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Prevention of housing stock collapse in Ukraine requires extraordinary strategic decisions

Vsevolod Nikolaiev and Oleksii Kucherenko

ERES from European Real Estate Society (ERES)

Abstract: The whole housing stock in Ukraine is practically private. Social housing fund is almost absent. In the 1990s most of the flats in the multi-apartment buildings have been privatized by the tenants free of charge. About 80% of all buildings in the cities have been built up to 1980, are not yet repaired and require urgent modernization with the cost equal to the actual State budget revenue. By the law of 2015 the responsibility for carrying out capital repairs has been transferred to the flat owners who are co-owners of the buildings. Maintenance management is organized only on the level of separate houses (no-associations) and is unprofessional. The tariff for housing services is enormous low because the component of capital repairs traditionally has been excluded. In the worst homes live exactly the poorest families which do not have any means to maintain and repair their houses because one half of all families in the country receive subsidies to pay their utility bills. Taking into account other urgent and costly needs to maintain public infrastructure the State is also unable to accumulate sufficient funds to renovate the housing stock. At the same time there is a difficult question of the justice of additional state assistance to homeowners for repairing their assets at the expense of all taxpayers. Another question is how to operate this private property on the market. Governments of the country that often replace each other are afraid to raise this problem, which requires extraordinary decisions. It becomes obvious that homeowners are mostly inefficient but the idea of re-privatization can cause social rejection. There are no analogues in the history or in other post-Soviet countries, where either the condition of privatized houses was better, or household incomes were higher, or state aid was regular and where, due to the tariff, funds for capital repairs has been always accumulated and used.Unfortunately, in Ukraine there is no tradition of real estate professional management as a scientific branch, university specialization or profession. Our first attempts to find right decisions which will be described in the paper need approbation. Therefore, we want to draw attention of the best European real estate managers and researchers to the resolution of this problem.

Keywords: capital repair; Financing; housing stock; Privatization; Tenants (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
New Economics Papers: this item is included in nep-cis, nep-tra and nep-ure
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Handle: RePEc:arz:wpaper:eres2019_191