Historically the whole package of services related to managing and maintaining housing in Ukraine has been rendered exclusively by housing and maintenance offices (ZhEK's) which still, with few exceptions, are holding actual monopoly in this sector. Permanent lack of funds in local budgets resulted in rapid deterioration in housing management and maintenance standards; ZhEK's fail to implement a lot of jobs essential for housing maintenance and repair. The only possible solution is to introduce competition and contractual basis capable of raising the housing maintenance standards considerably and, in future, of reducing its costs.

The objective need for identifying new structures capable of operating efficiently in competitive market environment implies transfer of the functions performed by state housing organizations to private companies through competitions and concluding contracts on competitive basis with companies which are best qualified to do the job and offer the lowest prices.
Successful realization of pilot projects in Kharkiv, Odessa, Kyiv, Lviv, towns in the Donetsk, Lugansk and other oblast's by specialists currently working with the Center proved the viability and efficiency of private housing maintenance in Ukraine. This positive experience provides grounds for considering introducing competition in housing management and maintenance as one of the major steps towards the implementation of the national housing reform - the provision stated in a number of laws and regulations in Ukraine.
Over 120 private companies are currently operating in Ukraine maintaining over 300 thousand units.
Their operation is supervised by oblast and city housing departments, as well as appropriate local inspections, and the check-up results testify to higher servicing standards, more efficient use of the tenants' money and higher level of residents' funds attraction.
It is noteworthy that housing maintenance costs are somewhat lower in the case of private maintenance than in the case of state maintenance, with quality and quantity of services being on the same level.
Private maintenance companies offer additional services, too: units repair, installing and manufacturing windows, doors, performing other carpentry, mounting various attachments, metal grates and doors, other services.
All the above stated provides reason enough to continue the PMM program implementation.

Private Zhek is a market alternative to traditional housing and maintenance offices, a private company which is striving to win the right, in the competition, to manage and maintain housing in any form of ownership.
Identifying a private Zhek starts with making a decision (passing a resolution) by the appropriate owner about competitive selection of a private structure for housing maintenance. This resolution shall approve competition provisions, a standard contract for housing maintenance, competition board for program implementation, preparing and holding the competition, etc.
In order to organize the competition and draw appropriate documents in accordance with the resolution adopted by the local government a task force is set up by the Customer's order and its action plan is approved.
In order to take part in the competition the company should submit a technical application and its business-plan. The companies offering the most acceptable prices and proving to be the best qualified to do the job will win the competition. They should also provide the widest range of additional services.
The operation of the winner company actually starts on the date of contract signing with the housing owners.
Currently there are three versions of financing such contracts operating in Ukraine: "at fixed price" ("Kharkiv model"), "for interest" ("Odessa model") and "remuneration for each unit on monthly basis".
In case of "fixed price" contracts the municipality earmarks certain funding in the form of payment in hrivnyas for each square meter per month. This figure is calculated on the basis of work amount to be performed by the contractor. Contractors are in no condition to demand more than this maximum. There is no doubt, however, that competitor for the contract who can offer a lower price will enjoy advantages in competition. "The Kharkiv model" leaves the job of monthly rent collecting to the municipality. Contractors receive their fixed payments on a monthly basis with inflation rate factored in periodically.
In case of the "Odessa model", private contractor is charged with rent collection for residential units and lease rent for commercially used units included into competition package. Contractor's profit consists in the interest from collected rent ( the interest rate in Odessa is 3%) which provides a direct incentive for the company to collect the rent in full. This scheme works only if commercial structures pay for the lease enough to finance the contract. This model may turn non-workable in the city suburbs with few non-residential units. If this model is used, the municipal government should also delegate to the private contractor the functions of unit lessor to commercial structures and allow using the contractor's banking account for the reception of commercial structures' payments for the lease. If this model is relied upon, the contractor acts as an intermediary between commercial structures and municipal authorities for which function he receives 3% from the lease payment.
The third model requires further study and approbation in terms of its efficiency in current Ukrainian environment.

PMM program implementation offers obvious advantages for virtually every party directly involved in housing management and maintenance.

For housing owners (local governments, departments, condominiums):

- housing owner retains the ownership, but his functions are modified since he becomes a client only. Thus, the current controversy is resolved when one and the same organization acts both as a client for and a performer of services. Redistribution of these functions promotes better efficiency since it leaves the housing owner free from servicing which enables him to focus more on management and control;
- private maintenance contributes to improving the public image of, say, executive committee. At present residents suffer from low standards of services rendered by the conventional system. Higher service standards ensured by private maintenance will reduce complaints and increase public satisfaction;
- private maintenance will promote the city's or region's economic development. With housing and housing services markets in place, the local Councils will have advantages in terms of attracting foreign and domestic investments and loans;
- competition in housing maintenance will force traditional state enterprises (Zhek's) to raise their performance standards;
- competition is bound to result in maintenance costs reduction which will make it possible to cut, and eventually to stop budget allocations to housing sector;
- private structures will develop the infrastructure in the districts where they are operating. Besides, judging from experience, crime rate (thefts, cases of vandalism) is considerably lower in the districts with private housing maintenance.

For housing and municipal economy staff:

- developing services market is an economic necessity and objective reality. Consequently, the specialists who manage to adjust to competition as early as possible will have considerable advantages in terms of successful and profitable operation in market economy;
- participation in the private housing maintenance program will effect dramatic changes in the specialists' mentality. The gained expertise will come in handy for working with prestigious companies or for opening a business of their own.

For residents (private owners and tenants):

- a privatized unit is an asset which has certain market value. One of the factors effecting the unit value is the standard of maintaining common use elements and building constructive elements. The best way to keep up the value of this property is to ensure its quality private maintenance;
- private maintenance provides ample opportunities for real self-government (condominiums) when the residents decide for themselves, proceeding from their interests, how to spend their money or what should be done to improve their housing and adjacent territory;
- with rent going up it is natural to expect higher standards of management and maintenance services. A unit resident in a building maintained by a private company can be positive that the job will be done timely and adequately; that the servicemen will be civil; that common use elements will be clean and safe; and that it will be possible to get additional services.

For private housing maintenance companies:

- housing maintenance has always been in demand and likely to remain so forever. Its high standards and competence will guarantee being always in business and making continuous profit;
- working in the housing sector offers a lot of attendant benefits, such as direct contacts with clients (residents) enabling to get additional orders, access to real estate transactions, etc.;
- housing maintenance will enhance the company's image which will provide additional advantages with respect to getting loans, concluding contracts, developing partners relations, etc.

1. Unwillingness on the part of local governments in some cities to introduce competition in housing maintenance results in violating basic provisions stated in the approved National Housing Policy Concept. Besides, executive bodies and local governments normally have no departments to deal with implementation of housing policy which is entrusted to housing and municipal economy departments and units interested in perpetuating the existing system of housing maintenance.
In order to solve this problem we deem it necessary to amend the Law of Ukraine "On local self-government in Ukraine" with a provision on attracting structures on a competitive basis, irrespective of their form of ownership, for adequate maintenance and efficient management of housing, and for rendering high standard services to the public. The Law must also stipulate that executive bodies of the local Councils should set up unit for implementation, coordination and control over housing reforms.
2. Lack of approved Procedure for competitive selection of housing maintenance and repair companies and Standard contract for housing maintenance between local governments and winning companies. Due to this lack the currently held competitions remain on the stage of pilot projects without any official status.
The Cabinet of Ministers should adopt the Resolution "On competitive selection of companies for housing maintenance and repair and their operation" (its draft is with the Cabinet of Ministers already).
3. The state's failure to pay target subsidies, salaries, pensions, scholarships, benefits, etc. on time results in rapid deterioration in the housing physical condition and in living conditions.
The Law of Ukraine "On levying taxes on enterprises' profits" should be amended in such a way as to stipulate that utilities suppliers and maintenance companies can be exempt from tax payment for the sum equal to the state's indebtedness to them. Housing maintenance companies should be also exempt from paying value-added tax.
4. The draft Housing Code of Ukraine makes no provisions for the housing maintenance procedure.
The draft Housing Code of Ukraine should be amended so that it would stipulate housing maintenance by state housing maintenance enterprises, or by private companies on contractual basis.
5. The effective law de-jure does not prohibit private enterprises from being a customer of communal services, however de-facto state enterprises hold a monopoly in this sphere.
This issue should be addressed in a Cabinet of Ministers Resolution "On competitive selection of housing maintenance and repair companies and their operation" or in a relevant ordinance issued by the State Committee for Construction, Architecture and Housing Policy of Ukraine.
6. The Law of Ukraine "On privatization of small enterprises" envisages privatization of Zheks - state enterprises for maintenance and repair of the housing stock. Practice shows that selecting enterprises on competitive basis affects housing maintenance positively; in particular, housing maintenance costs are reduced with its level increasing. But it is impossible to introduce competition through mere change in Zhek's form of ownership.
Amendments should be made in the Cabinet of Ministers resolution of October 5, 1995 No. 786 "On methods for calculating and procedure for spending the rent for public property" to the effect that local governments should be able to transfer Zhek's property to private companies engaged in housing maintenance and repair for free use; the same provisions should be made in the law on municipal property.
7. The provision in the Law of Ukraine "On privatizing public housing stock" (the amount of annual tax levied on the individuals' real estate goes to a special housing construction fund with the appropriate local Council) places housing construction and housing maintenance under unequal conditions. Given that most of the housing stock is in poor physical condition, and that no money has been allocated for timely preventive repairs for quite a long time, it would be advisable , alongside with developing housing construction program, to allocate funds for preserving housing stock.
It is necessary to amend and supplement the Law of Ukraine "On privatizing public housing stock" indicating that the tax proceeds shall go to a special housing construction and maintenance fund established with the appropriate local Council).
8. Lack of legally established legal status of condominiums complicates relations between condominiums and maintenance companies considerably in matters relating to housing maintenance.
We have drafted, submitted to the State Committee for Construction, Architecture and Housing Policy of Ukraine and plan to submit for the Supreme Rada's consideration the Law of Ukraine "On multifamily buildings co-owners' associations and condominium associations" which provides for regulating relations between condominiums and maintenance and utilities companies.
9. No statistic records are kept by local governments or executive bodies with respect to the number of formed condominiums and participation by private companies in housing maintenance.
This problem can be solved through amending the Laws of Ukraine "On local self-government in Ukraine" and "On state administrations" so that keeping statistic records on the above-stated issues would be mandatory.
10. Lack of Norms and regulations for housing maintenance in cities and villages of Ukraine complicates control over the physical condition of buildings and structures considerably, as well as control over the necessary repairs and their regularity.
The State Committee of Ukraine for Construction, Architecture and Housing Policy of Ukraine should develop appropriate Norms and regulations for housing maintenance in cities and villages of Ukraine.
11. There is no legal framework regulating the use of utilities meters and establishing utilities fees on the basis of these meters' readings which results currently in substantial discrepancies between the facilities expenditures for providing utilities and the payments made by unit (building) residents in accordance with the meters' readings. The issue of paying for the utilities in case when one meter is installed for a multifamily building is not settled either.
This problem can be solved by the Cabinet of Ministers Resolution "On paying for utilities in accordance with the meters' readings".