra Pozharskaya.
According to the "People's Front", this violates the balance of interests, infringes on the rights and interests of the consumer and requires urgent legislative intervention, since the trend to increase the number of housing sales in installments is obvious.
- In our opinion, it is necessary to revise the approach from regulating the activities of operators to regulating the very form of payment by installments, - emphasized the expert of the project "For the Rights of Borrowers".
Whether this will be done is a question. Discussions are still ongoing and it is too early to say anything, Anatoly Aksakov, head of the State Duma Committee on Financial Market, told Izvestia.
According to him, the deadline for consideration of the bills on installment settlement in the first reading has not yet been determined.
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