Developers will be able to do less when it comes to housing prices. The government is preparing changes
The draft amendment to the Act on the Protection of Purchaser's Rights, published by the Ministry of Development and Technology, introduces revolutionary changes that are intended to restore the balance between the consumer and the construction company.
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The key point is a total ban on indexation of the price of the premises to the detriment of the buyer after signing the development contract. This means that the risk of an increase in the costs of materials or labor is entirely transferred to the developer.
Quadruple booking fee and DOM Portal
The ministry also wants to put an end to the practice of unilaterally terminating contracts by developers who are looking for profit from rapidly rising market prices. In case of default the developer will have to refund the customer as much as four times the reservation fee (previously it was twice the amount).
To facilitate contractor verification, the functionality of the DOM Portal (Housing Trading Data) will be expanded. “This will enable citizens to compare developers' activities on an ongoing basis and assess their credibility” – informs the regulatory impact assessment (RIA).
The portal will include not only data on investments, but also information on delays, penalties imposed by the Office of Competition and Consumer Protection, ongoing bankruptcy cases and the history of criminal and civil proceedings of the developer.
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Transparent reception and no more marketing tricks
The changes will also affect the technical process. The information prospectus will be enriched with a uniform tabular template regarding the finishing standard. This is to ensure “transparency of technical and legal documentation and to create the basis for more effective pursuit of complaint claims.”
The amendment will also simplify the reception of the apartment. The buyer will be able to send a report with a list of defects by post or electronically, which will allow professional technical expertise to be attached. Defects reported in this way will be binding on the developer and will be subject to statutory repair deadlines.
Visualization is not an offer
The ministry is also taking a closer look at advertising. Developers will have to clearly mark visualizations as illustrative materials, and they will have to publish floor plans of apartments with precise areas on their websites.
— The purpose of this change is to limit the use of unfair marketing practices and to provide consumers with access to basic information at the initial stage of familiarizing themselves with the offer, argues the Ministry of Development. The new regulations are intended to make purchasing your own M home safer and make financial “surprises” during construction a thing of the past.
