Buying a New-Build Apartment: Which Contracts Should Alarm Kazakhstani Buyers

Kazakhstanis buying homes in apartment buildings under construction should not hand money to a developer based only on a reservation or a preliminary agreement. First, they must make sure the company is entitled to accept funds from equity holders and that the shared-equity participation agreement has been registered. The Committee for Construction and Housing and Utilities warned about this, according to infohub.kz.

The law sets out three grounds on which a developer may raise citizens' money to build housing: a guarantee from the Single Operator, participation of a second-tier bank in the project, or raising equity holders' funds after the frame of the apartment building has been erected. If none of these grounds exists, paying for an apartment during construction is not recommended.

Before the deal, it is also important to study the documents for the residential complex and the terms of the contract. It must specify the apartment price, payment procedure, construction and handover deadlines, and the rights and obligations of the parties. A shared-equity participation agreement is subject to mandatory registration.

According to committee specialists, particular alarm should be caused by cases where, instead of a shared-equity participation agreement, the buyer is offered a preliminary agreement, a reservation agreement, or an investment agreement.

"The name of the contract alone does not determine the legality of the transaction. If the document is in fact used to raise citizens' money for the construction of an apartment building while bypassing the mechanisms established by law, such a scheme is not allowed," the committee emphasized.

Information about the developer and the residential complex can be checked through official digital services, including Homeportal.kz and eGov.

Fines are provided for raising buyers' money in circumvention of legal requirements. For individuals — 200 MCI, for small businesses — 500 MCI, for medium-sized businesses — 750 MCI, for large businesses — 1,000 MCI. In case of a repeat violation, a large business faces 2,000 MCI.

The committee advises checking the developer and the residential complex before payment, finding out on what grounds the company is raising money, carefully studying the contract, and making sure the shared-equity participation agreement is registered.

Earlier, Kursiv wrote that apartments on the right bank of Astana bring in more money than those on the left.