Will developers in Tajikistan no longer be able to deceive clients?

Amendments to the legislation could lead to higher prices for new housing.

In Tajikistan, it is proposed to amend the legislation in order to eliminate the risks of buying housing in new developments. We explain what amendments are being discussed and what developers and shareholders in new developments think about it.   

In early February, the head of the Committee for Architecture and Construction, Mahmadsaid Zubaidzoda, reported that there is a discussion about amending the republic’s legislation in order to eliminate the risks of buying housing in new developments.

In particular, it is proposed that payment for apartments be made through banks, and the paperwork – through notary offices.

Cases of defrauding shareholders have become more frequent

The head of the committee noted that cases have become more frequent in which shareholders had problems acquiring housing after payment, problems with registration, or the houses remained unfinished altogether.

«There are some unscrupulous companies that do not finish the job; meanwhile they collect money from shareholders and leave the market, and as a result their buyers suffer.

An example is the company «Movarounnahr» with its unfinished properties and a number of other construction companies», – he reported.

According to Zubaidzoda, in recent years more than 23 residential buildings have remained unfinished in the capital. And «...only with the support of the Dushanbe city administration and other construction companies was the construction of these houses completed», - he said.

 «Specialists are now studying the experience of Kazakhstan. In particular, it is proposed that the payment of shareholders’ contributions be made officially through banks, and the paperwork directly through notaries», - he emphasized.

The Committee for Architecture and Construction declined to reveal other details, noting that the amendments are still being discussed. But the head of the committee is confident that after they are adopted, the problem of defrauding shareholders will be fully resolved.

«Of course it’s better this way, but there is a concern…»

Buyers agree that, on the one hand, official paperwork in the presence of a notary and payment of money through a bank will give them confidence that they will receive their housing. 

«The amendments are appropriate. Because right now this is not controlled in any way; you sign a contract only with the developer, and even then there’s no guarantee it’s the head of the company or a responsible person. Not to mention the payment of a large sum of money, which gets recorded in the notebook of an accountant or the head of the company. There have been cases where shareholders signed a contract with an intermediary or an ordinary employee of the company’s sales department», - says Firuz, a resident of Dushanbe. 

Another Dushanbe resident - Shahboz, who plans to buy an apartment in the near future, fears that the formality will affect the cost of housing. 

«Of course, it’s better when everything is done officially with a notary, and  when you pay through a bank. That way you are more confident that you will receive your housing at the promised time with all the documents. But there is a concern that this will affect the cost: transactions through a bank do not go through without commissions. If both the shareholder-buyer and the construction company pay even a small commission, it adds up to a considerable amount, and so apartments may become more expensive», - says Shahboz. 

According to him, also, by running all the money through a bank, construction companies will no longer be able to hide their income from the tax authority, and this too may affect the cost of housing. And besides, despite the ban, developers accept foreign currency from buyers, and in those cases the cost of housing is lower. But if the amendments are adopted, they will no longer be able to do this through a bank. 

What do developers say? 

Only two construction companies dared to speak on this topic, and even then on condition of anonymity.

«First, conscientious developers do not deceive their shareholders; the unscrupulous ones should be punished instead of complicating the work for others. Next, we have no private notaries, and the state ones always have a huge queue, and this is inconvenient both for buyers and for  the company. 

By receiving money through a bank, we lose cash, which is undesirable for three main reasons: 1. With cash, building materials are cheaper. 2. We have to pay for the bank’s services and commissions in cash. 3. Withdrawing the required amount from an account in our banks is not very easy», - the first construction company replied. 

The second construction company spoke about the same points, but also raised another issue: apartments in new developments are sold not only by developers. 

«The system of exchange between suppliers and sellers of building materials is very popular with us. That is, we take building materials from sellers, and in return give them living space, and they sell the apartments. After the amendments, will they be able to sell apartments officially? In general, it’s hard to say anything until there are details. On the one hand, this will indeed push unscrupulous developers out of the market; on the other hand,  it will complicate the work for everyone who remains», - they say at the company. 

Both companies noted that until there are details and a mechanism for working under the new amendments, they cannot calculate how much the innovations will affect the cost of housing, but they are already confident that there will be a slight increase in prices.

Source: Asia-Plus