The Association of Companies Servicing Real Estate (ACON) has put forward a proposal to the Ministry of Construction and the State Duma suggesting that outstanding housing and utility debts be transferred to collection agencies. According to ACON, this measure is crucial for improving payment collection rates across the sector.
Lina Tkachenko, Chairwoman of ACON`s Board, explained to Business FM that the primary objectives of this initiative are to enhance payment collection and alleviate the cash flow deficits experienced by managing companies (MCs) responsible for apartment buildings. It is with these aims in mind that the Association submitted its appeals to relevant government bodies.
Under current regulations, managing companies are prohibited from assigning utility debts owed by individual citizens to third-party entities. Paradoxically, MCs are simultaneously obligated to transfer the full amount for supplied services to resource-supplying organizations, irrespective of whether the residents themselves have made their payments.
This situation frequently compels MCs to use their own financial resources to cover the costs of utilities consumed by residents. Lina Tkachenko emphasizes that this practice elevates the risk of MC bankruptcies and can lead to a reduction in the quantity and quality of services provided even to residents who consistently pay their bills.
“Based on government decrees, managing companies cannot increase their payments or index them. The reality is that managing companies receive funds only for ‘Maintenance and Repair’, whereas only payments to resource-supplying organizations are indexed. Managing companies can only raise costs through a general meeting of property owners, which is exceedingly difficult to arrange, as owners are very reluctant to agree to tariff increases; such instances are rare. Debts accumulate, cash flow gaps widen, and something urgently needs to be done. This is precisely why our members at the Association of Companies Servicing Real Estate proposed lifting the ban on debt sales. This would enable companies to boost their liquidity and engage in factoring deals based on these debts, thereby addressing their cash flow shortages. As it stands, diligent payers are effectively subsidizing non-payers; buildings are maintained, in essence, through the payments received from those who pay, while it is virtually impossible to recover outstanding debts. I genuinely see no fundamental difference between housing and utility debts and any other type of debt; financial and banking institutions, for example, are allowed to sell their debts or transfer them to collectors. Our legislators are currently working to simplify the collection of utility debts, and I do not perceive any particular risks in our proposal.”
Lina Tkachenko, Chairwoman of ACON`s Board
According to ACON members and market participants, the total public debt for housing and utility services reached 900 billion rubles by the end of the first quarter of this year. Following the tariff increase implemented on July 1st, this figure is projected to rise by an additional 15-20% by December, taking into account heating costs.
Concerns and Alternative Perspectives
Conversely, other experts in the field caution that transferring household utility debts to collection agencies poses significant risks. Past attempts at such a system have been largely unsuccessful. Denis Proskuryakov, a consumer rights lawyer at the Center for Legal Support for Muscovites, argues that it would be challenging for debtors to dispute the potentially arbitrary actions of regional collectors, and difficult for authorities to regulate them effectively.
“We vividly recall how collection agencies operated in the late 1990s, 2000s, and 2010s, how they harassed people, ambushed them, made persistent calls, and so forth. Federal Law No. 230 of 2016, which outlines requirements for collection agencies, now limits the arbitrary behavior that was once prevalent. Nevertheless, it remains challenging to prove that a collection agency has violated a debtor`s rights, and only then can the question of license revocation arise. By the time that happens, a collection agency might have already harassed numerous debtors, leading to rather distressing consequences for ordinary consumers. On this basis, we believe it is impractical, especially since the existing legally prescribed procedure functions quite adequately. For routine business operations, managing companies are required to have legal departments that have successfully collected debts and can continue to do so. Moreover, these matters are often processed through simplified court proceedings, without the direct participation of the company itself. Courts, as a rule, issue standard decisions, so the system works, and there is no need to complicate this process. Debts are always sold at a significant discount—50-70%. It is far better to litigate and recover the full debt amount along with penalties and interest, rather than selling it at a substantial discount to collection companies. While those in Moscow and large regions tend to adhere to the law more or less, there could be widespread arbitrary practices in more remote regions.”
Denis Proskuryakov, Consumer Rights Lawyer, Center for Legal Support for Muscovites
Earlier, draft laws were introduced in the State Duma that would permit the transfer of residential debts from managing companies to resource-supplying organizations, and also allow MCs to collect debts from non-payers through notaries without judicial intervention.
Neither of these legislative initiatives has been adopted to date.
Rupert Blackwood 
Clement Ashworth