Dangers of buying virtual flats

Moscow property prices are among the highest in the world, but the trick is that even after cashing out, buyers not always can move in. Bureaucracy and fraud can cause several years’ delays.

For years Andrey Artemenko and his family have been forced to rent a flat in Moscow – officially one of the most expensive cities in the world. Instead they should have been living in their own flat which they'd purchased while it was still under construction.

They invested in their new apartment back in 2003 and were promised that they’d move in after just two years, but along with several thousand others they became hostages to bureaucracy.

“There were numerous protest rallies and we had to sign a lot of papers for authorities to help us get this flat,” Andrey Artemenko says.

In the neighbourhood, eight new apartment buildings have been built in total, but eleven more are still under construction.

Those flats were supposed to be built four years ago. Nevertheless their owners are more than delighted to have finally received them. Such a happy ending is not widespread, since many Russians are still waiting for the dream of having their own flat to come true.

Valentina Barabanova and Valentina Mitryakova also invested in what they hoped would become their new home. However, the building which was supposed to be demolished to free up space for their new home hasn’t even been demolished yet.

“I wanted to sell my old flat, to buy a smaller one and thought the extra money would be enough to have a normal life. Instead, they took my money and for a fourth year now I’m trying to get that new apartment,” Valentina Barabanova says.

The two women were told the company they’d made a deal with had committed fraud and authorities promised to start a criminal investigation. For now, they have to find a way to live without their own flats.

“At the moment I live with two other families in a small two-room flat. My daughter had nothing else to do than to leave and work abroad,” Valentina Mitryakova says.

There have been previous cases when investors lost their money due to fraud, bankruptcy or delays, sparking protests in several Russian cities. Authorities are trying to tackle the problem, but the global economic crisis is already becoming a serious obstacle on their way.

“In two years we’ve been in around thirty regions looking for ways out of this, but unfortunately the financial crisis may have a negative effect in this sphere as well. We’re already witnessing cases when construction is being frozen,” says State Duma deputy Aleksandr Khinshtein.

In every region, authorities are making lists of developers who will be helped to finish their construction during the economic crisis. However, there are too many people who’ve handed over their money but still don’t have their own roof the over their head.