On April 13, Uzbekistan’s President Shavkat Mirziyoyev approved a decree aimed at delivering housing to the population through “market-driven” mortgage programs in 2023, as reported by the Ministry of Justice to Gazeta.uz.
The decree stipulates that, beginning May 1, banks can grant mortgages to individuals without formal income. In assessing their repayment capacity, factors such as bank card turnover, rental payments, utility bills, and other expenses will be taken into consideration.
The banks will also be given a right to set differentiated rates on mortgage loans (without subsidies), based on the amount of the down payment, grace period and other indicators. The president of Uzbekistan said earlier that citizens who pay a higher down payment will be able to get a cheaper loan from the bank.
In order to accelerate the use of funds allocated for subsidies, the period of subsidy will be reduced from 12 to 4 months. However, citizens who have not used their certificates during these months will be entitled to reapply for the subsidy. Applications for subsidies will be accepted from May 1 to December 1.
In addition, from May 1 the order of granting subsidies on preferential terms to teachers and masters of vocational training organizations, teaching special subjects or leading educational practices in such areas as engineering, processing and construction is introduced.
The Uzbekistan Fund for Reconstruction and Development (FRDU), the nation’s sovereign fund, has been directed to allocate $100 million to the national budget at an interest rate two percentage points lower than the Central Bank’s current base rate of 14%. This allocation is to be repaid by May 1, 2028.
The Ministry of Economy and Finance should place 3 trillion soums on bank deposits at the expense of the national budget in April. At the same time, the Ministry may increase the volume of funds for mortgage on the basis of state budget liquidity.
Out of this amount 500 billion soums will be directed to replenish current assets of construction contractors. The Ministry of Economic Development and Trade will allocate funds to banks at a rate 2 percentage points below the basic rate of the Central Bank (12%), and developers will be able to obtain loans for up to 18 months at the rate of the Central Bank (14%).
Starting May 1, banks will have the authorization to accept partially completed sections (floors) of apartment buildings under construction as collateral. Previously, this could only be done after the completion of the roofing work.
From the same date, the practice of refinancing mortgages allocated to individual shareholders will be continued.
In total, 44,690 loans for 10.73 trillion soums will be allocated in 2022, including 9.6 trillion soums — from state budget and 1.1 trillion soums — from Company on refinancing mortgages.
Through December 31, 2024, the State Entrepreneurship Support Fund is authorized to offer private contractors guarantees and compensation for up to 24 months on soum loans from banks designated for the construction of buildings with a minimum of 9 floors in cities, 7 floors in other urban areas, and 5 floors in rural locations.
In this case:
- Compensation shall be paid in the part of loan not exceeding 5 billion soums for each apartment house (guarantee — up to 2.5 billion soums), regardless of the amount of the loan;
- In order to provide a guarantee and compensation, the number of apartments with the area of not more than 70 square meters should be not less than 70% of the total number of apartments in the house under construction.
As per the document, an experimental launch of the mortgage program “My First House” will take place in the Zangiata district of the Tashkent region, with the complex situated in the Turkiston mahalla.
As it was informed earlier, a special housing company will be created under Construction Ministry for implementation of this program. About 36 hectares of land will be allotted in Zangiata district for construction of 58 power efficient apartment houses for 2,500 families, social facilities and entertainment centers.
Through the sale of retail and commercial space to entrepreneurs, it is possible to reduce the cost of apartments, the head of state noted.
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It is expected that monthly payments for 2−3-room apartments in these houses will be lower than the current subsidized mortgage payments.