The main factors causing problems in housing management in the South-East-Europe can be summarized in four points:

1. The housing stock, even at the beginning of the transition, had deteriorated, partly because of low construction and maintenance technology, and partly because of under-investment in the stock before the transition.
2. Even in the cases where households do have the incentives to realize the significance of housing wealth in the household economy, the absence of efficient intermediaries (condominiums, cooperatives, associations etc.) render such a realization impossible.
3. The third factor explaining the tensions in housing management is the affordability problem. To move from a socialist planned economy to a market economy makes the introduction of the principle of cost recovery in the housing economy inevitable.
4. The fourth factor is the institutional environment of housing services. The restructuring of the economy (privatization and decentralization) changed the institutional and legal environment of the housing economy.

The countries of the region inherited a very inefficient public service sector. Organizationally, they operated either as municipal departments, or as public enterprises under state or municipal ownership, with no freedom to set prices and minimal degrees of managerial independence as far as service policies and operational matters are concerned Organizations tended to be top-heavy, and operational management procedures were bureaucratic; staffing was excessive, following the erstwhile full-employment approach.

The countries of Central and Eastern Europe have realized already that lack of an efficient housing management slows down the transition toward an efficient housing sector. The lack of proper maintenance and renovation of the housing stock is perhaps one of the most serious weaknesses the housing sector is facing.

The reasons are complex, involving several legal, institutional and financial problems. The study discussed these reasons in detail, which can be summarized as follows:

• The reliable legal and institutional background of the housing market
• The efficient organizational and legal structure of the multi-unit buildings
• Affordability constrains owners to co-operate even if the above-mentioned two conditions (incentives and willingness to cooperate) are given.
• The professional management companies are needed to be supervised by the „owners association”, which are transparent, reliable and efficient.
• The law has to prescribe the minimum building standard which would give a guarantee that the housing stock is not going to deteriorate further.
• An efficient, market-based supply of maintenance and construction services should develop.
• The housing finance system has to provide affordable long-term housing loans for rehabilitation and reconstruction.
• The restructuring of the housing related public service companies is needed.
To conclude, the housing policy of the countries in the region should put more emphasis on housing management reform, introducing pilot projects which link the factors analyzed above.

Metropolitan Research Institute, Budapest
Hungary
http://www.mri.hu
Mr József Hegedüs, tel. +36 1 217 9041

01/03/2004

Mr József Hegedüs and Mrs Nóra Teller

research

Urban Policy > Housing > Housing management

Housing maintenance