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Kyrgyzstan decides to legally protect housing equity holders

Government of Kyrgyzstan amends the Housing Code regarding shared-equity construction issues. The document was initiated by the Ministry of Economy.

The ministry noted that the institution of citizens’ participation in shared-equity construction in the country is in demand and is gradually becoming widespread.

There is no concept of shared-equity construction in the legislation of the republic.

In addition, there are no rules and conditions for attracting citizens’ money to shared-equity construction. Therefore, the Ministry of Economy proposes to introduce the concepts of «shared-equity construction» and «shared-equity construction object» into the Housing Code. The conditions are also proposed to be set for attracting population’s money for construction.

So, the bill is proposed to stipulate that shared-equity construction is possible, if there is a positive conclusion from study of design estimates, state registration by the developer of the right to own a land plot where they will build an apartment building. In addition, shared-equity construction can be carried out by housing construction cooperatives that have property plots allocated from municipal or state land.

An agreement on participation in shared-equity construction must be subject to state registration and is considered as concluded from the moment of such registration.

«The bill will regulate legal relations of participants of the shared-equity construction. It is proposed to provide a rule on the opening of special accounts on which the money of equity holders is accumulated. Participants of the shared-equity construction will be able to track the movement of money on the account,» a background statement to the bill says.

The Cabinet of Ministers plans to impose a ban on attracting citizens’ funds into shared-equity construction in violation of the conditions prescribed in the bill. If construction companies do not comply with the rules, their management will face criminal liability.

Simultaneously with the amendments to the Housing Code, a resolution was adopted on the approval of the procedure for maintaining a register of bona fide building organizations and databases of shared-equity construction contracts.

Deputies of the Parliament have been demanding from the government to develop a law protecting the rights of equity holders since 2016. And they themselves tried to accept it, but the Cabinet issued a negative opinion on the document. There are no official statistics on the number of deceived equity holders in the Kyrgyz Republic. However, according to the estimates of deputies, there are about 4,000 of them.