Real estate experts assessed the possible change in prices for apartments under shared-equity construction contracts (DDA) with the introduction of VAT on developer services. This initiative was previously taken by the Ministry of Finance as part of the formation of budget policy for 2022 and the planning period of 2023 and 2024, Izvestia writes with reference to the realtors of the company “Floors” and other participants in the primary real estate market.

The proposal of the Ministry of Finance, according to experts, is aimed at creating additional difficulties for developers in order to reorient them to the construction of housing with fixed, unlike apartments, legal status. The cancellation of the exemption from VAT of developer services on such facilities, introduced in 2010 under DDU contracts, will lead to an increase in the price of real estate without a residence permit by 2-3 percent, experts of the company “Floors” warned.

“It is not worth expecting that the apartments will align in price with similar residential premises in the existing realities,” said Sergey Zaitsev, head of the company’s new buildings center, explaining that the price increase will be fueled by the increased costs of creating a social infrastructure of apartment buildings.

Alexander Ruchev, President of OSNOVA Group of Companies, believes that the initiative of the Ministry of Finance contradicts the idea of equating apartments with housing. “Most likely, developers will refuse to purchase part of the sites for apartment projects due to the fact that the financial model, taking into account the serious increase in the tax burden on the project, will simply become non—working,” the expert stressed. The reduction in the volume of apartment construction, in turn, may exacerbate the shortage of supply in the housing market, Ruchiev added.

The Ministry of Finance did not comment on the expected effect of the implementation of the initiative in the construction and sale of apartments, as well as the timing of its adoption.

Earlier, realtors recorded an increase in demand for small real estate in Moscow. For the first time in the capital, micro-apartments with an area of less than ten square meters were put up for sale. The appearance of the offer of such studios pushes the growing interest in compact housing due to the rise in apartment prices, according to the specialists of the company Est-a-Tet.