Main idea of ​​creating Associations of Property Owners — to let people manage their own house — interview with Margulan Abdykarimov

Amendments to the legislation on housing and communal services, which came into force from the beginning of the year, provide for the creation of a new association instead of Cooperatives of Apartment Owners — the Association of Property Owners. Margulan Abdykarimov, deputy head of the Regional Development and Methodology Department of Kazakhstan Center for the Modernization and Development of Housing and Communal Services, told about how housing relations will be regulated in a new way and for apartment owners.

— What is Association of Property Owners? Let's start with this question. Why was such a system implemented, what are the advantages? How will the new system be different?

— As you know, last year on Dec. 26, President of the Republic of Kazakhstan Kassym-Jomart Tokayev signed the Law "On Amendments and Additions to the Legislative Act on Housing and Communal Services." The law entered into force on Jan. 7, 2020. There are several areas of this law. One of them is the regulation of the activities of governing bodies, namely, the construction of the principles of operation of individual apartment buildings: "one association of property owners — one account." We have introduced the new term “association of property owners.” This is a non-profit legal entity created only by the owners of apartments and non-residential premises of one multi-apartment residential building. The very idea of ​​creating such an association appeared after many debates, analysis, international experience in this field was also studied, and the main idea was to let the owners of apartment buildings of multi-apartment buildings manage their own house.

— How much will the new management system make life easier for the population? What exactly will change?

— The Housing Relations Act was passed in 1997. It has been 24 years and the law has been amended more than 60 times. If you consider the law from beginning to end, then many articles have come into conflict with some norms within the law. Currently, the cooperatives of apartment owners, which were defined by the old law, have become multi-homed, i.e. when the law was originally written, the term "apartment owners' cooperative" refers to members of a cooperative of one multi-apartment residential building, but after a quarter of a century these cooperatives became multi-homed and began to manage several dozens, sometimes hundreds of houses. At the same time, they open only one account for the maintenance of these houses, which does not allow the owners of apartments to trace the intended use of this money. Therefore, the principle of individual apartment buildings “one association of property owners — one account,” we believe, will enable residents of one apartment building to track the intended use of the collected funds for management and maintenance.

— How will the associations be created, who will create them and how will they work? Please tell us step by step.

— The law defines transitional provisions, i.e. the second article determines that the owners of non-residential apartments of one multi-apartment residential building must hold a meeting of residents within a year after the adoption of the law. At this meeting, the most important issues should be raised. This is the choice of the council of the house, the chairman of the association of property owners, the audit commission. In this case, the council of the house is elected for a period of three years, where there must be at least three people who own the houses. The chair of the association of property owners is elected only for one year, and members of the audit committee for three years. At this meeting, residents must decide the most important issue — the choice of form of government, i.e. it will be a union of property owners in the form of a legal entity or a simple partnership, or tenants are entitled to delegate these powers to the elected council of the house. If the residents trust the members of the council of the house, because these are the same people who live with them, dear neighbors, then, accordingly, they have the right to delegate authority to choose the form of management of the council of the house. Everything should be recorded by protocol. The protocol notes all the nuances of this meeting. There must be a quorum of more than 51% of residents, owners of apartment and non-residential premises of a residential building. These people, who gathered at a meeting represented by a quorum of more than 51% of residents, should vote the majority of them, i.e. more than 26% for certain decisions, respectively, by-laws are developed to implement the Law. There are old by-laws that we are finalizing considering the requirements of the new Law, and there are new ones. There are forms of protocols, rules for conducting a written survey, forms of initiative groups — everything is laid down in by-laws.

— And what if the inhabitants of the houses could not organize and create their own associations?

— This situation was explained in transitional requirements. If during the year the tenants were unable to assemble, then the local executive bodies have the right to help this apartment building hold this meeting.

— You can talk about the manager of the association, i.e. can it be a person who does not have the appropriate training?

— We introduced several new terms, including management company. This is a legal or natural person who is engaged in the management of an apartment building. There is also a manager of an apartment building. This is an individual who has undergone appropriate training and has a supporting document. The association chair should be the owner of the non-residential premises of the apartment building, i.e. it must be a tenant of the house. Owner rights must be confirmed. If tenants hire a management company or a manager, these are already third-party organizations, a third-party individual.

— When will the associations system begin to operate?

— According to the regulations for the preparation of normative legal acts, after the adoption of the law, we have already issued an Executive Order of the Prime Minister of the Republic of Kazakhstan, in accordance with which draft regulations have been developed. Regarding housing, this is about 20 documents, three Government Decisions and 17 orders. These regulatory legal acts follow from the norms of the new law and, accordingly, by order of the adoption of these regulatory legal acts is March of this year, that is, they will be approved by the end of March. Currently, they are undergoing coordination with relevant interested state bodies, the Atameken National Chamber of Entrepreneurs and all interested organizations.

— What will happen to the current cooperatives? What will they do next?

— In the by-laws, it is noted that cooperatives of apartment owners, which were created according to the requirements of the old law, are entitled to carry out their activities until July 1, 2022. If the residents of the apartment building are satisfied with the work of their cooperative of apartment owners, if cooperative provides the services as affordable as possible, if the cleaning is stable, there are no complaints, then the residents can leave this cooperative of apartment owners until July 1, 2022. But when this period is reached, cooperatives must understand: it becomes a management company or service company.

— Will the residents' money be lost when dividing the houses into associations? How to get all financial statements from cooperatives?

— Requirements for reporting were in the old version of the law. Now we have strengthened this moment. In the old edition there was a quarterly report. We considered that, after all, the report should be monthly; tenants should see monthly the movement of money, what kind of work is being done. Given the digitalization in the housing sector, residents will be able to see reports both in electronic form and on the sign in public places. It should be noted that the most basic body is the council of the house, which controls the work of the association chair, that is, she fulfills the will, the decision of the meeting and the council of the house regarding the management and maintenance of the apartment building. If the residents have elected the association chair, and she is an initiative person, then she has the right to work directly with service organizations, conclude contracts on behalf of the association of property owners with service organizations, and pay for the services of these organizations according to acts of work that will be provided monthly. At the end of the month, money will also be activated. Only after that they will transfer to the account of this service organization. The collected funds are controlled by the council of the house, the chair signs all acts of work performed, while the control and monitoring remains with the residents of the house.

— How will the changes affect the formation of prices per square meter for house maintenance and what factors will affect the determination of the monthly payment?

— The old and new versions have a methodology for calculating operating costs, that is, the necessary list of work that needs to be performed during the year. In accordance with this list of works, an annual cost estimate for the management and maintenance of this house is compiled. Given this list, when all the figures of this calculation will be understood, the monthly size per square meter is calculated. Accordingly, in this methodology, 25% is laid on management, 5% — on office supplies and 70% — on maintenance. This technique remains the main one in force. We have finalized it, taking into account the new law, there are some changes and additions, but the structure and mechanism for calculating the methodology remain. The money that was spent before and after the adoption of the law is calculated by the method. Here the question may be on payment. The chairman of the OSI, if he expressed a desire to work as a representative, and this is a tenant of this house, residents must understand that this work should be paid. He needs to pay wages.

— Wouldn’t it be so that with the associations residents will not be able to quickly solve their domestic problems? For example, house cleaning, chimneys, cellars, elevators, etc.

— Many fears are being expressed now if the associations cannot concentrate and work together. We believe that there will not be a gap from the cooperatives that are currently operating is leading the services of management companies, as such. The association chair will directly sign agreements with the service company and demand their implementation. The contract will indicate the necessary work, all positions will be prescribed, the schedule is built. Accordingly, the maintenance of the house should not be interrupted.

— In Kazakhstan, there are a lot of old apartment buildings that require large expenses for repair work, and, accordingly, this will affect the residents of these houses. What will happen if they cannot collect the necessary amount for the repair?

— It should be noted that before the adoption of this law, the norm that tenants should carry temporary maintenance was also prescribed in the old law. Accordingly, the norm was stipulated in the old law that tenants should collect 0.02 of the monthly calculation indicator for the overhaul of an apartment building. Each month they had to pay about 48 tenge per square meter, but taking into account many discussions, this indicator was reduced by three times and now amounts to about 13 tenge per square meter. This is a minimum indicator. Residents at the meeting can roughly estimate that a certain amount will be required for major repairs and, accordingly, calculate, depending on the area of ​​the house, the approximate time period for accumulating these funds. By the new law, we have prescribed several mechanisms when the association of property owners can take a loan from a second-tier bank. Accumulating a certain amount of 50% of the cost of major repairs, tenants can take the remaining 50% on credit. We used funds for the preparation of design estimates, for conducting a technical survey. This will be carried out at the expense of the local budget, that is, residents will not pay for these works. In the future, this will improve the condition of houses. There is also another position when, in the absence of funds from the association of property owners, the akimat, if there are funds from the local budget, has the right to help make a major overhaul on a return basis.

 — What is the difference between cooperatives and associations?

— Cooperatives were created only for the management of apartment buildings. Having only 1-2 accounts for several multi-apartment residential buildings, transparency in the use of collected funds is lost. There was an idea to collect the money of one residential building in one account, the distribution and control of the funds will be controlled by the council of the house with the provision of monthly reports that will allow residents to see the spending of money. In the capital, there are already examples of houses being transferred to the association of property owners. There are questions with non-residential premises, when the developer at the construction stage begins to sell non-residential premises that relate to common property, while the tenants, when buying an apartment, do not know anything about the housing they are purchasing. All this inconsistency allowed not respectable managers to spend these funds according to their vision. We in the law clearly prescribed the design organization at the design stage, immediately determine the list of common property objects. Now tenants will receive a complete list of common property objects, respectively, they have the right to lease it, make a profit and direct the funds received to the maintenance of their own residential building.

— Thank you for the interview!

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