Neighbor Bill and phone calls from collectors: A fresh look at the modern housing predicament?
In a move aimed at addressing persistent cash shortfalls in the housing sector, the Association of Companies Serving Real Estate (ACON) has proposed to authorities that managing companies (MCs) be allowed to transfer citizens' debts for housing and utilities to third-party organizations, including debt collectors. However, this proposal has raised significant concerns about potential violations and increased pressure on citizens.
The financial burden on MCs has led many of them to be unable to perform even basic current repairs. The risk of increased violations and pressure from unscrupulous collectors was the reason for the ban on such practices several years ago. Lawyers have expressed concerns about the potential increase in violations and pressure from unscrupulous debt collectors if the ban on debt transfer to third parties is lifted.
The State Duma has recently introduced a bill that officially allows MCs to transfer the right to collect debts for housing and utilities to resource-supplying organizations. However, before this practice is implemented, the debt collection system needs better regulation, control, and accountability to prevent abuses.
For property management companies, transferring debts may help alleviate financial shortfalls, but the lack of direct leverage over residents and the social dynamic (neighbours not demanding repayment from each other) means resolving debts internally is difficult. This transfer could offload the enforcement burden but could lead to harsher collection practices against citizens, increasing social tensions.
The Russian housing rules make it nearly impossible for homeowners to change property management companies. As a result, responsible citizens are paying for the irresponsible, as expenses are distributed among all owners of multi-apartment buildings. By the end of 2021, the total debt in the housing and utilities sector approached 1.5 trillion rubles.
The issue of debt transfer from managing companies to third-party organizations must be revisited, taking into account new realities and challenges. Proper legal frameworks and oversight mechanisms are necessary to prevent abuse and ensure fair treatment.
No relevant sanctions or international restrictions directly related to this domestic housing and utility debt transfer issue were found in the recent financial sanctions guidance or US Treasury regulations on Russian sovereign debt.
In addition, new technologies are expected to help Russian homes save on utility bills, and a utility app is projected to change the lives of Russians by providing stress-free utility management. Pensioners with pre-2002 service have been informed about a specific document that can increase their pension. Gas companies are expected to lose a significant portion of their revenue as utility equipment costs will decrease by 4 times.
Both bills are planned to be considered this fall. Earlier, in December 2024, deputies approved in the first reading a mechanism for simplified collection through a notarial deed, bypassing the court.
- The transfer of citizens' debts for housing and utilities to third-party organizations, such as debt collectors or resource-supplying organizations, being proposed by ACON, could potentially alleviate the financial struggles faced by property management companies (MCs) within the real estate industry.
- As the Russian housing rules make it difficult for homeowners to change property management companies, the persistent cash shortfalls in the housing sector have resulted in responsible citizens unjustly bearing the burden of expenses, particularly in multi-apartment buildings.
- To prevent potential abuses in a debt collection system, it's crucial to enact proper legal frameworks, oversight mechanisms, and improved regulation and control, as technology advancements continue to influence the financial sector and utility management within personal-finance and business realms.
