How Property Management Firms Profit: Three Schemes Hidden in Your Service Fee

How Management Companies Generate Revenue

According to ХВИЛЯ: In a video for the channel 'Na Pensii' (In Retirement), journalist Iryna Poliakova outlined three schemes through which property management companies profit from building administration fees. The report was relayed by 'Khvylya' (The Wave). Poliakova noted that, by law, these companies are entitled to take up to 10% of a building's total expenses as their profit.

• The first scheme involves creating phantom services, where residents pay for maintenance they never actually receive.
• A second method uses financial manipulation during routine repairs, allowing management firms to extract extra funds without completing the work properly.
• The third tactic, dubbed the 'manager's reward paradox,' further enriches these companies at the residents' expense.

'In reality, no one sees a cleaner for months, and the pipes are rusting away.' - Iryna Poliakova

Poliakova also stressed that 'the management company has absolutely no incentive to save your money.' These practices highlight the urgent need for greater oversight of management companies and their fee structures. This issue is particularly relevant in post-Soviet housing markets, where such management models are common.

The Need for Oversight

The exposed problems reveal serious flaws in residential building management systems, which can lead to a decline in service quality for residents. The need for control and transparency in the operations of management companies is becoming increasingly critical, as homeowners face financial burdens without receiving adequate service. This issue demands attention from both the state and society to ensure fairness and integrity in the housing management sector.