HomeDATA & INFORMATIONArticles_engNew Law “On Housing and Communal Services”: Myths and Speculations

New Law “On Housing and Communal Services”: Myths and Speculations

The new Law "On Housing and Communal Services" provides for a new classification of the housing and communal services, describes three models of contractual relations between their providers and consumers, excludes expenses for customer servicing from the tariffs for communal services and contains many other novations . No wonder it is already surrounded with various myths and speculations. Is there a basis for them? Our material will help understand this.

The story runs that...

... the new Law “On Housing and Communal Services” obliges to conclude only “collective” contracts on providing communal services in multi-apartment buildings.

In fact, the Law envisages three models for organization of contractual relations with respect to providing communal services:

  • individual contract;
  • collective contract; and
  • contract with HOA as a collective consumer.

The first of these models also has a sub-version – i.e., we can talk about four models. It is the right of the co-owners of a multi-apartment building to choose the model for concluding the contracts. If they are willing to have individual contracts – the Law provides such possibility.

You can find more details on the models of contractual relations organization with respect to providing communal services in our previous material .


... the new Law “On Housing and Communal Services” envisages new additional payments for communal services, in particular, a monthly fee.

In fact, the Law does not envisage any new payments, it just requires separation from the tariffs for communal services of certain components already included in them. For example, the Law envisages separation from the tariffs of expenses for the customer service. These expenses have to be paid now to the party which really works with the consumers on collection of payments. If this is done by the communal service provider – the indicated expenses will be paid to it as payment for consumer servicing, and if this is done by the manager – these expenses will be included in the payment for management service.

You can find more details on the models of contractual relations organization with respect to providing communal services and the relevant settlement options in our previous material .

 

... the new Law “On Housing and Communal Services” allows to disconnect the whole multi-apartment building from communal services for debts of one or several debtors.

In fact, the Law envisages the rights of the communal service providers to limit (stop) its provision to the specific consumer in a multi-apartment building, irrespective of the selected model of contractual relations organization. Therefore, even in case of collective contract, provision of the service may be terminated only to the specific debtor.

Moreover, the Law clearly identifies the procedure of such termination – in particular, the provider must notify the debtor on future disconnection at least 30 days in advance, thus allowing the debtor either to repay the debt, or to dispute legitimacy of service termination.

Let us add that the Law allows the communal services providers to terminate provision of services to those consumers who refused to conclude contracts on provision of communal services. There is nothing to add here: if you refuse from the contract – this means that you do not need the service.

 

... the new Law “On Housing and Communal Services” allows the monopolists to dictate their conditions to the consumers.

If this is about imposing a specific model of contractual relations organization, then the Law in fact envisages that the right of choice belongs to the co-owners of a multi-apartment building. The providers must conclude contracts according to the decisions adopted by the co-owners.

If this is about contents of the contracts, then the Law envisages that the contracts on provision of communal services must be concluded on the basis of standard contracts approved by the Cabinet of Ministers of Ukraine.

Furthermore, Article 13 envisages a detailed procedure for contract conclusion – also on the consumer’s initiative. Should the consumer believe that the monopolist in the proposed draft contract deviated from the terms of the standard contract, he/she will have an opportunity to suggest own draft of the contract. In case of a dispute, the last word rests with the court.

... the new Law “On Housing and Communal Services” provides for conclusion of the contracts on provision of communal services only for one year, and now you will have to “bargain” with the communal services providers every year.

It is true that the Law envisages one year validity period of the contract. But the Law also envisages automatic prolongation of the contract every year for the next one-year period. Therefore, there is no need to re-conclude the contracts every year. And should the consumers decide to terminate the contract, they will just have to notify the provider on refusal from the contract one month prior to its end.
 

... the new Law “On Housing and Communal Services” has divested the local authorities of influence on tariffs and quality of the housing and communal services.

Speaking of the service on maintenance of a multi-apartment building, the Law has really envisaged that price for this service is negotiable – i.e., the co-owners and manager must negotiate the price independently, without interference of the local self-government bodies. The co-owners of a multi-apartment building must control the manager themselves – and should its services be unsatisfactory, they must simply select a new manager, or even to change the form of management.

With respect to communal services and activities of the subjects in the sphere of natural monopolies and in the adjacent markets – the Law of Ukraine “On Housing and Communal Services” does not cancel requirements of other legislative acts with respect to regulation of such activities.

In addition, on request of the local self-government body, the manager and communal services providers must provide information on quantity and quality indicators of the provided services, their cost, as well as industry reporting.

 

... the new Law “On Housing and Communal Services” to disconnect apartments from the district heating system.

In fact, the Law does not allow this – disconnection of the apartments from district heating remains prohibited.

But the Law has allowed to arrange an individual heating system in the apartment for the apartment owners in those buildings where as of the date of enactment of the Law at least half of apartments have been disconnected from the district heating and district hot water supply networks. This means that the Law – only as an exception – allows for solution of a difficult situation that many multi-apartment buildings are stuck in, when over half of the apartments (at the time when this was allowed) disconnected from the district heating, and the others have no formal right to do the same.

Проект USAID "Муніципальна енергетична реформа в Україні"

 

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