Sber Bank allocates 1.9 billion rubles for housing development in Chechnya
In the real estate market of Krasnodar and various regions across Russia, the use of escrow accounts has emerged as a common practice, particularly since legal reforms aimed at protecting buyers in shared-equity projects were introduced around 2019–2020. These accounts, typically opened at authorized banks, are now mandatory for new residential developments to safeguard buyers' funds until the builder completes certain stages or delivers the property.
The benefits of escrow accounts are manifold for both buyers and builders.
For Buyers: - Enhanced Security: Payments are held by a neutral third party (bank) and released only upon fulfillment of agreed construction milestones, reducing financial risks. - Legal Protection: Funds are safeguarded against misappropriation or use for unrelated purposes, providing a legal assurance for buyers. - Risk Mitigation: In the event of a developer's bankruptcy or project abandonment, funds in escrow can be used for project completion or returned to buyers.
For Builders: - Improved Cash Flow: Escrow funds are released upon achieving construction milestones, enhancing cash flow predictability. - Increased Trust: The use of escrow accounts can lead to enhanced buyer trust, potentially making sales easier and faster. - Compliance: Compliance with legal requirements helps avoid penalties and secures timely project approvals.
The widespread adoption of escrow accounts in real estate transactions across Russia serves as a safeguard for both parties involved. While the precise extent of adoption can vary by region and project, the system has become standard due to regulatory mandates.
In the Krasnodar region, Sberbank has played a significant role in facilitating property purchases, having issued approximately 2,400 mortgages with an average transaction amount of 791,000 rubles. As of mid-2025, Sberbank provided a total of 860 million rubles in credit funds to accredited builders. Moreover, families in the region received almost 308 million rubles through the family mortgage program, which accounts for 94% of the total portfolio of loans with state support.
By July 1, the balances on escrow accounts in Chechnya exceeded 215 million rubles, indicating a growing trend in the use of escrow accounts in real estate transactions. However, it's important to note that the use of escrow accounts by construction companies in the process of buying real estate is not explicitly mentioned in the available data.
In conclusion, the use of escrow accounts in real estate transactions has become a standard practice in many regions of Russia, offering increased security, transparency, and legal protection for both buyers and builders. As the market continues to evolve, it is expected that the use of escrow accounts will continue to grow, providing a more secure and transparent environment for property transactions in the future.
- Investors in the Russian real-estate industry can benefit from the increased security and legal protection offered by escrow accounts, making it an attractive avenue for financing property-related projects.
- The adoption of escrow accounts in finance, like in the Krasnodar region where Sberbank plays a significant role, can help boost confidence among both buyers and investors, potentially leading to increased investing in the real-estate sector.
