Multi-apartment housing to revitalize construction sector?

  • 2009-06-04
  • By Lauras Stankevicius [Jurevicius, Balciunas & Bartkus]
Witnessing the freeze-up of the real estate market in Lithuania and the plunge of the construction sector into worsening recession, the Lithuanian government sought to act.
On May 6 this year the government adopted a resolution whereby it submitted bills to the Seimas (Lithuanian Parliament) amending and supplementing the laws on the state support for acquisition or rent of housing and modernization of multi-apartment buildings, construction, territorial planning and local self-governance.

The Seimas was asked to read the said bills by urgent procedure. The bills are mainly aimed at improving conditions for construction businesses and accelerating the multi-apartment housing modernization process.
Approval of the bill, the Law on the State Support for Acquisition or Rent of Housing and Modernization of Multi-Apartment Buildings, means conditions on the provision of state support for projects would substantially change.

Pursuant to the procedure in force, state support of up to 50 percent is provided to the owners of apartments who implement multi-apartment housing modernization investment projects, depending on energy efficiency levels of the investment project.
To provide state support of the established amount, appropriate budget assignments are needed, which are already deficient for implementation of the current investment projects.

With enactment of certain amendments to the Law state support would be provided in other ways:
(i) by providing credits on easy terms for the implementation of investment projects; (
ii) by paying part of costs in the established manner for the preparation of investment projects and technical projects as well as performance of technical supervision of construction works;
(iii) by compensating part of investments determined by the government, which are used for the implementation of energy efficiency increasing measures provided for in the Rules for Providing the State Support for Modernization (Renovation) of Multi-Apartment Housing;
(iv) by covering the costs of investment projects for impoverished persons: initial investment contribution, which has to be paid by the person, credit insurance contribution, credit and interest.

It should be noted that projects which have already been finalized 's there are currently more than 300 such projects 's would be subject to the conditions for the provision of state support, which were in force at the time these projects were prepared.

The bill, the Law on Construction, which was submitted to parliament provides that construction permits for buildings being modernized shall be issued following a simplified procedure in order to quicker realize measures for the implementation of multi-apartment housing modernization program.
To attain better quality of multi-apartment construction works and to guarantee against poor quality workmanship, the bill provides for higher qualification requirements for designers and builders, as well as establishing obligatory civil insurance for the technical supervisor of construction works.
Amendments to the Law on Territorial Planning would revise the objects of detailed territorial planning and the goals of this process. The changes would pertain to the mandatory preparation of territorial planning documents.

The bill establishes concrete cases when preparation of a detailed plan is not needed because the activities planned have no essential influence on the existing type of area development, or the master plan is sufficient for defining the type of area development.
The bill also provides for one of the great novelties in territorial planning 's it proposes to authorize the Director of Municipal Administration to make decisions on approval of a detailed plan instead of municipal councils.

With regard to the above-mentioned proposal, the Law on Local Self-Governance shall also be amended and supplemented. At present, approval of detailed plan is a rather complicated and politicized process.
Detailed plans are currently approved by a collegial political institution 's the municipal council, which is often not involved in the preparation of detailed plans and the issue of conditions for its preparation.

Given the Director of Municipal Administration is usually the most familiar with the solutions of a concrete detailed plan, a decision on approval would at least be based on concrete circumstances and established facts.
In conclusion, enactment of the described bills would promote investments into multi-apartment housing programs; simplify the procedure for obtaining design and construction permits when buildings are modernized.

The bill would also streamline procedures in the territorial planning process which would directly improve the construction business environment and lead to at least some revival in the sector.

Lauras Stankevicius is a lawyer at Jurevicius, Balciunas & Bartkus, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms including Glikman & Partnerid in Estonia and Kronbergs & Cukste in Latvia, dedicated to providing a quality "one-stop shop" approach toclients' needs in the Baltics.