State-guaranteed order for the housing construction introduced in Belarus

On May 8th, 2013 Belarus’ President signed a Decree No 215, envisaging for procedures of placing state-guaranteed orders for the housing construction for citizens, supported by the state.

Numerous cases of uncompleted construction and conflicts related to shared construction in Belarus showed the imperfections in the existing housing schemes, in particular, during the devaluation period. State order for the housing construction is aimed at suspending some citizens from funding the construction process. The Decree enables property developers to receive state-guarantees for the construction funding and construction shareholders to move into new flats in the shortest possible time.

In 2013, Belarus plans to build 6.5 million square meters of housing, of which 2.5 million square meters are intended for citizens enrolled in the housing construction with the state’s support. To fulfill the difficult task relate to housing construction, Belarus needs to change the mechanism for housing construction carried out with government support. Current mechanism has many flaws and hence many conflicts arising over shared development in the country. On January 1, 2013 760 residential unfinished construction objects have exceeded statutory construction period. Numerous lawsuits imply there are gaps in the legislation allowing dishonest developers to escape liability for their faults in the housing construction process.

The major novelty in the new funding of housing construction mechanism is that shareholders will not be responsible for funding during the construction process. Developers will receive the necessary funding to complete the project at 2% per annum. This measure is meant to solve the issue of insufficient funding of construction by some shareholders, simultaneously, the price will be fixed to avoid increments in the square meter’s costs when construction finishes. Any attempts to inflate costs will be subject to careful investigation by the inspecting authority, which is interested in demonstrating its value against the state apparatus reform.

It is assumed that regular funding and attention control by government agencies, will shorten the housing construction period, and will allow increasing the construction volumes. Shareholders will get a ready-made housing at a fixed final price. All problems related to construction terms and potential abuses will be dealt with at the state level, excluding shareholders. This scheme’s only disadvantage is the need to increase government’s budgetary allocations for the housing construction needs.

Thus, if shareholders in housing construction have the opportunity to take advantage of the state funds, the terms of construction would improve. However, questions related to commercial housing construction remain unresolved and require the adoption of similar solutions.