Tashkent, December 13, 2024 – The Europe Today: President Shavkat Mirziyoyev has reviewed a new system aimed at safeguarding citizens’ funds in housing construction, following a surge in demand driven by population growth and increased family formations in Uzbekistan.
Uzbekistan’s population has exceeded 37 million, with 215,000 new families formed this year alone, intensifying the need for housing. In 2023, multi-storey buildings comprising 100,000 apartments will be completed, and plans are underway to construct 120,000 apartments next year.
Addressing Challenges in the Housing Sector
The rapid growth in demand has highlighted several challenges in the housing sector, including unscrupulous entrepreneurial practices. Many citizens directly transfer funds to developers, bypassing banks, which has fueled the shadow economy. Additionally, delays in housing delivery and unregistered equity participation agreements have caused significant financial losses for buyers.
During a meeting on September 23, President Mirziyoyev emphasized the need for a system to guarantee the protection of people’s funds when purchasing housing.
Introducing the Escrow System
At the presentation, it was proposed to adopt the escrow system, a model successfully implemented internationally. Under this system:
- Escrow accounts will be opened in commercial banks for each construction project based on agreements between customers and banks.
- Payments for real estate will be made through these accounts, ensuring transparency and accountability.
- Developers can access funds only upon completing construction, minimizing risks for buyers.
- If a developer fails to meet obligations, the funds in escrow accounts will be refunded to the buyers.
The system also allows banks to provide loans to developers at reduced rates, leveraging the funds accumulated in escrow accounts. These funds will be protected from external claims or collection.
Presidential Approval and Next Steps
President Mirziyoyev approved the proposals and directed the development of a legal framework to implement the system. He also instructed relevant ministries and agencies to integrate the system into the construction sector, ensuring digitalization and transparency.
This initiative is expected to restore public confidence in the housing market, reduce risks, and curb abuses in the sector, supporting Uzbekistan’s growing housing needs.
