Housing condominiums need more self-funding and education
28 November, 2013
Housing condominiums need more self-funding and education
Housing condominiums need better management to be free of political influence from local municipalities. Increased self-funding and organizational structure, educated real estate agents, and modified legislation are recommended as three key remedies that may make the housing condominiums healthier and more resilient to political influence.
As the economic system changed in Georgia after the collapse of the Soviet economy in 90s of the last century, housing condominiums were founded to hand the apartments’ management from the public authority to owners
of apartments. But not thoroughly. Local municipalities are still responsible for funding rehabilitation/renovation works of apartments’ blocks in cities. They cover around 80% of necessary works that make housing condominiums and their heads financially dependent on local authorities which opens door to political and financial corruption. It is often unclear how reasonably and transparently the head of the housing condominium handles with the subsidies disbursed by the municipality. However, most members of condominiums do not care much for transparency and money embezzlement risks as far as it is the state money they think. The property ownership changed but the mentality of proprietors did not. They still feel free from the responsibilities against their apartments.
The best world practice shows that the real estate market is one of the most important elements of the economy of each country. Clear signals coming from the real estate market help to rationally develop national economy. International investors always take into consideration the real estate market evaluation and management standards. As an integrated part of this market, housing condominiums should comply with free economic principles and democracy, sector pundits say.
The Eastern European countries have successfully reformed housing condominiums in compliance with the best world experience. And now Georgia is on the way to share this experience. In cooperation with Polish and Ukrainian colleagues, Association of Young Economists of Georgia (AYEG) established a working group this year with a task to prepare recommendations for creation and operation of the platform for the exchange of information and support to housing condominiums in Georgia.
According to Giorgi Tsimintia, Head of the Board of AYEG, the group has carried out a preliminary analysis of the housing condominiums organization in Georgia and gave three key recommendations. Based on the Polish experience, the group recommends raising professional skills and education of real estate agents with particular needs of the housing condominiums. Education can be delivered through universities and professional organizations as well as postgraduate study comprising trainings and workshops.
Secondly, it is recommended to set up Association of Real Estate Professionals, a national organization bringing together professionals working in the real estate market such as appraisers, brokers, property managers, economist, construction managers etc. This organization should be involved in the education and licensing system of real estate market professionals.
To strengthen the organizational and financial position of housing condominiums, in order to make them self-deficient, researchers recommend changes to the legislation regulating real estate. First of all, creation of housing condominiums should be mandatory and each member of the condominium must be required to participate in the management process. Secondly, financial transfers from the public authority should be implemented through ministration of commercial banks instead of currently practicing direct payments. Financial institutions involvement will make the entire money disbursement and spending process transparent. Moreover, instead of completely subsidizing the expenses of condominiums, experts recommend instead to subsidize interests on banking loans for them. The preferential loans will make condominiums financially independent and enhance responsibility of condominium members against the spending.

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