Apartment privatization far from complete

Jul 13, 2000
By Diana Kudayarova

Recent data from the Housing Privatization Commission show that by July 1, exactly half a year before the certificates' validity deadline, only 173,933 apartments had been privatized, out of the total of 509,410, which by Latvian law should be subject to privatization.

One of the important barriers to housing privatization is that some apartment buildings are still owned jointly by the state and private persons or organizations. Such a situation arose because in the course of denationalization, parts of some buildings remained unclaimed - their original owners did not have heirs. There were also cases of unlawful denationalization, and the property in question was also transferred to the state.

The Real Estate Agency received a list of co-owned houses, prepared by municipalities, at the beginning of April. Such houses have to be physically separated into state- and privately owned parts, so that the apartments in the state part can be privatized by their current tenants.

"This raises many psychological issues," said the REA director general Kalvis Bricis. "Some tenants want to privatize their apartments, others don't, and all of them are unsure of their future."

In working out the separation projects to be presented to co-owners, REA tries to leave most of the apartments in state ownership, leaving the private owners non-residential areas which can be rented out. But inevitably, some apartments will remain in private hands and will not be privatized.

So far 55 separation projects have been presented to co-owners, and 35 replies have been received. Of them, 20 were rejections. If a property separation agreement with these co-owners is not reached within two months, the state-owned ideal part of the building goes on auction.

Should it be bought by the group of tenants - who have the right of the first buyer according to the law "On privatization of state and municipal residential housing," but not to the civil law, which gives it to the co-owner - the group will have rights to a part of revenue from property corresponding to the share of their ownership. They will not, however, become the owners of their apartments.

Six projects for alienation of the state part of co-owned property, the owners of which have not agreed to separation, have already been prepared by the Cabinet of Ministers; 14 more will be reviewed at the next session. Five separation projects have been signed, four are ready for signing, and six are being prepared.

"We are in the very midst of the separation process," Bricis said. "The problem has been around for seven years, and it still hasn't been solved, but we are working on it now."

By the end of 2000, REA plans to transfer all the state- owned residential housing to the Housing Privatization Commission. To speed up privatization and clear the confusion which the tenants often have about the process, REA is also preparing to publish a complete information booklet to be given to everyone who expresses an interest in becoming owners of their apartment.

Despite all the apartment privatization problems, REA is "very satisfied" with the results of its work, said Bricis. "It is unusual for the state property owners to enjoy a financially stable position, which we certainly have," he said.

The agency has made a net profit of 598,451 lats ($ 997,418) in 1999, and is planning to make a million in 2000. Most of the revenues come from selling off the unprofitable state property and working with the Latvian Privatization Agency on preparing contracts and ensuring in all other ways that "the privatization process runs smoothly."

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