House-building bonds discontinued in Belarus


Marina Makarchuk, Senior Associate

Vadim Poleschuk, Senior Associate

On 4 May 2021, the President of the Republic of Belarus adopted Edict No. 176 On House-Building Bonds (the "Edict"). The Edict has banned any new issue of house-building bonds in Belarus. In fact, the Edict discontinues the circulation of house-building bonds that started in 2009.

House-building bonds were a highly popular savings instrument that allowed citizens to build their own apartments more cost effectively. House-building bonds qualify as a security. Their par value was nominated in currency and the equivalent of the par value was nominated in square meters and could not be changed. So the housing price did not change or fluctuate during the process of construction.

However, the system of house-building bonds had some setbacks; namely, the possibility for the developer to abuse the intended purpose of the funds attracted via the placement of house-building bonds and to spend the funds on the construction of different facilities, which led to a delay in the construction of a number of vast projects. This in turn caused significant public discontent.

As a result of recent market developments, the system of house-building bonds was considered obsolete and was thus cancelled. House-building bonds issued before the Edict comes into force should be valid until their redemption by the issuer.

It is expected that the Belarusian real estate market will be reinvigorated as a result of the discontinuation of house-building bonds because it will decrease the number of problematic construction projects and strengthen public trust in the development companies.

The Edict comes into force six months after its official publication.