Project «Kvartaly 21/19» includes a school, 3 kindergartens, parkings and underground parkings, a multifunctional complex with shops, offices and a fitness center, and a green boulevard of total area over 3 hectares.
A great emphasis in the residential property design is placed on infrastructure: landscaping design, transport accessibility, environmental friendliness and architectural solutions, that jointly form comfortable conditions for living in urban environment..
Creating ideal space for living, which meets standards of A-class construction: safety, comfort, environmental friendliness and aesthetics.
We are trusted by such major investment funds as «Sberbank - Residential property 3», we have talented partners - together we can set new, higher standards of real estate market.
Expobank is our key partner, and we look in the same direction together. Thanks to its support, we have an opportunity to implement even the most daring projects.
July 1 this year came into force amendments to the legislation on shared construction. Changes have made confusion in the ranks of home buyers, who now can not decide to choose a new building, where sales of apartments are carried out according to the old rules, or certainly give preference to a new and, as many believe, a safe scheme using escrow accounts. Andrey Kolochinskiy, managing partner of "VectorStroyFinance", told about aspects of the transaction under the new rules, the pros and cons of this mechanism.
«Very often escrow accounts are opposed to the equity agreement – this is perhaps the main misconception that exists among home buyers».
It should be clarified that the transition to a new scheme of work does not imply the abolition of the equity participation agreement, and is intended to change the form of payments between the developer and the client.
Now, buying an apartment in a new building, the client carries the money not directly to the developer, but to the bank, where they will be stored on a special escrow account until the end of the construction of the house.
The appearance of a new participant in the chain represented by the bank does not complicate the transaction process. After the conclusion of the equity participation agreement and its registration in Rosreestr, the buyer, the bank and the developer sign a tripartite agreement for the opening of an escrow account. Then the shareholder has to make money on it, at the same time additional documents are not required. And if the apartment is purchased in a mortgage, the money is transferred to the account of the bank, which issued a mortgage. In total, the transaction takes about two weeks.
«Escrow accounts are designed to ensure the safety of funds during the construction of the house and this is their main advantage.»
No matter what happens to the developer or the bank, the money from escrow account will not disappear, even if the buyer is the debtor. If the developer has problems (failure of construction terms, lack of financing, bankruptcy, etc.), the client will lose only time, but he will not have to wait for years for the return of funds, as it was before. Despite the obvious advantages of the new mechanism, it is not without flaws. About the pitfalls that await buyers of housing, it is necessary to tell more.
Thus, the transition to escrow accounts deprives developers of the opportunity to build on the money of shareholders. Not having their own funds, most of the companies resorted to bank project financing that involves additional costs of servicing the loans and, consequently, affects the price of a square meter. According to analysts, in connection with the transition to the new rules before the end of the year, new buildings may rise in price by at least 10%. At the same time, in projects with the old scheme of implementation, price growth occurs only due to changes in the stage of construction readiness.
Participation in the bank's scheme involves total control over the developer, complicates the process of interaction with contractors, suppliers of materials and other contractors, increases the number of approvals and bureaucratic procedures. The credit institution may suspend payments at any time. All this as a result may affect the timing of the construction of the object.
Another disadvantage of the scheme with the use of escrow accounts - the legislation in the new form does not take into account the interests of some categories of home buyers. Among them are mortgage borrowers, who account for up to 70-80% of sales in mass-market projects. In case of bankruptcy of the developer, they will be able to return the amount of the loan and will not receive back the interest paid to the bank. And if the bank goes bankrupt, the participant of shared construction as compensation will be able to count on the amount of up to 10 million rubles, which is clearly not enough to cover the costs of buying expensive housing in the capital.
Apart from those developers who could not get bank project financing, unfortunately, there are many such companies in the country. Most likely, their projects are threatened with failure of construction terms. Legislators have not provided an action plan for this case, have not developed a mechanism to support such developers, from which it can be concluded that the problem of deceived shareholders will remain unresolved in the coming years.
From July 1, the developers were obliged to switch to a new financial model and scheme for the implementation of new buildings. Now developers will not be able to directly attract the money of home buyers, except through special escrow accounts.
"SP" asked how the transaction will take place under the new rules, what has changed for buyers, what guarantees they will receive and whether the new scheme will eliminate all possible risks.
"SP": — What has changed fundamentally for home buyers in the primary market since July 1?
— If we bear in mind the scheme and the stages of the transaction, — said the managing partner of the company "VectorStroyFinance" Andrey Kolochinskiy — then there is a new participant - bank. Now the client carries the money not directly to the developer, and places the funds on a special bank account, which is opened for settlements between the buyer of the apartment and the developer. If the property is purchased in a mortgage, the funds are credited to the account of a bank that issued the loan. The money is frozen in the account until the house is put into operation. This will ensure the safety of funds during construction, and if there is a force majeure, the buyer will be able to get them back.
"SP": — In which case the buyer can return the money from the escrow account?
— The client has the right to return the money placed on the escrow account, in case of termination of the contract of equity participation. And there must be legal grounds for that. For example, if the developer does not fulfill its obligations, does not meet the stated deadlines or is declared bankrupt. But we must bear in mind that during the construction of money can depreciate, and it is unlikely to be found for this amount of new building in the same location, with the same consumer characteristics.
An unpleasant moment exists for mortgage borrowers — in case of termination of the equity participation agreement or bankruptcy of the developer, a bank will return only the body of the loan, the interest is not returned. Namely, interest is a significant share of payments in the first years of servicing the loan.
"SP": — Who defines bank? And should the buyer issue a mortgage loan exclusively in the bank where the escrow account is opened?
— The developer chooses a bank with which he will cooperate. The full list of organizations authorized to work with escrow accounts can be found on the website of the Central Bank. At the same time, there is no connection between bank financing the construction and the credit institution that issued the mortgage. The client has the right to independently determine a bank on the basis of acceptable mortgage terms. But it is possible that partner banks of developers will be able to offer borrowers the most profitable programs with a reduced interest rate.
"SP": — What to do to customers who have already concluded the equity participation agreement in the project, sales in which are transferred to a new scheme?
— Do not worry, the transition to the new rules will not affect such customers. If a person has already concluded the equity participation agreement and transferred money to the developer, in this case, the escrow account will not have to be opened. And new customers do not need to do anything — there is no need to collect additional documents. The only thing you need to do is to sign a tripartite agreement between the bank, the buyer and the developer.
"SP": — Often the man in the street opposes escrow accounts to equity participation agreement. Is that wrong?
— Nobody cancelled the equity participation agreement, if the new building is purchased using escrow account, the buyer will also have to sign a contract with the developer. The Institute of shared construction continues to exist, only the scheme of settlements between the parties to the transaction has changed.
There is another misconception — some people mistakenly believe that they have lost the opportunity to buy a house under construction. This is not so, apartments in new buildings will continue to be sold at different stages of construction. And the volume of supply at the stage of the pit will not decrease, as the developer is interested in attracting more funds to escrow accounts to reduce the rate of project financing.
"SP": — The buyer will be able to return the money from the escrow account if the developer goes bankrupt. What if the bank goes bankrupt?
— By analogy with bank deposits of individuals, escrow accounts are insured. But there are restrictions on the amount — up to 10 million rubles. With the average cost of housing in Russia 3 million rubles, this restriction seems reasonable. However, legislators have not fully taken into account the interests of residents of Moscow and St. Petersburg, where the cost of multi-room apartments is much more expensive. The same applies to buyers of luxury housing, expensive country houses and townhouses. But even with all the minuses is to recognize that this airbag adds confidence to the participants of shared construction.
"SP": — In some new buildings you can already buy an apartment using an escrow account?
— I must admit, most of the new buildings are now sold under the old rules. An exception was made for objects where the level of construction readiness exceeds 30% and 10% of apartments have already been sold on the equity participation agreement. 80% of residential complexes will be sold in the capital without escrow accounts. But this should not frighten, all projects have been thoroughly tested, and Moskomstroyinvest issued a positive conclusion. The pace of construction and the level of financial stability make it possible to continue the implementation of these facilities under the old scheme. Developers will not have to change the financial model, and they will be able to avoid a sharp rise in prices, which is good for buyers.
"SP": — Are there any disadvantages of the new scheme?
— Buyers receive additional guarantees against risks, and they will have to pay for it. The weighted average rate for project financing is 7%. The developer will service the loan at a high rate until the amount of funds in escrow accounts reaches the amount of the loan issued by the bank. At the same time, the amount of lending will increase significantly, since under the new rules, only 15% of the developer's own funds are required.
Developers will compensate additional costs for servicing loans at the expense of buyers, increasing the cost per square meter. To sum up — the main disadvantage is associated with rising prices. According to my estimates, when switching to escrow accounts, new buildings may rise in price by at least 10%.
However, everything is not so rosy — the Central Bank's concerns about the "credit spiral" and tighter control over unsecured loans and loans with a low down payment can become an obstacle to the dynamic development of the industry.
But what exactly is the risk of this "credit spiral"? And what other negative trends are emerging in the primary real estate market?
— Recently, in the next review of financial stability, the Central Bank warned about the threat of a "credit spiral", which is possible with a simultaneous decrease in mortgage rates and a steady increase in housing prices. The improvement of lending conditions pushes the population to take out a mortgage, while the growing demand heats the prices in the housing market, — explained the managing partner of the company «VectorStroyFinance» Andrey Kolochinskiy. — In addition, the regulator's concerns are caused by loans with a small down payment, which may result in a "mortgage bubble".
SP: — What's wrong with low down payment programs? After all, such products significantly expand the range of potential borrowers.
— Loans with a low down payment are traditionally considered high-risk. The logic of the bankers is simple — if the borrower does not have the funds even for a down payment, most likely he does not have a financial cushion. In case of deterioration of a life situation, for example, at loss of work, it won't be able to make payments regularly. Psychologically, it will be easier for him to refuse to service the loan at all, if the amount paid as a down payment was insignificant. Conversely, the borrower who has made a round sum is unlikely to refuse further payments, rather it will close all its obligations on the loan ahead of time.
The Central Bank has already begun to take concrete actions to reduce the share of loans with a low down payment, although it is not large — 1.3% of all loans issued for the 1st quarter of 2019. Thus, on January 1, risk factors for such loans were introduced.
"SP": — And banks have already started to implement in practice the recommendation of the Central Bank to reduce the share of loans with a low down payment?
— After the regulator raised the premium to the risk factors on loans with a small down payment, banks had to increase the difference in rates on programs with a small down payment and standard products. Thus, interest rates on loans with a small contribution increased by 0.2 — 0.5 percentage points. The rate hike makes such products less attractive and gradually reduces their share in banks mortgage portfolios. Thus, at the end of the first quarter, the share of loans with a down payment of less than 20% has already decreased by 2 percentage points.
"SP": Well, the risk of the notorious "credit spiral", which warns the Central Bank, it really exists?
— In Russia, the level of housing per capita is still low — less than 25 square meters, while in developed European countries this indicator is 40 square meters. And only with the help of mortgages, most families can improve their living conditions. Although the growth rate of mortgage lending remains high — about 25% per year, the mortgage portfolio reached only 7.4 trillion rubles. With a population of 146 million, this is a small number.
In my opinion, the risk of the "credit spiral" can be said when housing prices will grow steadily for several years, and rates will approach the level of rates of developed western countries, and people will start to buy a second or third property on credit. Our rates remain at a fairly high level, and the emerging price increase is not due to high demand, but to other factors. Therefore, there are no prerequisites for concern, as evidenced by the official statistics — the share of overdue mortgage loans is about 1%.
"SP": — what is happening with prices and demand in the housing market?
— For several years in the segment of new buildings there was a negative price dynamics, a positive trend emerged only last year. According to the Central Bank, prices in the primary housing market increased by 8.7% in 2018. However, the reasons for the growth should be associated with an increase in the cost of construction and the imminent entry into force of legislative amendments regulating the activities of developers. Demand remains moderate, as the population has no savings, and the current level of income is not enough to service loans. The growth rates at the beginning of 2019 chilled borrowers more.
"SP": — And what is the situation in the consumer lending segment? Is this direction connected with the mortgage market?
— The situation in the consumer lending segment causes much more concerns than in the mortgage lending industry. For the understanding I’ll give you the numbers — the share of overdue debt on consumer loans more than 30 days in Russia in the first quarter of 2019 amounted to 20.2%.
There is indeed a connection between consumer and mortgage lending — some borrowers who do not have the money to make a down payment take out consumer loans for this purpose. However, there are few such people — according to the Central Bank, last year only 4% of mortgage borrowers applied to banks for consumer loans before issuing a mortgage. I should note that in the near future it will become more difficult to turn such a "Scam", as the Central Bank is going to introduce a mandatory indicator of the debt burden of an individual.
"SP": — What will happen to the mortgage rates before the end of the year? Should borrowers expect better credit conditions?
— Sberbank has already taken a course to reduce rates, lowering rates for its products by 0.3 — 0.6 percentage points. Traditionally, the main player in the mortgage market sets trends, so we hope that after him and the rest of the credit institutions will revise the conditions. Now the weighted average rate is 10.5%. We are optimistic about the future — according to experts HOUSE. Russia, in the second half of the year mortgage rates may fall to less than 10%.
Rich experience is a no reason to stop. We are constantly looking for a fresh vision of routine market standards: new architectural forms, layout ideas, innovative materials and technologies. A lot of attention is paid to beautification of the public spaces, entrance groups and house territories.
«VectorStroyFinance» focuses on long-term future, making projects that will correspond with the spirit of time even in 100 years.
We care about future generations: each project assumes environmental security and subsequent planting.
Today our constant desire to progress has led us to a new quality level of construction and allowed us to reduce the price of constructed square meters.
The future of construction field lies in high quality projects that correspond with all requirements of big city inhabitants.
With our work we form new principles of construction business in Russia, oriented on innovational approaches, environmental responsibility and customers’ true needs. Company’s nearest plans include increasing presence in regions and becoming a leader of affordable housing market in Moscow.
The basis for «VectorStroyFinance» activities is a long-term experience in the implementation of various projects, which made it possible to elaborate a comprehensive vision for development.
We can ensure the entire investment and construction process, starting with purchase and land development and ending with exploitation of real estate.
Steady and responsible work since 2004 provided us with a reputation of a reliable developer and partner.
Today, with the support major Russian banks, we realize big and ambitious projects - both in regions and in Moscow.
JSC «Vectorstroyfinance» was established in 2004. First projects of the developer were reconstructions of emergency state residential houses in the center of Moscow.
Since its establishment company has implemented dozens of projects in the development sphere: commercial complexes, countryside real estate, objects of social infrastructure, multistorey apartment complexes, reconstruction and redevelopment of buildings.
Conducting these activities, we formed a strong and professional team. We highly appreciate it, as responsibility for the company’s future lies on everyone, and indifference is the main enemy of effectiveness.