Existing housing legislation sets clear requirements for investors and developers, general principles of housing construction, legal and organizational principles for attracting funds from individuals and legal entities to banks and other financial institutions for the purpose of financing housing construction.
It should be noted that the rules of state regulation in the field of housing construction are undergoing constant changes. On the one hand, this is evidence of attempts by the government to improve the existing financial and credit mechanisms for financing housing construction, however, frequent legislative changes lead to uncertainties and create additional difficulties, burdens for investors in investment relations.
Until recently, financing of new construction was possible in three ways: through an investment agreement with the developer, target housing bonds and a participation in the construction financing fund (hereinafter the FFB), among which the latest investment option was most safe for the investor, but least popular among developers.
With the adoption of the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Improvement of State Regulation in the Area of Housing Construction” dated 29.06.2010 No. 2367-VІ, according to which a number of amendments were made to the Law of Ukraine “On Investment Activity” of September 18, 1991 No. 47 and On Financial and Lending Mechanisms and Property Management in the Construction of Housing and Real Estate Operations of 19.06.03 No.978-IV and a number of other legislative acts in the field of investment in housing construction, for funds raised from individuals and legal entities, significant changes took place. In particular, the ways of investing and financing of housing construction, with the use of non-state funds attracted from individuals and legal entities, were clearly defined.
So, now, investing in housing construction can be done through:
construction financing funds;
real estate funds;
joint investment institutions;
by issuing targeted bonds.
When deciding whether to invest in bonds or to take part in construction financing funds, attracting own funds or bank loans, the investor will take into account, first of all, the potential risks, positive and negative features of existing financing mechanisms for construction.
