Shared Construction in Kazakhstan

Shared Construction Participation Agreement (DDU)

The core instrument is the Shared Construction Participation Agreement (DDU — dogovor dolevogo uchastiya). Under Law No. 94-VI ZRK, the DDU must be in writing, notarized, and registered with the local Justice Department. An unregistered DDU is void and confers no enforceable rights against the developer or third parties. Registration is the buyer’s primary legal protection at the contracting stage.

Governing Legal Framework

The primary statute is Law No. 94-VI ZRK on Shared Construction of Residential Buildings (2016). Civil Code Article 734 governs the underlying construction contract relationship. Developer insolvency and creditor priority are governed by the Law on Rehabilitation and Bankruptcy No. 516-II, Article 93, which affords dolshchik claims senior priority over unsecured creditors.

Distinction from a Standard Sale

A dolevoe stroitelstvo agreement is not a sale of existing property. The buyer acquires a contractual right to receive a future asset — the completed unit — rather than acquiring an existing title. This distinction is legally significant: the buyer bears completion risk (mitigated by the GNS and guarantee mechanisms) and cannot mortgage or sell the unit until construction is complete and KNB registration has occurred.

Developer Eligibility

Not every developer may legally enter into a DDU. Developers must be registered in the MIID Unified Developer Registry and hold a valid state contractor licence. A DDU executed with an unregistered developer is unlawful and may be declared void. Bond Stone verifies MIID registry status as a first step in any due diligence instruction for off-plan residential purchases.

MECHANISM 1

Guaranteed Savings Account (GNS)

Before accepting any buyer payments, the developer must open a Guaranteed Savings Account (GNS) at an accredited bank. All buyer funds flow exclusively into this ring-fenced account. Funds are released to the developer only upon verified construction milestones — not at the developer’s discretion. A developer accepting funds into any account other than the designated GNS commits a statutory offence under Law No. 94-VI ZRK.

MECHANISM 2

Completion Guarantee

Prior to accepting buyer payments, the developer must obtain either a bank guarantee or a contractor completion guarantee covering the full construction cost. If the developer fails to complete, the guarantee may be called upon. Practical recovery depends on the guarantee wording — Bond Stone reviews the guarantee instrument as part of pre-DDU due diligence, as poorly drafted guarantees may contain ambiguous conditions precedent or caps that limit recovery.

MECHANISM 3

MIID Supervision

The Ministry of Industry and Infrastructure Development (MIID) maintains the Unified Developer Registry and exercises supervisory authority over shared construction activity. Only MIID-registered developers may lawfully enter into DDU agreements. MIID may suspend a developer’s registration if statutory compliance requirements are breached, triggering the GNS fund-return mechanism for existing dolshchiki.

Currency Control & Payment Risk

GNS accounts are KZT-denominated. Foreign buyers transferring foreign currency face conversion timing risk — the KZT equivalent at transfer date may differ materially from the agreed purchase price expressed in USD or EUR. Payments from foreign buyers must comply with the Law on Currency Regulation and Currency Control. Bond Stone advises on structuring payment obligations to manage this risk and ensure NBK notification obligations are met.

Tax Exposure for Non-Residents

Non-resident buyers face 15% withholding tax on rental income from Kazakhstan property and 15% capital gains tax on disposal. Double taxation treaty review is recommended before purchase — Kazakhstan has active DTTs with the UAE, China, the UK, Russia, and several EU member states that may reduce or eliminate the withholding obligation. Bond Stone coordinates with the client’s home-jurisdiction tax advisers to structure the holding appropriately.

Title Registration by Proxy

Upon completion, the buyer must attend the Justice Department (Government for Citizens / GCC) in person or through a duly authorised representative. A foreign buyer who cannot attend in person requires a notarized and apostilled power of attorney. The POA must be executed in the buyer’s home jurisdiction, apostilled under the Hague Convention, and accompanied by a notarized Kazakh translation. Bond Stone manages the POA documentation workflow for international clients.

Corporate Buyer Structure

Foreign legal entities purchasing residential units must demonstrate the authority of their signing representative (apostilled charter extract or POA), provide notarized translations of all corporate documents, and comply with Kazakhstan’s AML/KYC requirements applicable to non-resident purchasers. Where multiple units are purchased as an investment portfolio, Bond Stone advises on whether a Kazakh SPV holding structure is more efficient for ongoing tax reporting and management.