The quality of residential housing is a particular concern for many Ukrainians. Housing services—which have a direct impact on the quality of life—are used by virtually everyone on a daily basis. A growing body of evidence suggests that the housing sector is in an advanced state of collapse. Preventing this poses major challenges for Ukraine’s local governments, which are responsible for the management of the country’s housing stock.
Ukraine’s housing sector consists of 1.1 billion square meters of residential space, divided into 19.3 million apartments. © Chris Wevers
What do the numbers say?
Ukraine’s housing sector consists of 1.1 billion square metres of residential space, divided into 19.3 million apartments.1 Around 70 percent of Ukraine’s apartments are located in multi-dwelling buildings, housing approximately 34 million people (more than 80 percent of the population). Some 90 percent of Ukraine’s households own the dwelling in which they live. Five percent live in state or company-provided housing; 2 percent rent from private individuals; while 3 percent live in hostels. Most of these buildings were constructed between the 1950s and 1990s; roughly every third residential building needs renovation.
Many of Ukraine’s residential housing concerns are linked to the quality of communal services—particularly for energy, water, and sanitation. More than 20 percent of the boilers at communal heating facilities have been in use for more than 20 years; 38 percent are classified as extremely inefficient or obsolete. About a third of the pipes in heating networks are likewise in urgent need of replacement. Residential buildings in many communities therefore do not have stable heating supplies; room temperatures during the winter often fall below norms.
This situation results in average levels of energy consumption per unit of service that are well above European averages. Since energy now constitutes more than half of all residential service costs, higher energy prices can mean significant increases in the housing costs. As the data in Chart 1 show, the costs of household and communal services since 2005 have been growing much faster than consumer prices overall. While expenditures on these services may not absorb a large share of the average household’s budget, for low-income households, this share could be significant—and growing.
On the other hand, many households (not just poor ones) are not paying their bills. Household arrears to housing service providers, which contract with communal service providers for deliveries of gas, heat, and water, currently stand at 8.7 billion hryvnias ($1.1 billion). Likewise, debts of residential service enterprises are now 8.6 billion hryvnias; including 2.2 billion hryvnias for unpaid gas bills and 2.1 billion hryvnias for unpaid electricity bills.
More than half of Ukraine’s cities with populations over 100,000 have running water only at certain times of the day; some only have hot running water during the winter months (when central heating is provided by municipalities). Much of Ukraine’s water and sanitation equipment is obsolete, having been installed during the Soviet era without regard for efficiency. About 25 percent of the filtering units and 20 percent of the pumps working in water and sewage systems are now beyond their useful operating life. Some 28,000 kilometers (30 percent0 of the country’s water pipes and 9,000 kilometers (27 percent) of Ukraine’s sewage systems are now in an emergency state. Moreover, the number of water supply pipes in this condition is growing by about 3,500 kilometers every year. As a result, water supply losses in some cities are as high as 60 percent, while the energy used to provide a given amount of water and sanitation services can be 3-7 times higher than in Europe. The poor condition of water pipes results in contaminated water supplies and increased risk of infectious disease. The situation is even worse in rural areas, due to inferior access to running water and gas supplies, and longer distances in service provision that boost delivery costs.
While more than 80 percent of individual apartments have been privatized, the establishment of associations to represent the common interests of apartment owners in a given building is moving at a slow pace. At present, such associations have been formed for 15 percent of Ukraine’s multi-unit dwellings. The maintenance of the 85 percent of the privately owned multi-apartment buildings, which do not have established associations of apartment owners, is still with the largely unreformed housing/communal service administrator offices (known as ZhEKs). Moreover, many of the associations that have been formed do not have the institutional capacity needed to effectively discharge their duties. As a result, many apartment buildings remain without an ‘owner’ to protect the interests of their residents.
Housing reform—next steps
Government reform programmes2 envision a number of initiatives in the housing sector. These include:
• Raising housing and communal service tariffs to cost-recovery levels;
• The mandatory introduction of apartment owner associations, and household installation of energy and water meters;
• Creating a fund for financing capital repairs of privatized apartment buildings, to be co-financed by the state and apartment owner associations;
• Establishing a national support center for these associations, and to train apartment building managers;
• Significant reductions in household and company debts in the sector; and
• The modernization of the local housing/communal service administration (ZhEKs).
If successful, these changes would strengthen competition on markets for housing and communal services, and help attract investments in renovation and energy efficiency, in both the housing and communal services sector. However, substantial increases in tariffs, with possible undesirable side effects for low-income households, could also result.
UNDP’s Municipal Governance and Sustainable Development Programme
The Municipal Governance and Sustainable Development Programme is one of UNDP’s key community-based development programmes in Ukraine (see Box 1). It helps 29 municipalities in 12 of Ukraine’s 25 regions to respond to these housing sector challenges. Some 50,000 people in the 29 cities have joined the 470 apartment owners’ associations assisted by this programme. These associations are supported through trainings on housing law, management, and finance, as well as on the practical aspects of organizing the renovating multi-dwelling apartment buildings. The programme also encourages cooperation between the associations and local councils on housing renovation and energy saving investments, on the basis of community-led development and cost sharing.
Ensuring that lessons learned in housing reform from this programme feed into national reform processes is an important challenge. Together with the Ministry of Regional Development, Housing, and Construction, the programme is developing training courses for members and managers of apartment owners’ associations, as well as for local officials in communities seeking to create them. This training and support is based on lessons learned from cities in which these changes have been successfully introduced, such as Zhitomir
Oksana Remiga is Senior Programme Manager for the Human Security/Local Development Cluster, UNDP Ukraine.
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