Tashkent, Uzbekistan (UzDaily.com) —  President of Uzbekistan Shavkat Mirziyoyev reviewed proposals for a system to guarantee public funds in housing construction.

The population of Uzbekistan has exceeded 37 million, with 215,000 new families formed this year alone, significantly increasing the demand for housing.

In 2024, the construction of apartment buildings with 100,000 units is planned, while housing for another 120,000 families is slated for 2025.

However, amid high demand, the construction sector has faced issues with unscrupulous practices among developers. The lack of a structured payment system, digitalization, and transparency creates opportunities for misconduct. Many citizens transfer funds for new housing directly to developers, bypassing banks, fueling the shadow economy. Delays in project completion are frequent, and funds contributed by citizens often become frozen. Co-investment agreements are not always officially registered and are often drafted in ways that favor dishonest developers.

To address these issues, the President on 23 September tasked officials with developing a system to guarantee the protection of public funds in housing purchases. Relevant proposals were reviewed during a recent presentation.

The proposed model includes the introduction of an escrow system, widely used abroad. Under this system, an escrow account will be opened for each construction project in a commercial bank, based on an agreement between the client and the bank. All real estate payments will go through this account. Commercial banks will be able to provide developers with loans at reduced rates, backed by funds accumulated in the escrow account. Upon project completion, the funds from the escrow account will be transferred to the developer’s account. If the developer fails to fulfill their obligations, the funds will be returned to the buyer. Funds in the escrow account will be protected from seizure.

The President approved the proposals and instructed the development of a legal framework for implementing this system, as well as its integration into the work of ministries and agencies involved in the construction sector.