Escrow system may push up housing prices in Uzbekistan – Justice Ministry

Uzbekistan's Ministry of Justice suggests that an escrow system could lead to higher housing prices, according to Jamshid Mirzayev, head of the Ministry's Economic Legislation Department. He shared this perspective during a session of the People's Democratic Party of Uzbekistan's parliamentary faction, responding to inquiries from lawmakers.

MP Anvarkhon Temirov questioned whether mandating developers to secure financing exclusively from authorized banks would elevate construction expenses. Mirzayev confirmed that four research organizations had examined this matter, and all concluded that an increase in construction costs was likely.

Mirzayev elaborated that developers currently utilize direct payments from buyers as interest-free capital for their projects. However, under the proposed escrow framework, buyer funds would be held in a bank account until the developer fulfills their contractual commitments. This would necessitate developers to finance construction through bank loans, thereby incurring additional costs due to interest.

Mirzayev stated, "Yes, housing prices will rise in the future, but if a citizen does not receive the apartment, they will be able to go to the bank and recover their money."

The ministry emphasizes that the core purpose of this new system is to safeguard buyers' investments. All payments from homebuyers, including mortgage funds and government subsidies, would be deposited into escrow accounts managed by authorized banks. Developers would only gain access to these funds upon satisfying the terms outlined in their agreements.

Previously, on July 11, the Legislative Chamber's Committee on Entrepreneurship Issues conducted an initial review of a draft law concerning shared-equity housing construction. This bill seeks to govern the relationship between developers and buyers, while simultaneously enhancing legal protections for individuals purchasing new homes.