Azerbaijan to greatly expand geography of renting flats under buyout obligation

Construction Materials 23 June 2020 17:32 (UTC +04:00)
Azerbaijan to greatly expand geography of renting flats under buyout obligation

BAKU, Azerbaijan, June 23

By Matanat Nasibova - Trend:

The Azerbaijani Mortgage and Credit Guarantee Fund continues the process of expanding list of apartments proposed to citizens for renting with the obligation of their further sale, a source in the Fund told Trend.

“The formation of the housing stock is carried out on the basis of relevant standards, given the population’s demand for housing. This issue is regularly considered by the Fund,” the source said. “So far, 646 apartments have been allocated in the housing stock upon the rental mechanism. The number of proposed apartments is planned to triple by the end of the year.”

“In this regard, the Fund will attract necessary financial resources. The housing complexes initially proposed by the Fund upon the rental mechanism, are located in the Nizami and Khatai districts of Baku, in the city of Khirdalan of the Absheron district, as well as in Sumgayit city,” the source noted. “Taking into account the requirements of citizens, the Fund expanded the list of residential areas and added another residential complex to the housing stock in May. The new complex is located on Boulevard Street (Seaside Park) in Sumgayit. Seventy-four apartments are offered to the citizens in this complex.”

“In the future, taking into account the needs of the population, the Mortgage Fund plans to include residential complexes in the housing stock that will meet all quality standards,” the source also noted.

President of Azerbaijan Ilham Aliyev signed a decree on the formation of a mechanism for renting apartments with an obligation to further sell them on January 25, 2019.

The procedure for the rental of residential areas of the Azerbaijan Mortgage and Credit Guarantee Fund with an obligation for sale has been approved upon the president's decree.

The apartments are rented with an obligation for purchase in Azerbaijan for a period from three through 25 years, which has been indicated in the contract. Such a condition has been envisaged in the procedure of renting the fund’s residential premises with an obligation for sale, approved by the decree of President Aliyev.

According to the procedure, the fund receives the right to acquire housing for its further rent with the right for purchase. At the same time, the fund may purchase such housing through its own equity and income from the issuance of bonds.

There is no age requirement for concluding a rental agreement.

The rules allow the tenant to transfer his/her rights under the rent agreement to a third party, and also allow the tenant to transfer his/her rights under the rental agreement to heirs following the tenant's death.

Rental of apartments with the right for purchase is subject to a number of conditions. The tenant must be a citizen of Azerbaijan, and at the time of applying he/she should not have overdue obligations and loans.

The mortgage lending mechanism has strict requirements for age limits, proof of income and prepayment. This is due to the fact that a housing area acquired at the expense of the Fund is pre-paid against the debtor’s property and provided only with a mortgage.

The tenant must transfer payment in the amount of twelve-fold of the monthly payment to the Fund's account after signing the rental agreement with him/her. Then payments are made monthly.

The market value of housing area should be determined by an independent appraiser, and the area should be insured at the appraised cost.

After signing the contract, the tenant must make at least 12 months’ rental payments as advance payment. Meanwhile, the full price of the apartment can be paid no earlier than three years after the conclusion of the contract.

Only from the fourth year of the rental, the tenant can transfer the right to rent the housing to a third party with the consent of the fund. In the event of the death of the tenant, the rights under the rental are transferred to his/her heirs.

As for the requirements for tenants, the cost of renting residential premises with an obligation for sale must not be lower than the market price and housing must be insured by the Fund. This is one of the main requirements.

Moreover, the fund is entitled to provide tenants with additional requirements.

In accordance with the terms of the rental agreement, the address of the apartment, building, floor-space and number of rooms are determined by the fund. Then they are offered to the population through an electronic system by indicating the cost of apartment and monthly payments, and the residents may connect to the system.