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The Russian Federation may introduce installment plans for the purchase of housing for certain categories of citizens

The Russian Federation may introduce installment plans for the purchase of housing for certain categories of citizens

Federal authorities will work installment plan for buying a home for certain categories of citizens 2024 year. This issue will be dealt with in the Ministry of Finance, Ministry of Construction, Central Bank and the operator "DOM.RF", follows from the action plan for the implementation of the adopted Strategy for the development of the construction industry and housing and communal services until 2030 y. It's about teachers., doctors, IT workers, narrow specialists in industry.

Member of the General Council of Business Russia, Ekaterina Avdeeva, head of the Expert Center for Criminal Law Policy and Execution of Judicial Acts, appreciated this initiative and explained to the correspondent of our publication the differences in the legal nature between installment and mortgage lending:

– Existing mechanisms for acquiring housing require transformation - this is an indisputable fact. Now the Russian real estate market is fixated on mortgage lending, and this limits its development, and the lack of an alternative to mortgage does not encourage banks to increase its availability. Today in the segment of mass housing there has been a steady trend. Due to the cancellation of the preferential mortgage program 31 December 2022 experts predict a decrease in buying activity. The market will have to adapt to new conditions.

In this regard, the preparation by the Government of an installment plan for the purchase of housing for certain categories of citizens is a more interesting mechanism.. Undoubtedly, the development of financial instruments for the purchase of housing on preferential terms will become an effective measure to maintain the balance of supply and demand, ensure the sustainability of the construction industry and stabilize housing prices.

In its financial and legal essence, the installment plan is more “loyal” to the buyer. This financial and legal form makes it more affordable for those individuals to purchase housing, who are unable or unwilling to take out a mortgage loan. Unlike strict criteria for assessing the solvency and scoring models of credit institutions, installments do not take into account the person's credit history. This greatly simplifies the process of buying a home., makes it more flexible and customizable.

The next indisputable advantage of the installment plan is the absence of overpayment for housing and a shorter repayment period. (from 1 to 4 Years). At the same time, it is important to take into account, who will provide the installment: developer, which is subsidized by the state, or an intermediary in the form of a credit institution (in this case, a tripartite contract of sale is concluded).

It is important to understand, that installment and mortgage have a different legal nature in terms of the consequences of default. Credit is a loan, mortgaged on existing immovable property. If the property is dispossessed, use, borrower's instructions, for example, recognized as illegal, to be seized or imprisoned, this does not terminate the agreement with the credit institution and does not release the person from the obligation to repay the loan, payment of interest for the use of it in the amount of, established by the loan agreement, and contractual penalty, even if the seller disputes the transaction.

The installment agreement provides for a completely different mechanism, which is regulated by Art.. 488 and 489 Civil Code of the Russian Federation. If the buyer does not make the next payment for the goods sold by installments and transferred to him within the period established by the contract, the seller has the right, unless otherwise provided by the contract, refuse to perform the contract and demand the return of the goods sold, except in cases, when the payment amount, received from the buyer, more than half the price of the product. At the same time it should be noted, what if the contract for the sale of real estate specifies an installment payment, then in case, unless otherwise stated, in accordance with Art.. 488 Civil Code of the Russian Federation acquired real estate is pledged to the seller. In other words, in the case of a sale and purchase agreement with the provision of installments, the level of buyer protection can be assessed as higher in comparison with mortgage lending.

So, with the advantages in terms of greater accessibility and greater security in the event of significant payments under the installment agreement, it is necessary to evaluate other mechanisms and consequences of violations of financial discipline in payments for purchased housing. If we're talking about installments, then, in essence, the contract of sale should be terminated due to non-fulfillment of the conditions, prescribed in it, but in the case of mortgage lending, the loan agreement is terminated, and the bank has the right to foreclose on the collateral, which continues to be the property of the buyer.

For most buyers, Maybe, the difference will not be clear, since in any case, you will have to answer for violation of financial discipline and immunity to the only housing, purchased with a mortgage, does not apply. In any case, you will have to pay penalties in case of violation of the payment schedule, and as under a mortgage loan agreement, as well as in the case of purchase in installments. In the case of the acquisition of housing with the involvement of mortgage lending, the relationship between the buyer and the credit institution will be regulated not only by civil law, but also by federal law “About mortgage (pledge of real estate)” from 16.07.1998 N 102-FZ and the Federal Law “About consumer credit (will take)” from 21.12.2013 N 353-ФЗ. It is also necessary to understand, that in the event of termination of the mortgage agreement, the court determines the foreclosure on the pledged property, moreover, a writ of execution is also issued for the amount of debt with a recovered penalty, and to foreclose on an apartment in pledge, which involves selling it at an initial discount at 20%. In the case of installments, the mechanism is different., the contract itself is terminated and the return of real estate to the seller is determined, as well as the amount, returnable to the buyer, which in general can be determined in an agreement in accordance with Art.. 450.1 Civil Code of the Russian Federation. That is, there are differences in external similarity between installment and mortgage lending., they are significant in legal nature, determining the regulation of the conclusion of contracts, the procedure for fulfilling obligations and the consequences of their non-fulfillment.

 

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