The State Duma adopted a law unifying the rules for the privatization of housing and communal services

The State Duma adopted a law unifying the rules for the privatization of housing and communal services objects – by extending competitive procedures to cases of alienation of such objects from the jurisdiction of state and municipal enterprises (SUEs and MUPs) from 2025. They will be able to sell housing and communal services projects only at auction – in order to avoid the uncontrolled transfer of such property into private hands, bypassing the requirements for holding auctions and transferring investment obligations. Experts note that such cases are not uncommon and create risks for consumers.

Yesterday, the State Duma immediately approved in the second and third readings a law on the extension of competitive procedures to transactions with housing and communal services facilities managed by state unitary enterprises, municipal unitary enterprises and state-owned enterprises. This initiative was proposed by the Federal Antimonopoly Service (FAS) back in 2022 (see “Kommersant” dated October 3, 2022). This measure is generally consistent with increasing the efficiency of privatization, including through the unification of tendering procedures.

Currently, transactions of state unitary enterprises and municipal unitary enterprises in relation to property that is assigned to them under economic control are not subject to the requirements of the privatization law – in particular, on holding tenders and transferring operational and investment obligations to the new owner. This has actually become a loophole – housing and communal services facilities (except for cold water supply facilities, which are not subject to privatization) are assigned to the state unitary enterprise, and then sold to a specific person without bidding and establishing obligations in relation to such property. Initially, the bill provided for the direct extension of the privatization law to transactions of state unitary enterprises and municipal unitary enterprises in relation to housing and communal services facilities, but by the second reading this idea was abandoned – now the obligation to conduct tenders is prescribed in the law on state unitary enterprises and municipal unitary enterprises. At the same time, the procedure itself is regulated in detail – in particular, requirements are established for the availability of a deposit for participation in the competition (10% for an initial price of less than 100 million rubles and 20% for a larger amount). The competition will be considered invalid if there was only one participant.

When selling housing and communal services facilities, including their sale and lease by companies with state participation of 50% or more, to which the privatization law also does not apply, the law on the protection of competition introduces mandatory bidding – by analogy with the rules on the alienation of state property, since such companies de- actually controlled by the state. A mandatory requirement for transactions by both state unitary enterprises and state-owned companies is the establishment of operational and investment obligations for the entire period of ownership of the new owner – and their preservation in the event of his change. As noted by the FAS, this will allow “to ensure proper operation of socially significant facilities, timely carry out repairs and modernization.”

According to the managing partner of the legal company Enterprise Legal Solutions, Yuri Fedyukin, the problem is that housing and communal services facilities are sometimes in a pre-emergency or emergency condition, and municipalities and the organizations they control often “seek to shift the burden of their maintenance and modernization to private companies – sometimes this is possible through a concession , but more often, if there is an interested investor, the objects are simply privatized.” If in the first case the investor has obligations to maintain and develop this property, then in the second, he explains, it is impossible to impose any obligations on him – which creates risks for consumers.

Sergei Sergeev, head of legal support for disputes in the field of housing and communal services and real estate management at the Yakovlev and Partners legal group, however, adds that the situation “cannot be called completely uncontrollable” compared to the 2000s and 1990s – since the beginning of the last decade, restrictions and prohibitions have been gradually introduced. In his opinion, the presence of competitions is more likely to create “more bureaucratic barriers than to affect the situation.”

Evgenia Kryuchkova