Moscow developers abandon installment plans for new-build apartments

The share of such deals may fall to 4–5%

Moscow developers have begun abandoning installment plans for new-build apartments, which until recently had been a mass sales tool, Plus Development told Stroigazeta. Most developers may fully phase out such programs within the next six months, and the share of these transactions could drop to 4–5%. The main reasons are risks to project financial models and rising borrowing costs.

Why developers are abandoning installment plans

Installment plans became widespread as mortgage affordability declined and were used to support demand for new housing. This mechanism allowed buyers to purchase property without bank loans amid high interest rates.

However, this scheme proved incompatible with the current project financing system. Funds are received gradually and do not ensure timely funding of escrow accounts, which increases bank financing costs and adds financial pressure on developers.

Plus Development Marketing Director Ekaterina Nalivaiko noted that developers used installment plans as a forced measure during a period of expensive mortgages, but the mechanism turned out to be incompatible with the current construction financing model. As the number of such deals increased, it became clear that installment plans created additional financial strain and could not serve as a sustainable sales tool.

The Central Bank to introduce caps on installment plan penalties

A draft law being prepared by the Bank of Russia will also affect the market. Izvestia reports that the document provides for the introduction of caps on penalties for housing installment plans and tighter regulation of this mechanism. The new rules will also require information about such obligations to be reported to credit bureaus.

Mikhail Mamuta, Head of Consumer Protection at the Central Bank, explained that the proposed changes are driven by the rapid growth of installment plans amid high mortgage rates. At some projects, installment plans account for up to 30–40% of apartment sales, while the segment remains largely unregulated.

Late payment penalties can reach up to 50% of the outstanding debt, and ownership remains with the developer until full payment is completed. The introduction of capped penalties and mandatory disclosure requirements is expected to increase market transparency and reduce risks for buyers. At the same time, developers’ ability to offset losses from terminated contracts will be limited.

Installment plan conditions have tightened

Installment plans now remain mainly as standard schemes with regular payments until project completion and large down payments. This structure helps reduce financial risks and ensures more stable cash inflows.

Initial payments under such programs typically exceed 50% of the property value, limiting accessibility compared with previous years.

More flexible options—such as interest-free balances or phased payments with minimal financial burden—have largely disappeared. These schemes were previously used to stimulate demand but are now economically unviable for developers.

Declining activity and rising contract terminations

Plus Development expects a significant slowdown in Moscow’s new-build market in early 2026. The company estimates that the number of transactions in February may fall by 50% compared with December 2025. As a result, installment plans will lose their importance, with their share declining to 4–5%.

At the same time, termination risks are increasing. In 2026, the share of canceled installment contracts may rise to 20–30% if mortgage rates do not decline to comfortable levels, according to experts surveyed by RBC Real Estate. Currently, termination rates range from 3% to 15%, depending on the project and developer.

The main reason is that many buyers used installment plans as a temporary solution, expecting to switch to mortgages once rates declined. However, the average mortgage rate for new builds exceeds 21% annually, making mortgages unaffordable for some buyers.

Structural shift in Russia’s new-build sales model

International Investment analysts note that the decline of installment plans reflects a structural shift in the new-build sales model. This tool was widely used as a temporary response to high mortgage costs but proved incompatible with the project financing system and increasing regulation.

Rising termination rates, tighter conditions, and upcoming legislative restrictions indicate that installment plans are no longer a sustainable sales mechanism. Developers are gradually returning to a model where bank lending plays the central role, ensuring stable escrow account funding.

Moscow is the first to demonstrate this shift, but similar trends are expected across other regions. In the coming years, the structure of Russia’s new-build market will depend primarily on mortgage affordability, while installment plans will remain a niche product with limited impact on overall sales.

Prepared by Tatyana Borodina