A revolution in the new housing market: Buyers' money will no longer go directly to developers

A fundamental reform is being introduced in the Uzbekistan real estate market aimed at protecting the interests of citizens and putting an end to cases of fraud. Strict new rules have been established for multi-apartment residential buildings under construction based on equity participation. From now on, money paid by buyers will not go directly into the hands of the developer, but will be kept in special bank accounts. This step is expected to put an end to painful problems such as unfinished construction projects or the misappropriation of citizens' investments.

Escrow accounts: Where and how is the money kept?

The central link of the new procedure is the escrow account system, which has been tested in international practice. According to it, the funds paid by the buyer for an apartment are not directed to the disposal of the construction company, but to a frozen account at a bank.

The developer can only receive these funds after the building is fully completed and the official documents for its commissioning by the state acceptance commission have been processed. Until the house is completed, the money is kept safely under a bank guarantee.

«The escrow system prevents developers from creating pyramids at the expense of citizens' money without security guarantees or abandoning the project — the buyer's funds remain fully protected until they receive the keys to the apartment».

Transparency requirements for developers and installment conditions

Under the new system, strict requirements are being imposed on construction companies. Before starting to collect money from the public, a construction company must register in a special state electronic system and publicly disclose all project-estimate documentation for the facility. If these conditions are violated or obligations are not met, the developer is obliged to unconditionally return the funds received from the citizen along with interest as established by law.

At the same time, the activities of honest entrepreneurs who build using their own capital will not be restricted. If a developer has fully completed a house at their own expense, the right to sell ready-made apartments to buyers directly on an installment basis (rassrochka) is preserved.

In your opinion, will the escrow system affect new housing prices, or is the safety of citizens more important than any cost? Share your thoughts in the comments.