The Bank of Russia has issued a recommendation for banks to thoroughly evaluate the risks when lending to developers, especially in cases where a significant portion of housing is sold through instalment plans. This advice comes after a survey revealed that instalment plans were a primary payment method in the first quarter of 2025, accounting for nearly 40% of new build transactions, compared to less than 10-20% in previous years.
The total outstanding amounts under these instalment plans have reached ₽1 trillion. The central bank highlights that developers often do not assess buyers’ solvency when offering these plans, increasing the risk of over-indebtedness among households. This could lead to difficulties in obtaining mortgage loans or servicing existing debts. Additionally, housing prices under instalment sales are often inflated, potentially resulting in financial losses if individuals decide to sell their homes on the secondary market.
Households purchasing homes through instalments face greater risks than those using mortgages. They cannot benefit from loan repayment holidays or other government support measures available to mortgage borrowers. Beyond consumer risks, there are also potential threats to developers and the banking system if buyers default on their instalment agreements.
The Bank of Russia’s document seeks to mitigate these risks associated with developer-offered instalment plans.
