Residential developers could be hit by Romania's new law on mortgage loans

The real estate developers and construction companies active in Romania will also be negatively impacted by the new law that defines giving in payment, which will change the rules on the mortgage loans market. The law, which should be reviewed by the Parliament in the following weeks, allows mortgage debtors to give the mortgage assets to the bank in case they can’t repay their loans anymore. The local banks fear that they will thus get stuck with houses they can’t sell and some of them have already announced tighter lending conditions. The real estate developers complain that the new law will have a negative impact on their business as well, reports local Hotnews.ro. They estimate that residential prices will decline as potential clients will have difficulties in accessing loans. The local construction companies associations also fear that developers might cut costs by using cheaper and lower-quality materials that would also be less safe for customers. “At the end of last year, we were hoping for a 5-6% increase in the construction sector this year. Now, we see a possible decline in our business,” said Daniel Popa, Country Manager of Reynaers Aluminium Romania, a construction materials supplier. editor@romania-insider.com