Assessment of the degree of emergency: Recognizing the main signs

A clear definition of the concept of obsolete and uninhabitable dwelling is in the Housing Code of Ukraine from 19.11.2022, document 5464-X, namely:

The obsolete housing stock consists of residential buildings up to five stories, excluding individual housing developments, which technically do not meet modern safety and comfort standards, have exceeded their maximum service life, or the wear and tear of the main structural elements is at least 60%.

Uninhabitable houses are residential buildings that, according to legislation, are recognized as emergency or dilapidated.

Exclusion of residential buildings and premises from the housing stock is regulated by the Housing Code of Ukraine.

• Residential buildings and premises deemed uninhabitable are to be repurposed for other uses or demolished by decision of the executive committee of the regional or municipal (cities of republican subordination) council.
• Uninhabitable residential premises in housing and construction cooperatives can be converted into non-residential premises by a decision of the cooperative members’ general meeting, ratified by the executive committee of the district or municipal council.
• The procedure for inspecting the condition of residential buildings to ensure they meet sanitary and technical requirements and to declare buildings and premises uninhabitable is established by the Cabinet of Ministers of Ukraine.

Resolution No. 189 “On the procedure for inspecting the condition of residential buildings to establish their compliance with sanitary and technical requirements and to recognize residential buildings and residential premises as unfit for habitation” sets forth the rules and procedures for inspecting the condition of residential buildings.

The condition of residential buildings is inspected:

• the courtyard of the house and its amenities;
• foundations and basements;
• walls and facade elements (balconies, bay windows, cornices, etc.);
• joint connections in large-panel residential buildings;
• the roof of the house and equipment on it (chimneys and ventilation ducts, etc.);
• elevators and their equipment;
• floors of the residential building, including their structures;
• engineering equipment.

A commission is formed for the inspection, comprising engineering and technical specialists from housing and utility organizations, experts from design and research organizations (if necessary), and representatives of the public.

Based on the inspection materials, the commission prepares relevant documents: an inspection report of the residential building with conclusions, a technical passport of the residential building with data on its physical wear and tear, a conclusion from the design or research organization on the feasibility/impossibility of carrying out major repairs, and also a conclusion from the sanitary-epidemiological service (involved if necessary).

First steps after a building is declared emergency

If a residential building (residential premises) is declared as not meeting sanitary and technical requirements – that is, unfit for habitation – the executive authority of the respective local council submits a proposal to the higher-level executive authority regarding the use of this building (premises) for other purposes or its demolition.

If a building is designated as emergency and unfit for habitation, the residents must contact the owner or entity responsible for the building’s maintenance to inquire about the next steps. Subsequently, the owner or maintenance entity should approach the executive authority of the local council with a request to inspect the residential premises. Based on the application, the executive authority then forms a commission and decides on the feasibility of the building’s continued use or its unsuitability for habitation.

Legal aspects and rights of the owners of emergency buildings

According to the Article 111 of the Housing Code of Ukraine, citizens evicted from an emergency building “are provided with another well-appointed living space by the executive committee of the local council, or in cases where the land plot is allocated to a state, cooperative, or other public association, by that organization.”

In practice, the process is slow. Therefore, people continue to live in emergency buildings for 20, or even 30 years without any offers from local administrations for relocation to safe housing. Selling an apartment in an emergency building is almost impossible, as buying emergency housing is not an attractive real estate investment.

Opportunities for the restoration or reconstruction of an emergency building

According to the State Statistics Service, before the war, 45.6 thousand buildings with a total area of 3.3 million square meters were recognized as dilapidated, housing 54.8 thousand Ukrainians. There were 1.01 million square meters of emergency housing, or 17.2 thousand units of emergency housing, with 11.6 thousand residents living in them. The scale is immense. A comprehensive approach is needed to address this issue. Moreover, the war has further exacerbated this problem, increasing the number of emergency buildings due to shelling.

Discussions about the implementation of reconstruction programs have been ongoing since 2007 when the “Law on Comprehensive Reconstruction of Districts (neighborhoods) of Obsolete Housing Stock” was repeatedly amended but never came into effect. The document explores various approaches to reconstruction, including the complete redevelopment of districts with the replacement of old housing with new and the upgrade of infrastructure, as well as the modernization of existing buildings with improvements to their engineering systems and thermal insulation without increasing the area and relocating residents.

Even when the law finally becomes operative, its implementation will immediately face the problem of relocating residents (neither the state nor local authorities have a flexible housing stock), as well as the issue of financing (the state lacks funds for such a large-scale project). Therefore, the solution to the problem will depend on the business sector and the attraction of private investments.

DOMOVA platform – a solution to the problem of old housing

The Ukrainian company DOMOVA has already taken on the challenge of addressing the problem of emergency housing and the reconstruction of cities by creating a platform for the transparent sale and purchase of dilapidated and emergency houses.

DOMOVA positions itself as the world’s only IT platform that offers apartment owners in old and emergency buildings the opportunity to unite for the collective sale of the entire building. The company provides mechanisms for such unification, offers free submission of sales requests, and attracts investors, and construction companies.

This is a unique offering in the real estate market.

Therefore, we hope for positive changes in the real estate sector and quality reconstruction of cities.

Often, people perceive their home as their most valuable material possession, which leads to inflated expectations of its value. “Expensive wood flooring, marble finishes” in the interior – for many people, this is another reason to consider their property unique and more expensive than others on the market. Unfortunately, this approach often leads to disappointment and a waste of time and resources for the seller, as buyers may have different preferences and tastes. Likely, the new owners will make redecoration according to their preferences, so they do not see the point in overpaying for what they will change. Practice has shown that the costs of renovation do not pay off at the sale.

Accordingly, the valuation of an apartment for sale is not just about setting a price, but a complex process that requires an understanding of legal norms and market realities. Here are the main points to pay attention to:

Legal necessity of valuation: Ukrainian legislation requires an expert valuation of property value for notarial acts, mortgage registration, loans, resolution of property disputes, insurance, and other purposes.

Initial valuation: For an initial valuation, legal documents such as a technical passport, documents confirming ownership rights, personal documents of the owner, and tax number are needed.

Key valuation factors:

• Location and infrastructure of the neighborhood.
• The type of building and its historical context.
• Distance to transport hubs.
• Distance from the city center.
• Total area and number of rooms.
• Number of floors in the building.
• Floor of the apartment (apartments on the first floors may be considered by investors as potential commercial premises – hairdresser’s shops, bank branches, supermarkets).
• Condition of the property – renovation, quality of construction materials.
• Parking space availability.
• Unauthorized alterations.

Assessment of the apartment’s condition: From perfect to unsatisfactory condition, taking into account the quality of utilities, repairs, and materials used.

Impact of market conditions: Calculation of the discount depending on the market condition – from zero to 15% depending on economic factors.

Specifics of valuation for inheritance: The need to consider tax norms when assessing inherited property.

When conducting an assessment, it’s important to remember that professional help can significantly simplify this process and help avoid mistakes, especially with a large number of factors affecting the price. Valuing an apartment is not just about determining a price; it’s a complex process that requires a deep understanding of the market and the specifics of the property.

The process of evaluating and selling a property becomes more complicated if the apartment is in a dilapidated or condemned building. The condition of the building, utilities – these are the key factors that make up the main price of each apartment in a condemned building, and it absolutely does not matter if the window sills are made of marble, for example. So, how should people form a price for an apartment in a dilapidated building? Sell it for next to nothing?

A new initiative has emerged in the real estate market from the business sector. The company DOMOVA offers an effective solution to the problem of resettling people from old and condemned housing by registering and selling apartments on the innovative DOMOVA platform. The uniqueness of the offer lies in the fact that it’s not just an opportunity to sell an apartment in a condemned building, which generally has no demand, but to sell it at a price above the market value. A favorable selling price for an apartment in an old building is possible thanks to the unification of apartment owners on the platform.

Selling a unified house on the DOMOVA platform allows all co-owners of the building to receive their share of the value of the total area, attic, basement, and also take into account a portion of the buyer’s profit from building a new, larger building on the site of the old one. By combining several buildings, an entire block can be sold for new construction.

The issue of dilapidated buildings in Ukraine is becoming particularly relevant as many residential buildings built in the mid-20th century are reaching the end of their useful lifetime. Given the postponement of government decisions on reconstruction and the lack of clear legislative norms, owners of such apartments face the problem of a decrease in the value of their property and difficulties in selling it. As time goes on, the process of destruction of emergency buildings continues, and the cost per square meter of housing in old and dilapidated buildings is steadily falling. However, if we look at this problem from a broader viewpoint, from the perspective of aesthetics, comfort, functionality, and technology, in the context of modern architectural planning of urban developments, taking into account traffic load, this problem can provide a development vector for investment and urbanism.

Discussions on the reconstruction of outdated housing stock have been ongoing since 2018 and have intensified again recently. The draft law on the comprehensive reconstruction of quarters (districts) of dilapidated housing stock stipulates that local authorities will determine which buildings need reconstruction. According to Article 9, the sources of financing for the reconstruction and replacement of the housing stock should be investors’ funds, reconstruction funds, as well as funds from the state and local budgets with their subsequent return. The reconstruction program stipulates that if buildings are demolished, residents should be offered new housing. Unfortunately, neither the state nor local authorities have any reserve housing for the reconstruction program, nor funding. The war has only exacerbated this problem. Last year, the President of Ukraine initiated a program of affordable housing loans called eOselya, but only for certain categories of people.

In this context, the DOMOVA platform represents an innovative solution for apartment owners in this kind of housing. Firstly, it is a real opportunity to sell an apartment in a dilapidated or emergency building at a price above the market price. Secondly, it is a transparent process of selling emergency accommodation and buying buildings for reconstruction by investors or developers. 

One of the advantages of the DOMOVA platform for owners of dilapidated housing is the ability to submit a free request for sale, and receive consulting support from the company’s experts and lawyers.

And then, the next step is to unite the apartment owners to sell the entire building. The sale of a condominium on the DOMOVA platform allows all co-owners to receive their share of the value of the common area, attic, basement, and to take into account part of the buyer’s profit from the construction of a new, larger building on the site of the old one. Therefore, the price for an apartment will be higher than the market price. By combining several houses, you can sell an entire neighborhood for new construction.

This approach greatly simplifies the sales process, allowing owners to enter the market with a more favorable offer.

In addition to economic benefits, DOMOVA contributes to solving social problems by helping to restore and modernize the housing stock. This helps to improve the quality of life of citizens and renew the urban environment.

Thus, DOMOVA represents not only a platform for real estate sales, but also an important tool for social and economic transformation, creating new opportunities for property owners and investors.