The strength of debt security – namely mortgages – plays a leading role in property markets. It directly affects availability and cost of debt. Where lenders’ rights are unclear, or mortgages are unduly costly or burdensome, the market suffers.
For 15 years, Russian developers have typically financed property with equity. The registration of a mortgage has required payment of a notarial fee of 1.5%. In large projects – office buildings, shopping centres, resorts and infrastructure – this fee often amounted to a seven-figure sum. This made mortgages unworkable and hampered the normal development of mortgage laws.
