OREANDA-NEWS. December 16, 2013. Sviaz-Bank and the International Analytics Unlimited Bank Club held a round table “Banks, Insurance Companies, and Developers: Law Amendments – New Aspects of Cooperation” at the RIA Novosti Agency’s press center.

VEGAS LEX law firm and the Morton Group of Companies were their partners in putting on the event. The round table was moderated by Alexei Bakhayev, Director of Sviaz-Bank’s Retail Business Development Department.

The round table participants discussed the amendments to Federal Law No.214-FZ, Participation in Joint Construction of High-Rise Condominiums and Other Real Property Projects and Amendments to Laws of the Russian Federation,” effective from January 1, 2014. In his report, Igor Chumachenko, a partner of VEGAS LEX law firm and CEO of Real Estate. Land. Construction, highlighted the details of all key changes in the laws. Alexei Bakhayev said that many developers were making efforts to take out permits for new construction projects before January 1, 2014.

In the common view of the round table participants, developers are running high risks that warrant insurance coverage. According to Sofia Starkova, General Director AN Lider, no insurance company was willing to burden itself with this liability six months ago. Today, the situation has turned around.

Sergey Pakhomov, director of the Developers’ Civil Liability Mutual Insurance Company, spoke about a unique noncommercial association of developers set up to share joint liability. According to the speaker, fixing rates is a far from easy thing in insurance. “No statistics are available on default probability evaluation. Today, we adhere to 1.2% upon insurance of a joint construction agreement and 1.65% upon insurance of every project. We only have practice to prove whether or not our figures are right.”

Alexei Bakhayev said that apartments in new housing projects are purchased most frequently with mortgage funds. In early 2013, mortgage was only used to make 30% of housing purchases, while the figure has grown to almost 50% of all purchase transactions today, and is still going up in Moscow and elsewhere across Russia. Naum Libkind, chief of the retail lending service, MIA Commercial Bank, OJSC, said: “Purchasing real property in a building under construction is business, and the person transacting it must be protected by law. Since the mid-2000s, when insurance coverage was applied to developers, nothing has changed for the purchaser, though.”

Yuri Kudryakov, Chairman of the Board of Directors, Unicom24 company, cited these figures: over 700,000 apartments will be sold on credit next year, and all funds given in loans for the purchase of real property will together top a trillion rubles. Joint efforts by all market participants will help make mortgage of primary market projects more civilized and accessible.