The burden of utility: how utilities helps Russia to remain a poor country

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Long course 100% payment of public services by citizens have borne fruit. The country has developed a system skewed towards the interests of suppliers, management companies and developers

Debt circle

Russia is one of the countries with the lowest housing affordability and low supply of housing against the background of not only developed but also developing countries. The total debt of the population for housing and communal services has exceeded 270 billion rubles and continues to grow. When established by the Federal legislation the maximum cost of housing in 22% of family income, many families under different pretexts do not receive full subsidies and enter into a vicious circle of debt and disconnections of services. The operating company is perceived as a norm the average debt in two months.

A significant part of the problems in the relations between public utilities and consumers arises from low awareness and low financial literacy of owners and tenants. Instead of negotiating with a management company or TSZH, or the correct treatment for the subsidy often citizens go to the MFI (and the debt noose!) or accumulate many months of arrears and dealing with bailiffs. Tenants do not fully understand their rights and control over consumption of services and their correctness even without the HOA. Finally, in many regions the real estate management market is heavily monopolized, and it is used for squeezing the maximum juice out of the population.

Discuss the involvement of collectors and the possibility of imposing penalties on a single housing may further skew the system towards the rights management companies and service providers. In the quest to beat debt providers often go to the actions directly prohibited by the law, — shut-off heat in the winter time, have large families and persons with disabilities, failure to comply with procedures. The possibility of obtaining judicial orders and direct recovery of debt via banks this year became available on municipal debt, and already having the first scandals. Invitation collectors can increase fees, but due to the growth of social tensions and personal tragedies in a particular family.

In some countries (e.g. South Africa) the right to access to water and basic utilities is enshrined in the Constitution for every citizen. There is a guaranteed minimum amount of public services provided free of charge to ensure social justice and reduce efforts to recover the debt. Under this concept, electricity for lighting and ventilation and water should be a human right regardless of income or payments on loans. In Russia at the time, embarked on the eradication of cross-subsidies and the introduction of subsidies as a major tool to help the poor. However, due to the complexity of the process, the support comes not to all.

Finding a balance

The system of contributions for capital repairs and issues of resettlement of slum housing also require clarification for the public and regional authorities. The system is opaque, the inclusion of buildings in plans for the resettlement is carried out such that there is often not the most needy, and the most vociferous. The transition to the real estate taxes on a cadastral estimation also creates a source of pressure for owners. The procedure for challenging cadastral evaluation, which in many regions were already higher than the market, are quite complex and incomprehensible to citizens. While municipal authorities have a direct interest in overstating her to increase own revenue is very limited within the existing system.

At the time of housing and communal services in Russia is actively subsidized, and tariffs were reduced. Many years of building systems aimed at 100 percent payment of services came to fruition. However, the resulting structure is highly skewed toward service providers, leaving a difficult situation, “the working poor” and retirees. The sale of housing can not always be produced quickly and without significant deterioration of the situation of the owner.

It is important to understand that housing policy needs to keep in focus is not the interests of developers, management companies, or buyers of new buildings. In the interests of and providing services to all, including vulnerable groups, it is the biggest challenge. Literacy in financial matters, the ability to protect your rights and financial interests will reduce conflict and improve the situation on the market in the interests and service providers, and builders, and the authorities and the population. Continued growth in housing prices faster than inflation, increasing tax burden, the emergence of new fees, such as contributions to the Fund overhaul, I can finally finish the well-being of citizens, especially amid declining revenue. The growth of competition and increasing transparency in the provision of public services should be a goal of public policy on the supply side. But with the demand for services mechanisms should be in other: active education, the development of extrajudicial dispute resolution and mediation, encouraging managers to more friendly relations with consumers. This would help to reduce conflict and improve the situation on the market.

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.

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