Debt trap: housing co-ops, building owners petition gov’t for help with errant tenants, members

14-01-2019

Building owners and housing co-operatives are demanding government help in enforcing and expanding their rights to collect payments from errant tenants or allow for their eviction, or force the sale of flats to cover debts. Many housing co-operatives across the country face bankruptcy, the groups say, due to tenants’ and co-owners’ failure to pay utility and other bills.

Illustrative photo: Lenka ŽižkováIllustrative photo: Lenka Žižková More than 48,000 people, representing close to 1,000 housing co-operatives and associations of apartment building owners have signed on to a petition demanding that the government do more to enforce their rights.

Rather than see their buildings’ water, heating or electricity supplies cut off or these essential services curtailed, housing co-operatives often feel forced to pay the bills of their neighbours, as getting the courts to act can take years. Many have been driven to bankruptcy, and hundreds of others face this threat.

Martin Hanák is responsible for heating and electricity issues at the Association of Czech and Moravian Housing Cooperatives, one of the country’s largest such groups. He told Czech Radio that the petition, due to be presented to the Minister of Justice Jan Kněžínek (ANO) on Monday, in effect, calls for both strengthening and enforcing the rights of tenants and owners who do pay their bills.

“We do not see any real effort by the responsible authorities to resolve the situation. And as the situation has gradually gotten worse with each passing year, we’ve seen some housing cooperatives or communities get into serious financial trouble. This has resulted in the collapse of some apartment building owners and housing co-operatives.”

Under Czech law, non-payment of bills can result in an entire building’s water supply and wastewater collection being disconnected or restricted, at the utility’s discretion. That step is usually taken as a last resort, after attempts at out-of-court debt collection. Going through the courts can take years.

Meanwhile, others are compelled to make payments for such tenants or fellow owners. The bills can quickly add up and become unsustainable, says Renata Šimečková, head of an association of apartment owners in Prague’s Podolí district.

“We had a problem with one owner of a flat who had not paid for instalments for utilities and services. We had to cover their debts, which had grown to 150,000 crowns.”

Illustrative photo: Dominika BernáthováIllustrative photo: Dominika Bernáthová About a third of the Czech population, and 44 percent of people in Prague, live in prefabricated blocks of flats known as “paneláky”, many of which are in dire need of repair – a bridge too far, for those with a high percentage of co-owners or tenants chronically in arrears.

Compounding the problem, housing cooperative representative Martin Hanák says, are property speculators who buy flats in poor areas and rent them out to people reliant on social housing benefits. The state in effect pays the rent, but not for maintenance or utilities.

“Such owners rent flats to someone getting social benefits, a housing allowance or supplement, who don’t pay for the administration of that building, be it a cooperative of private build," Hanak adds.

Mr Hanák says the petition to which the 900 associations and cooperatives have signed on to, among other things, proposes changing the law to allow for the forced sale of a chronic debtor’s flat to cover their debts to fellow owners.

14-01-2019