The Association of Real Estate Management Companies (ACON) has formally submitted a proposal to the Ministry of Construction and the State Duma suggesting that outstanding utility debts be made available for sale to collection agencies. According to ACON, this measure is crucial for improving payment collection rates and reducing financial strain on utility service providers.
Lina Tkachenko, Chair of the ACON Council, explained to Business FM that the primary goal of this initiative is to enhance payment collection efficiency and mitigate cash flow gaps experienced by managing companies overseeing apartment buildings. This reasoning underpins the association`s appeals to the Ministry of Construction and the State Duma.
Currently, managing companies are prohibited from assigning residential utility debts to third parties. Simultaneously, these companies are mandated to transfer the full cost of provided services to resource suppliers, irrespective of whether the residents themselves have paid or not.
This situation often compels managing companies to use their own funds to cover the costs of resources consumed by citizens. Lina Tkachenko emphasizes that this practice elevates the risk of bankruptcy for these companies and consequently diminishes the quantity and quality of services delivered to prompt-paying residents.
Chair of the ACON Council
«Under current government regulations, managing companies cannot increase or index their service charges. The core issue is that they receive payments solely for `Maintenance and Repair,` while only resource supply payments are subject to indexing. Raising service costs requires a decision from a general meeting of property owners, which is incredibly difficult to achieve, as owners are very reluctant to approve tariff increases, making such instances rare. Debts accumulate, cash flow deficits widen, and something needs to be done. This is why our members at the Association of Real Estate Management Companies proposed lifting the ban on debt sales. This would allow companies to boost liquidity and enter into factoring agreements with banks based on these debts, thereby addressing cash flow shortages. In essence, diligent payers are currently subsidizing non-payers; buildings are maintained primarily through payments from those who pay, while outstanding debts are virtually impossible to recover. I frankly see no fundamental difference between utility debts and other types of debt; financial and banking organizations, for example, are permitted to sell their debts or transfer them to collectors. Our legislators are moving towards simplifying utility debt collection, and I perceive no significant risks in our proposal.»
According to Tkachenko, public utility debts amounted to 900 billion rubles by the end of the first quarter of this year. Following the July 1st tariff increase, this figure is predicted by ACON members and market participants to climb by an additional 15-20% by December, including heating costs.
Conversely, other industry specialists caution that transferring household utility debts to collection agencies poses substantial risks. This approach has been attempted previously and was largely deemed unsuccessful. Denis Proskuryakov, a consumer rights protection lawyer at the Moscow Legal Support Center, suggests that it would be challenging for debtors to dispute the arbitrary actions of regional collectors, and equally difficult for authorities to regulate them effectively.
Consumer Rights Protection Lawyer, Moscow Legal Support Center
«We vividly recall how collection agencies operated in the late 1990s, 2000s, and 2010s—how they harassed people, ambushed them, made relentless calls, and so forth. The Federal Law No. 230 of 2016, which outlines requirements for collection agencies, now restricts that past arbitrariness. Nevertheless, it still requires proving that a collection agency is violating a debtor`s rights before any license revocation can be considered. By the time such a decision is reached, a collection agency could have harassed numerous debtors, leading to quite distressing outcomes for ordinary consumers. On this basis, we deem it impractical, especially given that the existing legislative procedure functions quite effectively. Managing companies are required to have legal departments for their routine operations, which have always collected debts and can continue to do so, particularly since these cases are often handled through simplified legal proceedings without the direct involvement of the company. Courts typically issue standard rulings, so the system is operational, and complicating it further is unnecessary. Debts are always sold at a discount—50-70%; it is more beneficial to pursue litigation to recover the full debt amount, including penalties and interest, rather than selling it at a steep discount to collection companies. While those in Moscow and major regions tend to adhere to the law more or less, arbitrary actions could occur in remote areas.»
Earlier, draft legislation had been introduced in the State Duma that would permit the transfer of public debts from managing companies to resource-supplying organizations, and also allow managing companies to collect debts from non-payers via notaries through an out-of-court process.
However, neither of these initiatives has been adopted to date.
