PJSC Sberbank : Sber opens the first IHC escrow account in Russia

Sberbank has been the first in Russia to apply the escrow framework to the construction of single-family homes, also known as individual housing construction (IHC). INPK Investment signed the first sales agreement regarding a construction-stage cottage with an escrow account opened for an individual customer. Previously, the developer had received project finance to construct a cottage settlement in Rostov Region, Russia.

Evgeny Kravchenko, director of Trade Finance, Sberbank:

"Sber is the biggest escrow account agent in the country, having nearly 500,000 escrow accounts with the value surpassing RUB 1.4 in residential real estate deals. We are actively engaged in shared-equity construction work with developers, continuously improving our services and developing distant offers. Today, we have opened the first account of a kind in the framework of a construction-stage single-family home purchase from a developer."

Those wishing to buy a construction-stage single-family home in the Donskoy cottage settlement can now draw up a sales agreement and carry out all settlements using escrow accounts, which guarantees the safety of the buyer's funds and stable financing for the developer. The procedure is similar to sales of real estate in apartment buildings: if a developer has obtained project finance in a bank, a buyer opens an escrow account and deposits into it after signing the sales agreement; then Sber "freezes" the money in the account until the construction of the house is completed. After the buyer registers their property rights and the bank registers a mortgage (if the house was purchased with a Sber loan), the money is transferred from the individual's escrow account to the developer.

According to the road map designed by the Government of Russia, the escrow framework will become mandatory for IHC deals by the end of 2021.