New decree in the field of housing and mortgage market

On February 21, 2025, the President of the Republic of Uzbekistan issued a decree  “On additional measures for further development of the housing and mortgage market”.

The decree cites huge sums of money that the State intends to sponsor new construction of commercial (!) housing: either from the State budget, or  the State obliges banks to provide loans . We have converted these sums into dollars at the exchange rate as of the date of publication. The sums are significant, which suggests that the already considerable state debt will continue to grow.

As Gazeta.uz announced, the Uzbekistan’s total external debt amounted to $64.1 billion in 2024, or 55.7% of GDP. Over the year, the debt increased by $10.8 billion – the maximum growth in the history of observation. Last year, interest payments on Uzbekistan’s state debt grew 1.8 times to 14.5 trillion soums (about $1.2 billion).

 

Review of the bill No. PF-26 of 02.21.2025  “On additional measures on further development of housing and mortgage market”

Preamble

Over the past 5 years, multifamily housing with a total area of 21.7 million m² has been built, and mortgage loans worth 67 trillion soums (= 5 billion 200 million USD) have been allocated to ensure the purchase of housing by the population. In addition, 44 trillion soums (=$3 billion 412 million) have been allocated from the state budget for these purposes.

More than 64 thousand low-income citizens have received subsidies worth more than 3.5 trillion soums ($271.4 million).

In addition, in recent years, the population has been increasing by about 800 thousand people per year, and the number of new families is growing by 300 thousand, which requires accelerated work to meet the demand for housing.

Also, about 40% of the housing stock of apartment buildings in the country are 2-3 storey buildings, which requires their replacement by multi-storey (vertical) buildings. This approach will allow to create more modern residential complexes, as well as social facilities and green areas.

In this regard, it is necessary to continue the development of urbanism and residential renovation processes, expand the scale of construction, increase the implementation of the “New Uzbekistan” program, improve mortgage and financial security, develop the capital market and attract investment in the lending sphere.

The main directions of the program for providing the population with housing through mortgage loans in 2025

• It is planned to build 135 thousand apartment buildings with a total area of 8.1 million m².
• The number of subsidies will increase by 1.5 times to cover part of the down payment and interest payments on mortgage loans, for which 2.5 trillion soums will be allocated from the state budget (= $194 million – ed.).
• The housing and mortgage market will be provided with financial resources by allocating mortgage loans amounting to 20.9 trillion soums. ( = $1 billion 621 million .)
• To finance construction organizations involved in the construction of apartment buildings in “New Uzbekistan” and other residential areas, 700 billion soums (=$54.3 million) will be allocated from the state budget, as well as 3.0 trillion soums at the expense of own funds of commercial banks (=$233 million).

New territories for “New Uzbekistan” residential areas will be selected taking into account the principles of urbanization and the following criteria:

• Location in the center of the district (city) or close to it (up to 2 km), as well as the presence of demand for housing among the population of this region.
• Proximity to engineering, communication and transportation infrastructure, or provision of these facilities.
• The minimum population of the created massif is not less than 70 thousand people.
• The total area of apartment buildings in the array should be at least 100 thousand square meters, with a floor area of at least 7 floors.
• At least 2% of the total area of the residential area should be allocated for the creation of green areas around the residential complexes.

Annex 1 to the Decree of the President of the Republic of Uzbekistan dated February 21, 2025 № PF-26

Indicators of target plans for construction of multifamily housing in “Yangi Uzbekiston” and other residential areas in 2025

	Regions	Nbre of appartments	Surface of appartments, thousand of sqare meters	Includings  “New Uzbekiston” quarters
				Nbre of buildings	appartments	Surface of appartments, thousand of sqare meters
Total for the whole country		135 000	8 100,0	543	28 219	1 388,5
1.	Republik of Karakalpakstan	4 800	288,0	27	890	44,5
2.	Andijon region	9 700	582,0	59	1 715	85,8
3.	Buxoro region	6 500	390,0	12	524	26,2
4.	Jizzax region	5 700	342,0	26	1 080	54,0
5.	Qashqadaryo region	7 700	462,0	26	1 077	53,9
6.	Navoiy region	5 500	330,0	10	842	42,1
7.	Namangan region	8 500	510,0	34	1 712	85,6
8.	Samarqand region	12 500	750,0	65	4 781	239,1
9.	Surxondaryo region	9 200	552,0	45	1 568	78,4
10.	Sirdaryo region	3 100	186,0	38	1 488	74,4
11.	Toshkent region	9 900	594,0	35	3 492	152,1
12.	Farg‘ona region	9 900	594,0	59	3 113	155,7
13.	Xorazm region	7 000	420,0	80	2 592	129,6
14.	Tashkent city, Including: In the city of Tashkent In the New Tashkent	35 000   20 000 15 000	2 100,0   1 200,0 900,0	27   27	3 345   3 345	167,3   167,3

 

NB: It is envisaged to draft a National Strategy for Sustainable Development of the Housing and Mortgage Market until August 1, 2025, as well as amendments and additions to legislative acts.

Allocation of plots for the construction of “New Uzbekistan” quarters

• Land plots for the construction of apartment buildings will be put up for auction, and only legal entities paying the cost of land on a value-added basis will participate.
• Legal entities that received land plots at auctions will be exempt from paying the land value for the first 12 months after receiving the plot.
• If the apartment building is not built and commissioned within the established timeframe, two times the land value will be charged for the period of use of the exemption.

Two ways of putting land plots up for auction are envisaged:

1) Transfer of land plots intended for agriculture to the category of urban lands .

According to Annex No. 6, 244.38 hectares of agricultural land will be transferred for the construction of Yangi Uzbekiston residential quarters. Among them are lands belonging to more than 20 farms and private firms. These losses should be compensated fivefold through the development of new land plots. According to Annex No. 7, 1,222.4 hectares of agricultural land, on which 89 farms are currently located, will be transferred for this purpose,

2) Demolition of existing houses under the renovation program.

The local authorities together with the Ministry of Construction and Housing and Communal Services should ensure construction of:

• 20 000 apartments within the framework of the renovation program until the end of 2025;
• 30 000 apartments within the framework of the renovation program until the end of 2026.

At the same time, it is stipulated that the implementation of the renovation project can only begin after a notarized agreement is signed with all property owners.

Depending on the choice of the owners, they shall be provided with one of the forms of compensation:

The demolished residential properties will be replaced with apartments of no smaller area in new houses being built on the same site. During the construction period, the owners will be provided with temporary housing with full coverage of rental costs.

Full compensation for demolished residential and non-residential facilities at market value.

In coordination with the initiator of the renovation project, owners may be offered an alternative compensation option.

Процесс выдачи разрешения на начало строительства будет полностью осуществляться онлайн через систему «Прозрачное строительство».

Разрешение на ввод в эксплуатацию завершённого многоквартирного дома будет выдаваться только после получения заключений от Инспекции по контролю в сфере строительства и ЖКХ и соответствующих государственных контрольных органов. В рамках этого:

Simplifying the process of commissioning apartment buildings

The process of issuing a permit to start construction will be fully online through the “Shaffof Qurilish” (Transparent Construction) system.

The commissioning permit for a completed apartment building will be issued only after receiving conclusions from the Inspectorate for Control of Construction and Housing and the relevant state control bodies. As part of this:

• Design documents prepared by the developer must be coordinated with the sanitary and epidemiological services, environmental and climatic authorities, as well as with public associations of persons with disabilities before passing urban planning expertise.
• Construction and installation works must comply with the design documentation and be carried out under the supervision of the Inspectorate.
• The instrumental-technical inspection before issuing a permit to put apartment buildings into operation is abolished. Instead, laboratories that conducted tests during construction will provide a conclusion on the seismic resistance of the building.
• The timeframe for issuing construction permits shall be reduced by half.

Introduction of “green” standards in construction

The decree instructs construction organizations to use the renewable energy installations and energy-saving equipment and alternative heating systems in the design and construction of transport and engineering and communications infrastructure in “New Uzbekistan” residential areas. Treated wastewater should be directed to landscaping, irrigation, etc.

The Ministry of Construction and Housing and Communal Services should approve an authorized body that will assess and certify construction projects and apartment buildings built in accordance with “green” standards.

Construction organizations that receive an opinion on the compliance of their buildings with “green” standards will be granted tax benefits and soft loans.

Financing the construction of apartment buildings

The decree requires commercial banks to grant construction organizations loans for 24 months (including a grace period of 12 months) at a rate exceeding the Central Bank’s main rate by no more than 2 percentage points.

By December 1, 2025, banks shall attract at least USD 500 million from abroad and allocate loans for a period of 2 years to finance construction works and to lend to construction organizations to replenish their working capital.

In 2025, mortgage loans allocated by commercial banks will be refinanced by the Ministry of Economy and Finance in the amounts and on the terms determined by the Decree of the President of Uzbekistan dated April 30, 2024 № PF-70 “On additional measures to improve the mechanisms of allocation of mortgage loans and improve housing conditions of the population in 2024”.

Special settlement accounts will be opened in commercial banks to record the amounts of mortgage loans and obligations under mortgage bonds. Mortgage bonds will be issued.

Starting from January 1, 2026, loans for the purchase of at least 50% of apartments in new buildings within the “escrow” system will be allocated and allowed to cover subsidies from the State Budget. For this purpose, the Ministry of Economy and Finance is authorized to refinance loans granted to individuals.

In order to issue loans to citizens who do not have an official income, the Cabinet of Ministers shall ensure the procedure of scoring their ability to repay the loans. For this purpose, the interested ministries and agencies should timely and continuously provide the necessary data for the interagency integration platform “Electronic Government”.

Strengthening “O’zbekiston ipotekani qayta moliyalashtirish kompaniyasi” (JSC “Uzbekistan Mortgage Refinancing Company”)

The Uzbekistan Mortgage Refinancing Company (hereinafter referred to as the Company) , established in 2019 by a presidential decree, becomes a special authorized organization for issuing mortgage bonds. The authority to manage the state block of shares in the authorized capital of the Company is transferred to the Ministry of Economy and Finance.

The Ministry of Economy and Finance together with the Central Bank and the Company shall:

• Allocate 1 trillion soums (= $77.5 million) from the State Budget over the next four years to increase the Company’s authorized capital.
• Develop and approve a schedule for phased increase of the Company’s authorized capital up to 5 trillion soums (= $387.7 million ) by 2030.

The Ministry of Economy and Finance in 2025 should :

• Issue additional shares and place them among shareholders at par value, thereby increasing the Company’s authorized capital by 1.4 trillion soums.
• Allocate at least 100 billion soums from the State Budget to repurchase additional issued shares of the Company.

The specially authorized body will take the purchased assets of commercial banks on the balance sheet and keep records of them, as well as issue mortgage bonds under the guarantees of mortgage loan aggregates.

Residents and non-residents of the Republic of Uzbekistan, including legal entities and organizations engaged in refinancing of mortgage loans, as well as specially authorized organizations, are exempt from income tax on bonds issued before January 1, 2030. This exemption applies for the entire period of circulation of these bonds.

The Ministry of Economy and Finance, based on the Company’s requests, will provide credit resources for a period of 20 years from the funds set forth in the second annex to this decree. These credit resources will be provided to the Company at a rate of 1 percentage point above the prime rate of the Central Bank.

By Farida Sharifullina

Photo taken from Youtube channel O’zbekiston 24