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Apartment building renovation reserve – both necessary and useful

2015-04-15

Today the Government approved the procedure for building the reserve for the apartment building renovation and protecting it which will enable homeowners to maintain and repair their homes in a timely manner. The approved document was drafted by the Ministry of Environment as the Specification of the procedure for collection, estimation and protection of funds of owners of apartments and other premises for the renovation of the building (construction works) under the compulsory requirements for the use and maintenance of construction works.

Until now, just a fraction of owners of apartments and other premises complied with the provision of the Civil Code adopted in 2001 obligating them to collect funds for home renovation according to the compulsory requirements for the use and maintenance of construction works. If the reserve is unavailable, it is very difficult to organise repairs of buildings. Payment for work must be immediate and not all apartment owners are able to pay a higher amount.
This problem is becoming more pressing as old apartment buildings simply must be renovated. In a number of towns across the country, they are considerably worn and some buildings have even become dangerous to people living in them. For instance, the useful life of bituminous roofing is up to 20 years, while that of water supply and other piping is up to 30–35 years. Worn balcony structures and lifts may cause many problems after four decades. Unfortunately, homeowners are reluctant to invest in common use facilities. Therefore, the Civil Code was amended to stipulate that the Government must lay down the procedure for the collection of funds for renovation of apartment buildings, calculation of their amount and protection of collected funds.
According to the procedure which was approved today, these funds must be used depending on the physical and energy situation of a building for specific renovation (repair) of common use facilities to be provided for in the long-term building renovation plan. This plan and the amount payable monthly will be set and approved by the owners of apartments and other premises. Until the amount is approved by them, it will be collected at the minimum rate of EUR 0.03–0.05 per square meter (depending on the size of the house). For instance, an owner of a 50 sq. m apartment can expect to pay EUR 1.5–2.5 per month. The amount of the monthly charge is limited and tied to the minimum monthly wage in order to ensure social security of lower-income households.

The funds accumulated by owners of apartments can be used for unscheduled repairs of defects and faults in the structures and engineering works of a building and in response to accidents but they cannot be used as payment for the work included in the maintenance fees applicable to the building.

The funds collected for home renovation must be kept in a separate account and must be accounted for each house and each apartment owner. The provisions of the Deposit Insurance Law apply to these funds.

Public Information Division
15 April 2015

Minister of Environment of Lithuania Kęstutis Navickas
Minister of Environment of Lithuania Kęstutis Navickas