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- It's more expensive for you: the Central Bank revealed the details of the gray installment scheme for housing
It's more expensive for you: the Central Bank revealed the details of the gray installment scheme for housing
The Central Bank told about the gray installment scheme, which allows you to buy a house on favorable terms. As Izvestia found out, developers issue it for a longer period than the law allows. This turns out to be more profitable than a mortgage at a market interest rate of up to 28%. This approach makes apartments more accessible to people, but the risks are much higher: late payments or bankruptcy of the developer can deprive the buyer of both housing and invested money. What threats an atypical installment plan poses to the market can be found in the Izvestia article.
How does the long-term installment scheme work?
The Central Bank is concerned about the gray schemes of atypical installments, which are taken after the housing is put into operation. This was told to Izvestia by the head of the Financial Stability Department of the Bank of Russia, Elizaveta Danilova. According to her, developers are finding ways to circumvent the requirements of the law, which implies that installments are issued only for apartments in buildings under construction.
Usually, when purchasing a house in installments, the buyer makes an initial payment of 10-50%, and then pays for the apartment in equal large installments (once a month, quarter or half a year). Installments can be either interest-free or not, but the overpayment is less than the usual loan due to the short term — usually no more than three years while housing is being built.
Installments cannot be issued for 25 years, like mortgages, because residential buildings have not been built for so long. According to the law 214-FZ, if the house has already been rented, installments cannot be arranged — you can take housing immediately for the entire amount or on credit. However, developers have found a way around this requirement. They sell their homes in installments for 10 years with a down payment of 10%. Market participants can draw up a preliminary purchase and sale agreement, said Elizaveta Danilova.
The scheme works like this: the developer and the buyer sign an installment agreement, and the final deal is finalized only by the end of the payment schedule, said Maria Yakovleva, director of the Yakovlev and Partners law group. Formally, this is not even an installment plan, but a phased payment under a preliminary agreement. However, at its core it is the same mechanism — just disguised.
A 10-year installment plan is illegal, Maria Yakovleva clarified. If the house has already been commissioned, and the client continues to pay money to the developer, the scheme may be recognized as fake, and the court simply cancels the deal. The Central Bank warned about such risks, the lawyer emphasized.
Currently, there are not many long—term installments in the primary market - no more than 3-4% of the total supply, and for the most part they are concentrated in the metropolitan region, said Tatyana Reshetnikova, deputy head of the mortgage department of the federal company Etagi. In such transactions, housing is provided at an interest rate (for example, 8% per annum) or the cost of the object increases by 15-25%.
Nevertheless, with limited access to preferential mortgages, installments have become one of the key tools for buying a home, said Vladimir Chernov, analyst at Freedom Finance Global. No one wants to take out a mortgage at 25-28% with a fourfold overpayment. However, buyers should also pay attention to the risks of such schemes.
How profitable is the installment plan from the developer
In some cases, due to the installment plan, the client may find himself without an apartment and lose the deposited money, the press service of the Central Bank clarified. Sometimes buyers do not have enough funds to buy a home and they expect to get a mortgage after some time by the end of the installment plan (this is possible due to the agreement between the bank and the developer). However, in this case, there is a risk that the monthly loan payment will be higher than the borrower expected, or that the bank will not approve the loan in principle.
— Also, the developer may overestimate the cost of the apartment in order to compensate for his expenses, and there may not be any benefits for the buyer from such an installment plan, the Bank of Russia warned.
To determine the profitability of installments, let's compare it with other housing purchase options.:
- An apartment for 15 million rubles in installments can cost 25% more expensive — about 18.75 million rubles, said Tatiana Reshetnikova from Floors. It is from the latter amount that all calculations will be carried out. With an initial payment of about 15%, monthly payments in the first three years will amount to 315 thousand rubles, and in the remaining seven years they will decrease to about 55 thousand rubles.
When buying the same home on a family mortgage at 6% for the same period of 10 years, the initial payment will need more — already 30% (it is also the average, according to Dom.Russian Federation"), then the monthly payment will amount to 133 thousand rubles, explained in "Floors". The overpayment on such a loan will be comparable to the installment payment, although the monthly payment at the start of the mortgage will be less.
At the same time, the monthly payment for the same housing, taken at a market rate of 28% with a down payment of the same 15% as for installments for 10 years, will amount to almost 320 thousand rubles. Moreover, if you increase the loan term to 25 years, it will decrease only to 300 thousand per month due to high interest rates.
What are the risks of installments when buying a home
Although the installment interest is small or not at all, developers offer a noticeably heavier and more demanding payment schedule, said Yuri Belikov, managing director of the Expert RA rating agency.
Obviously, this option is not suitable for everyone. The buyer should have a large amount of money in his hands — for example, from the sale of a previous home, explained Evgeny Shavnev, CEO of the Flip real estate investment company.
— The main risk of all installment schemes used is that at some point citizens are unable to pay the due payment, — said Andrey Barkhota.
If suddenly the developer does not receive his money, he can withdraw the housing from the buyer. In the case of a mortgage, the mechanism is different — the apartment is not withdrawn, but sold at market value. If the value of the collateral (housing) is greater than the remaining debt, then the benefit from this sale will be credited to the owner — that is, to the borrower. Although, of course, there is a possible scenario when his home is taken away from him and he still owes the bank.
In any case, developers do not specialize in lending and calculate the risks much worse than banks, Andrei Barkhota said. If many home buyers do not pay on time, the developer may face an increase in defaults on his installment portfolio.
Because of this, developers can really go bankrupt, Evgeny Shavnev emphasized. Then everyone who bought a house from him in installments will lose money and the prospect of housing.
How to safely arrange an installment plan
Often, the buyer of an apartment in installments realizes how unfavorable the conditions are for him only after a while, explained Evgenia Lazareva, head of the Popular Front project For Borrowers' Rights. This is a fairly complex product that is not yet regulated by a separate law.
Of particular concern is the way in which the nuances of installments are explained to consumers, the expert added. There is no certainty that the developer's managers or realtors will honestly and clearly tell him about all the risks. There is also no guarantee that there will be no hidden payments like insurance in the contract.
— This infringes on the rights and interests of the consumer and requires urgent legislative intervention, because the tendency to increase the number of home sales in installments is obvious, — said Evgenia Lazareva.
Installment agreements are concluded not with credit institutions, but with developers whose activities are not regulated by the Central Bank, the press service of the Bank of Russia clarified. To avoid problems with installments, you need to carefully read the terms of the agreement, pay attention to penalties and fines and other consequences in case of non-fulfillment of the terms of the agreement, they stressed.
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