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Building Management Component in Elaboration of New Ukrainian Housing Policy Concept

Vsevolod Nikolaiev and Andrii Shcherbyna

ERES from European Real Estate Society (ERES)

Abstract: The report reflects the authors' viewpoint in discussions concerning New Housing Policy Concept in Ukraine. The housing sector in Ukraine has the following specific features: residents of apartment buildings have received their flats mainly through free privatization: 99,2% of households owns a housing; 89% of households live in buildings constructed before 1990-th which are in need of expensive major repair; the financial sources of major financing are not identified; professional home management is only emerging and focused on current needs; joint shared ownership on building and unidentified land property rights are not effective. Such housing management system shows a conflict of interests between residents as consumers of services as well as homeowners. The vast majority of Ukrainian households are insolvent in paying for utilities. Government subsidies have increased from UAH 19 billion in 2015 to UAH 74 billion in 2018 and must be reduced to UAH 39 billion in 2021. The population housing utilities debt remains still UAH 66 billion at the end of 2020 (73% of the national monthly wages fund). The provision of massive housing subsidies to almost half of the households contradicts with their real property value and leaves the problem of financing the renovation of the housing stock unresolved. The Government of Ukraine should develop and approve a New Housing Policy Concept. We have proposed to take into account the following recommendations for improving housing management in the document. The state, as well as the local government bodies must participate in the financing of the first major repair of houses constructed before 1990, in a proportion to be determined according to the age and technical condition of the house. To retain ownership of the home, another share must be funded by the home co-owners. This provides for the right to determine the ownership or use of land and to include in the management of the homes of a reasonable component for further repairs. Alternatively, the possibility of denying homeowners the rights to own a house that will pass to the community or other efficient private owners is offered. In order to carry out the functions of building management and facilities management, it is proposed to consolidate the co-owners' organizations in the associations, to create a fund for capital repairs and to use it for the gradual financing of buildings renovation. To manage the real estate assets of co-owners, it is proposed to introduce and support by the managers the services of insurance, loans and other asset operations. In addition, it is necessary to establish requirements for the capitalization of housing companies as assets managers, enhancing their role in providing payment for housing and communal services using financial instruments of asset management. As a large number of apartment buildings do not have the necessary documentation, it is suggested that inventory and periodic inspection of the buildings to be carried out digitally by managers. At the same time, it is planned to develop information models of typical houses, reuse projects of their repair. For developers and house managers the implementation of life cycle costing and revenue accounting are planned and their reporting to data bases. In order to withdraw the rental housing market from the shadows, it is suggested to introduce accounting and reporting of owners for renting apartments (premises) and monitoring by the managers of the use of the premises of the house. In addition, to keep the control of uninhabited housing and determine the rules for its maintenance. In the implementation of these proposals, management companies, in the case of investing their own funds in major repairs, modernization and reconstruction of buildings can acquire, in the long term, into the ownership of the houses under their management.

Keywords: Financing; Ownership; Policy; repair (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2021-01-01
New Economics Papers: this item is included in nep-acc, nep-cis, nep-isf and nep-ure
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