From shared construction to project funding

Abstract

The article studies the process of development of the shared construction model as an investment scheme in the construction sector. Information on the housing issues in Russia, the constitutional right to housing and methods of exercising this right is provided. For a deeper understanding of the issue, it is necessary to study the history of development of the shared construction model, its strengths and weaknesses, as well as the factors affecting this type of housing purchase. The construction investment legislation lacks rules for organizing the process. Therefore, it is necessary to amend the legislation so that there were no “deceived equity holders”. These circumstances determined the need for reforming the shared construction model and replace it with the project funding one. The legal acts governing shared construction activities and the latest innovations in the construction legislation are presented. The concepts of project funding and escrow accounts are defined. The algorithm of transactions under the agreements of equity participation with the involvement of banks and the government and the new mechanism for monitoring developers’ activities are analyzed. Based on the results of the analysis, conclusions on the main positive and negative aspects of the new system for consumers, construction companies and the construction industry as a whole are drawn.