Column by Alexandra Mertsalova about the new moratorium on penalties

The government decree published on March 22, which introduces further relaxations for housing developers in the form of a moratorium until the end of 2024 on the accrual of penalties for failure to transfer apartments to shareholders, went unnoticed. Meanwhile, the document is quite remarkable.

The authorities have already introduced similar moratoriums in the spring of 2020 and 2022. But in both cases, there were compelling and understandable reasons for them – the pandemic and military operations in Ukraine. Now the formal reason is the high key rate of the Central Bank, on the basis of which penalties are calculated. But it has been in effect for several months now.

Probably, this time the authorities were pushed to a moratorium by unfavorable conditions on the market for new residential buildings. Thus, in Moscow and the Moscow region, the number of apartments sold under equity participation agreements in February decreased by 6% year-on-year, in St. Petersburg and the region – by 3%, as calculated by Dataflat.ru. But what probably scared the market the most was the noticeable decline by January – by 14% and 44%, respectively. And given the gradual winding down of preferential mortgage programs for a wide range of borrowers, the trend is unlikely to change quickly.

For developers who have already started implementing projects, low sales will inevitably lead to an increase in the share of unsold housing. According to the Nash.Dom.RF information system, 33% of the current construction volume has already been implemented in Russia; in the relatively prosperous March 2021, the figure was 44%. In some regions the situation is worse. For example, in the Krasnodar Territory only 26% were sold, in the Leningrad Region – 23%.

Postponing the commissioning of an unclaimed facility is widely used in commercial real estate. Many of the shopping or office centers announced for 2022 are only now being delivered. For the housing market, the postponement may have special meaning: potential buyers of properties under construction can traditionally, at a minimum, count on loans at rates lower than on the secondary market. And a large share of unsold housing will be kept under wraps. The example of ghost towns from the Chinese developer Evergrande is unlikely to seem inspiring to anyone.

However, for shareholders the moratorium is rather unprofitable. “For the third month they haven’t given me the keys to the apartment, the house was rented out without elevators, without ventilation, and now the wait is free,” notes one of the buyers of an apartment in a new building. Meanwhile, the introduction of yet another relaxation for developers, seemingly out of nowhere, creates the risk that this formally temporary anti-crisis measure becomes one of the permanent market realities.