Today's Uzbekistan is a country with a rapidly developing economy and intensive population growth, which is clearly evident in the construction sector. In particular, we can witness the rapid increase in the number of residential buildings across all regions. Tashkent, the most densely populated capital in Central Asia (with over 2.5 million inhabitants), faces the challenge of providing housing for its residents as one of the government's top priorities.[1]
However, to what extent does the construction of residential buildings comply with the established legal requirements? What problems do city dwellers encounter, and are they satisfied with the progress of construction? In this blog post, we will briefly examine the issues and difficulties in implementing the aforementioned task, using Tashkent as an example. We will particularly focus on the vulnerability of the legal regulatory mechanism in Uzbekistan's housing construction sector.
Tashkent - Star of the East: a glimpse into the past
Tashkent, the capital of Uzbekistan, was not the first in its history. During the Uzbek SSR era, first Bukhara and then Samarkand[2] served as administrative centers of the newly established Soviet republic. However, in 1930, for various reasons, the main seat of power was transferred to Tashkent. Since then, this city (one of the oldest in the CIS region, having celebrated its 2200th anniversary in 2009) has remained one of the largest in terms of area and population.
Furthermore, the city is renowned for its generosity, as during World War II it welcomed numerous evacuated families, including children.[3] However, 1966 remains a dark chapter in the capital's history due to a catastrophic earthquake. The disaster resulted in the destruction of over 2 million square meters of housing, 2,236 administrative buildings, approximately 700 trade and catering facilities, 26 municipal enterprises, about 180 educational
[1] In particular, Goals 33 and 34 are aimed at the balanced development of regions and the development of the system of engineering, communication and social infrastructure of the regions, available at: https://lex.uz/ru/docs/5841077
[2] https://brightuzbekistan.uz/ru/kak-tashkent-stal-stolicej/
[3] https://www.gazeta.uz/ru/2021/05/09/evacuation/
institutions, schools with a capacity of 8,000 students, 36 cultural and social facilities, and damage to 185 medical and 245 industrial buildings.[1]
All efforts were directed towards the city's restoration, with construction teams, engineers, and designers dispatched from Moscow, Yerevan, Kiev, Tallinn, Frunze, and Minsk.[2]
Life in modern Tashkent
From an architectural perspective, the genesis of the city's architecture can be divided into four main stages:
1) Classical (Renaissance) - Hazrati Imam Complex;
2) Colonial (Russian Imperial) - The academic building of Tashkent State University of Law in the square;
3) Soviet (post-1966 earthquake) - Residential buildings along Alisher Navoi Street;
4) Contemporary (early years of independence) - The Oliy Majlis building.[3]
However, the current appearance of the city has changed significantly, and it cannot be said that construction adheres to a single, unified style. Since 2017, the government has provided a range of incentives and preferences for private business, especially in the sphere of residential construction. Nevertheless, to date, the ratio of housing affordability to average monthly income in the country remains one of the lowest.[4]
However, the current appearance of the city has changed significantly, and it cannot be said that construction adheres to a single, unified style. Since 2017, the government has provided a range of incentives and preferences for private business, especially in the sphere of residential construction. Nevertheless, to date, the ratio of housing affordability to average monthly income in the country remains one of the lowest.[1]
[1] https://www.numbeo.com/property-investment/rankings_by_country.jsp
[1] https://kun.uz/ru/news/2023/02/18/zemletryaseniye-silneye-chem-v-tursii-na-istoricheskix-snimkax-stixiya-potryasshaya-tashkent-v-1966-godu
[2] https://uz.sputniknews.ru/20240426/tashkent-zemletryasenie-1966-arhitektura-stroitelstvo-34284902.html
[3] https://www.youtube.com/watch?v=yQYcQ4HvdJE
[4] https://www.numbeo.com/property-investment/rankings_by_country.jsp
However, to what extent does the construction of residential buildings comply with the established legal requirements? What problems do city dwellers encounter, and are they satisfied with the progress of construction? In this blog post, we will briefly examine the issues and difficulties in implementing the aforementioned task, using Tashkent as an example. We will particularly focus on the vulnerability of the legal regulatory mechanism in Uzbekistan's housing construction sector.
Tashkent - Star of the East: a glimpse into the past
Tashkent, the capital of Uzbekistan, was not the first in its history. During the Uzbek SSR era, first Bukhara and then Samarkand[2] served as administrative centers of the newly established Soviet republic. However, in 1930, for various reasons, the main seat of power was transferred to Tashkent. Since then, this city (one of the oldest in the CIS region, having celebrated its 2200th anniversary in 2009) has remained one of the largest in terms of area and population.
Furthermore, the city is renowned for its generosity, as during World War II it welcomed numerous evacuated families, including children.[3] However, 1966 remains a dark chapter in the capital's history due to a catastrophic earthquake. The disaster resulted in the destruction of over 2 million square meters of housing, 2,236 administrative buildings, approximately 700 trade and catering facilities, 26 municipal enterprises, about 180 educational
[1] In particular, Goals 33 and 34 are aimed at the balanced development of regions and the development of the system of engineering, communication and social infrastructure of the regions, available at: https://lex.uz/ru/docs/5841077
[2] https://brightuzbekistan.uz/ru/kak-tashkent-stal-stolicej/
[3] https://www.gazeta.uz/ru/2021/05/09/evacuation/
institutions, schools with a capacity of 8,000 students, 36 cultural and social facilities, and damage to 185 medical and 245 industrial buildings.[1]
All efforts were directed towards the city's restoration, with construction teams, engineers, and designers dispatched from Moscow, Yerevan, Kiev, Tallinn, Frunze, and Minsk.[2]
Life in modern Tashkent
From an architectural perspective, the genesis of the city's architecture can be divided into four main stages:
1) Classical (Renaissance) - Hazrati Imam Complex;
2) Colonial (Russian Imperial) - The academic building of Tashkent State University of Law in the square;
3) Soviet (post-1966 earthquake) - Residential buildings along Alisher Navoi Street;
4) Contemporary (early years of independence) - The Oliy Majlis building.[3]
However, the current appearance of the city has changed significantly, and it cannot be said that construction adheres to a single, unified style. Since 2017, the government has provided a range of incentives and preferences for private business, especially in the sphere of residential construction. Nevertheless, to date, the ratio of housing affordability to average monthly income in the country remains one of the lowest.[4]
However, the current appearance of the city has changed significantly, and it cannot be said that construction adheres to a single, unified style. Since 2017, the government has provided a range of incentives and preferences for private business, especially in the sphere of residential construction. Nevertheless, to date, the ratio of housing affordability to average monthly income in the country remains one of the lowest.[1]
[1] https://www.numbeo.com/property-investment/rankings_by_country.jsp
[1] https://kun.uz/ru/news/2023/02/18/zemletryaseniye-silneye-chem-v-tursii-na-istoricheskix-snimkax-stixiya-potryasshaya-tashkent-v-1966-godu
[2] https://uz.sputniknews.ru/20240426/tashkent-zemletryasenie-1966-arhitektura-stroitelstvo-34284902.html
[3] https://www.youtube.com/watch?v=yQYcQ4HvdJE
[4] https://www.numbeo.com/property-investment/rankings_by_country.jsp
Regarding housing in Tashkent, the local market conditions and pricing policies differ significantly from other regions, with prices being at least twice as high. In 2022 alone, the volume of construction work in Tashkent amounted to 32,946.1 billion sums.[1]
[1] https://mc.uz/oz/view-page/open-information
The main legal regulators in the field of residential construction are the 2023 Constitution (which for the first time recognized the right of everyone to housing),[1] the Housing Code, presidential decrees and resolutions, as well as acts of ministries and departments.[2]
[1] Art. 47, Constitution of Uzbekistan
[2] https://lex.uz/ru/search/ext?&lang=1&okoz=6769
[1] https://mc.uz/oz/view-page/open-information
The main legal regulators in the field of residential construction are the 2023 Constitution (which for the first time recognized the right of everyone to housing),[1] the Housing Code, presidential decrees and resolutions, as well as acts of ministries and departments.[2]
[1] Art. 47, Constitution of Uzbekistan
[2] https://lex.uz/ru/search/ext?&lang=1&okoz=6769
Legal landscape: problems
Despite the fact that this sector is meant to be regulated by the aforementioned normative acts, there are serious shortcomings in their practical application.
In general, buyers often fall victim to various fraudulent schemes and manipulations by developers. This is because until the keys to the newly constructed dwelling are handed over, the property rights remain with the developer, and the buyer only acquires such rights after the appropriate state registration.[1]
1) Contract Provisions - When drafting agreements (contracts) for housing acquisition (purchase and sale agreement), the developer (seller) often attempts to emphasize clauses that primarily protect their rights and interests, rather than those of the buyer. Cases of including legally void clauses are not uncommon. However, it is important to note that the legislator clearly defines minimum requirements for such contracts,[2] including:
- Written form of conclusion;
- Notarization and state registration;
- Specific data on the housing, clearly establishing its transfer to the buyer;
- Free elimination of defects or compensation for defects by the seller, among others.[3]
2) Banking Fraud - There are frequent cases where developers, announcing the sale of yet-to-be-built houses, receive a large portion as prepayment. The issue arises when the developer uses these funds to start construction on new projects (without completing the ongoing ones), while also taking out new loans using the initial property, which has not yet been transferred to its buyers, as collateral. Such cases may lead to criminal proceedings under fraud charges.[4]
3) Buyer's Burden - Owning real estate in Tashkent is a luxury and dream for most, as prices in the capital are exorbitant. Paradoxically, while previously major developers included companies like Murad Buildings and Golden House, now there are many more construction companies in the market.[5] However, prices continue to rise instead of decreasing. The situation did not significantly change even after the relocation of many Russian residents following the mobilization at the beginning of the Russia-Ukraine crisis - housing purchase prices and rental rates remained elevated. For instance, there are cases where residents, unable to afford purchases, sell their current homes and use the proceeds as an initial payment for new constructions. Moreover, in some cases, this is insufficient, and people resort to mortgage loans, which most banks offer up to 420 million sums at interest rates starting from 17% annually for 15-20 year terms.[6]
4) Construction standards - In Uzbekistan, a three-tiered governance structure for the construction industry has been established, comprising:
1. Relevant ministries:
- Ministry of Construction
- Ministry of Energy
- Ministry of Transport
- Ministry of Water Resources
2. State committees overseeing construction-related domains:
- State Committee for Land Resources, Geodesy, Cartography and State Cadastre
- State Committee for Geology and Mineral Resources
- State Committee for Ecology and Environmental Protection
- State Committee for Industrial Safety
3. State inspectorates under the aforementioned ministries, responsible for direct oversight and issuance of permits.
The system of state control in the construction sector encompasses:
- Technical regulation (quality and safety standards)
- Issuance of construction permits
- Conducting expert reviews (of project documentation and environmental assessments).
- Regulation of pricing and cost estimation documentation in construction.[7]
However, the application and adherence to construction norms are not uniform across all parts of Tashkent, resulting in additional problems, including:
- Increased atmospheric dust levels within the city (there are also cases where residential buildings were erected near cement factories);
- Artificial degradation (drying out) of green zones to expand construction areas;[8]
- Deformation of nearby roads due to heavy truck traffic;
- Systematic interruptions in electricity, water, and gas supply, as new buildings are connected to existing infrastructure without separate facilities being built (potentially leading to major accidents or blackouts);
- Sewage systems unable to cope with the increased waste volume;
- Most developers neglect to construct parking facilities, resulting in significant parking issues in the city, especially in prohibited areas.
5) Regulatory Gaps - Under current legislation of the Republic of Uzbekistan, violations of urban planning laws are subject to only minor sanctions. These include fines under the Code of Administrative Responsibility (in practice, many developers abuse this loophole and merely pay the fine)[9] and restriction of freedom under the Criminal Code, but only if non-compliance with construction norms results in severe consequences or human fatality.[10]
Are there solutions to these problems? What can be done?
To address the aforementioned issues, it is necessary to revise the regulatory mechanism of the "seller-buyer" relationship. In particular, we consider it advisable to:
- Always carefully review the content of the contract with the housing developer (seller). If necessary, seek legal consultation before concluding the agreementж
- Introduce a rating registry of developers (sellers), which will evaluate their activities and allow buyers to familiarize themselves with and obtain information about them in advance, thus enabling buyers to express confidence in a particular company;
[1] Art. 14, Housing Code of Uzbekistan
[2] Ibid, Chapter 2
[3] Art. 434, 479, 484, 488, Civil Code of Uzbekistan
[4] Art. 168, Criminal Code of Uzbekistan
[5] https://yangiuylar.uz/developers
[6] https://depozit.uz/ru/credits/mortgage
[7] https://azizovpartners.uz/ru/2020/11/19/gosudarstvennyj-kontrol-v-sfere-str/
[8] https://www.youtube.com/watch?v=yQYcQ4HvdJE
[9] Art. 99, Code of Administrative Responsibility of Uzbekistan
[10] Art. 258, Criminal Code of Uzbekistan
- Implement a new banking mechanism where banks act as intermediaries: the buyer deposits money for housing purchase into a bank account, from which the developer can only receive funds when they actually complete the construction work exactly as stipulated in the contract;
Despite the fact that this sector is meant to be regulated by the aforementioned normative acts, there are serious shortcomings in their practical application.
In general, buyers often fall victim to various fraudulent schemes and manipulations by developers. This is because until the keys to the newly constructed dwelling are handed over, the property rights remain with the developer, and the buyer only acquires such rights after the appropriate state registration.[1]
1) Contract Provisions - When drafting agreements (contracts) for housing acquisition (purchase and sale agreement), the developer (seller) often attempts to emphasize clauses that primarily protect their rights and interests, rather than those of the buyer. Cases of including legally void clauses are not uncommon. However, it is important to note that the legislator clearly defines minimum requirements for such contracts,[2] including:
- Written form of conclusion;
- Notarization and state registration;
- Specific data on the housing, clearly establishing its transfer to the buyer;
- Free elimination of defects or compensation for defects by the seller, among others.[3]
2) Banking Fraud - There are frequent cases where developers, announcing the sale of yet-to-be-built houses, receive a large portion as prepayment. The issue arises when the developer uses these funds to start construction on new projects (without completing the ongoing ones), while also taking out new loans using the initial property, which has not yet been transferred to its buyers, as collateral. Such cases may lead to criminal proceedings under fraud charges.[4]
3) Buyer's Burden - Owning real estate in Tashkent is a luxury and dream for most, as prices in the capital are exorbitant. Paradoxically, while previously major developers included companies like Murad Buildings and Golden House, now there are many more construction companies in the market.[5] However, prices continue to rise instead of decreasing. The situation did not significantly change even after the relocation of many Russian residents following the mobilization at the beginning of the Russia-Ukraine crisis - housing purchase prices and rental rates remained elevated. For instance, there are cases where residents, unable to afford purchases, sell their current homes and use the proceeds as an initial payment for new constructions. Moreover, in some cases, this is insufficient, and people resort to mortgage loans, which most banks offer up to 420 million sums at interest rates starting from 17% annually for 15-20 year terms.[6]
4) Construction standards - In Uzbekistan, a three-tiered governance structure for the construction industry has been established, comprising:
1. Relevant ministries:
- Ministry of Construction
- Ministry of Energy
- Ministry of Transport
- Ministry of Water Resources
2. State committees overseeing construction-related domains:
- State Committee for Land Resources, Geodesy, Cartography and State Cadastre
- State Committee for Geology and Mineral Resources
- State Committee for Ecology and Environmental Protection
- State Committee for Industrial Safety
3. State inspectorates under the aforementioned ministries, responsible for direct oversight and issuance of permits.
The system of state control in the construction sector encompasses:
- Technical regulation (quality and safety standards)
- Issuance of construction permits
- Conducting expert reviews (of project documentation and environmental assessments).
- Regulation of pricing and cost estimation documentation in construction.[7]
However, the application and adherence to construction norms are not uniform across all parts of Tashkent, resulting in additional problems, including:
- Increased atmospheric dust levels within the city (there are also cases where residential buildings were erected near cement factories);
- Artificial degradation (drying out) of green zones to expand construction areas;[8]
- Deformation of nearby roads due to heavy truck traffic;
- Systematic interruptions in electricity, water, and gas supply, as new buildings are connected to existing infrastructure without separate facilities being built (potentially leading to major accidents or blackouts);
- Sewage systems unable to cope with the increased waste volume;
- Most developers neglect to construct parking facilities, resulting in significant parking issues in the city, especially in prohibited areas.
5) Regulatory Gaps - Under current legislation of the Republic of Uzbekistan, violations of urban planning laws are subject to only minor sanctions. These include fines under the Code of Administrative Responsibility (in practice, many developers abuse this loophole and merely pay the fine)[9] and restriction of freedom under the Criminal Code, but only if non-compliance with construction norms results in severe consequences or human fatality.[10]
Are there solutions to these problems? What can be done?
To address the aforementioned issues, it is necessary to revise the regulatory mechanism of the "seller-buyer" relationship. In particular, we consider it advisable to:
- Always carefully review the content of the contract with the housing developer (seller). If necessary, seek legal consultation before concluding the agreementж
- Introduce a rating registry of developers (sellers), which will evaluate their activities and allow buyers to familiarize themselves with and obtain information about them in advance, thus enabling buyers to express confidence in a particular company;
[1] Art. 14, Housing Code of Uzbekistan
[2] Ibid, Chapter 2
[3] Art. 434, 479, 484, 488, Civil Code of Uzbekistan
[4] Art. 168, Criminal Code of Uzbekistan
[5] https://yangiuylar.uz/developers
[6] https://depozit.uz/ru/credits/mortgage
[7] https://azizovpartners.uz/ru/2020/11/19/gosudarstvennyj-kontrol-v-sfere-str/
[8] https://www.youtube.com/watch?v=yQYcQ4HvdJE
[9] Art. 99, Code of Administrative Responsibility of Uzbekistan
[10] Art. 258, Criminal Code of Uzbekistan
- Implement a new banking mechanism where banks act as intermediaries: the buyer deposits money for housing purchase into a bank account, from which the developer can only receive funds when they actually complete the construction work exactly as stipulated in the contract;
- Strengthen the activities of all relevant state bodies and agencies in urban planning supervision. For reference, the State Inspectorate for Construction and Housing and Communal Services under the Ministry of Construction is reported by the Anti-Corruption Agency to be one of the worst-performing in Uzbekistan;[1]
- Tighten sanctions for violations of housing construction legislation at the legislative level, as the current regulatory framework does not "frighten" but rather "encourages" unscrupulous developers;
In conclusion, it is necessary to emphasize the urgency of comprehensive measures to effectively regulate the long-standing construction mania in Tashkent, the largest city. Otherwise, will it be necessary to relocate the capital to a new city, or would it be easier to build a "New Tashkent" (de facto a new capital)?
[1] https://anticorruption.uz/uz
- Tighten sanctions for violations of housing construction legislation at the legislative level, as the current regulatory framework does not "frighten" but rather "encourages" unscrupulous developers;
In conclusion, it is necessary to emphasize the urgency of comprehensive measures to effectively regulate the long-standing construction mania in Tashkent, the largest city. Otherwise, will it be necessary to relocate the capital to a new city, or would it be easier to build a "New Tashkent" (de facto a new capital)?
[1] https://anticorruption.uz/uz