Problems of attracting investment in housing and communal services

Abstract

Object: The article deals with the problems of creating incentives to attract investment in order to modernize and create fixed assets in the housing and utilities sector. The main negative factors that negatively affect the attraction of investments for the reproduction of fixed assets of housing and utilities organizations are reflected.

Methods: The paper analyzes the pricing policy for housing and communal services for enterprises and the population of the Republic of Kazakhstan, highlights the positive foreign experience of attracting private capital to the housing sector through concession agreements.

Results: Monetarization of benefits for the population was not used in the field of housing and communal services, which led to the emergence of a mechanism for issuing subsidies for housing and communal services. Currently, about a third of the population of the Republic of Kazakhstan is entitled to benefits for housing and utilities companies do not always receive full or timely budget subsidies for additional payments to preferential categories of the population. This circumstance increased financial risks in the activities of housing and utilities enterprises and led to a decrease in their profits and, accordingly, investment activity.

Conclusions: The sphere of housing and communal services is characterized by the provision of two types of services to homeowners. Housing services include everything that is necessary for the proper maintenance of the common property of the owners of premises in an apartment building. A specific list of housing services is agreed by the owners and the management organization in the contract. Housing services, for example, include maintenance and repair of common property of owners of premises in an apartment building (inspections of common property, detection of damage and violations), including sanitary maintenance of common property (janitor services, cleaning of entrances, their disinsection and deratization, services for cleaning garbage chutes); services for managing common property and common funds (receiving, storing and transmitting technical documentation, filling in and updating information in the GIS housing and utilities, debt collection, etc).

Introduction

One of the priority tasks of the socio-economic development of the Republic of Kazakhstan is to improve the living conditions of citizens. This task involves the formation of an affordable housing market through the development of mortgage housing lending and increasing the volume of housing construction.

The solution to the problem of affordable mortgage is possible on the basis of the state’s balanced and consistent economic policy aimed at increasing the volume of housing construction and the necessary municipal infrastructure. The development of financial and credit institutions and effective financial mechanisms will ensure the availability of housing for citizens with different income levels, as well as bring the existing housing stock and municipal infrastructure in line with quality standards.

The sphere of housing and communal services concerns everyone, so it needs supervision and control by the state. State and municipal authorities monitor the implementation of laws and regulations, and they are the ones to contact if you realize that your home is being serviced poorly or utility rates have been inflated (Address of the President of the Republic of Kazakhstan N.A. Nazarbayev to the people of Kazakhstan, 2017).

Analysis of activity of the enterprises of housing and communal services shows that at the moment the lack of investment in housing sector is due to several reasons:

• the lack of incentives to attract investment, high payback period of capital investment and there are real risks of non-repayment are not achieving the performance indicators for investment projects;
• a short-term action plans, binding tariff regulation of the budget process, the planning of which is carried out for a period of not more than three years, while the timing of the implementation of investment projects more than 5 years;
• concentration of activities within the framework of state and municipal management: just over 30 % of the housing and utilities market is occupied by private operators (including 1 % — foreign companies), about 69 % of housing and utilities enterprises are state or municipal owned. The situation is somewhat better in energy supply companies, where the share of private enterprises is about 60 %;
• the applied methods of tariff regulation do not create incentives for public sector organizations to increase their investment activity;
• the lack of tools to insure the risk of non-return of direct investment;
• financial dependence of the utility sector on budgets through mechanisms of subsidizing losses and direct subsidizing of organizations in order to serve preferential categories of consumers;
• instability of the financial condition of most organizations of the utility complex, which does not guarantee its solvency and investment attractiveness (capital investments) in the long term within the limits of the acceptable level of risk;
• politicization of the tariff decision-making process;
• short-term operation of property relations and lack of inventory and state registration of the majority of objects in the public sector;
• high technological risks;
• low quality of design solutions and, consequently, the lack of high-quality investment projects in the public sector;
• lack of quality production and management personnel in the public sector. Thus, there is a situation of closed instability of land and privatization legislation (Askarova, 2012).

Methods

The task is to ensure that the population has access to the consumption of housing and utilities in accordance with effective demand and social standards.

This has already led to the fact that the average level of depreciation for housing and communal services in Kazakhstan has reached 60 %, and for many objects it has exceeded 70 %. Consequently, the financing of housing and communal services in Kazakhstan remains at an unacceptably low level and should be increased by 4 times. Before diving into the analysis of the reasons for such a depressing situation, it seems advisable to turn to the models of development of the housing and utilities sector in foreign countries. We will look at the industry and understand the condition of the Russian housing and public utilities, which in turn will help to develop an exit strategy from the crisis, and housing attractive to investors. Business must turn to the consumer. Creating a competitive environment will increase the quality of services (Obojmova & Grebenkina, 2016). There will be a serious struggle to get money from the consumer, and the winner will be the one who will provide a better service. Socially responsible investment is a more comprehensive concept: from creating a stable business environment, reducing operational risks to raising financial indicators, increasing sales, improving labor productivity, and ultimately increasing the company's market value in the long term. Thus, in order to attract investment in housing and utilities, the following steps should be taken:

• creating incentives to invest in the sphere of housing and utilities modernization: payment of 50 % interest rate on loans from regional budgets; cancellation of VAT on the purchase of equipment and construction and installation works; unchanged tariff policy during the implementation of investment projects (up to 10 years);
• before implementing concession relations in the housing and utilities sector it is recommended to conduct an inventory and re-state registration of public utilities before entering into concession agreements;
• creating a competitive environment in the industry by transferring public utilities to private entrepreneurs and conducting contract auctions for housing and utilities services;
• creating tools for insurance of the risk of non-return of direct investment;
• development and approval of a single regional pricing methodology for utility services, preparation of the rules and procedures of interaction of participants of process of tariff setting, as well as methods of verification and control; increase of tariff plans for the long term;
• the statutory audit for investment projects, and concessional agreements;
• the state examination of the effectiveness of investment projects on modernization of housing and communal services;
• preparation and implementation of educational programs in leading construction universities to train professional production and management personnel for work in housing and utilities enterprises (Daulethanova, 2016).

For example, the index calculation is given in table 1.

Table 1. The index of efficiency of implementation of investment programs in the utilities sector entities RK

According to the statistics Committee of the MNE of Kazakhstan, in January-August of this year the total volume of investments in the infrastructure of public services in Kazakhstan amounted to 390.79 billion tenge. Of these, 252.18 billion tenge is invested in the modernization of electricity, gas, steam and air conditioning, and 138.61 billion tenge is invested in the development of the water supply system, sewerage system, control over waste collection and distribution. In total, funds allocated to the housing and utilities system account for 6.1 % of the total investment in fixed assets in all sectors of the economy.

Over the past 15 years much has been said about the need to modernize the country's housing and utilities sector, since the existing regulatory mechanisms, as well as the state of fixed assets, do not meet economic conditions. To solve the accumulated problems in the housing and utilities sector various support measures have been taken and funds have been allocated.

For example, only in the past five years the state has adopted the program “Energy Saving–2020”, “Program of modernization of housing and communal services of the Republic of Kazakhstan for 2011– 2020”, “Program of modernization of housing and communal services of the Republic of Kazakhstan until 2020” and “Program of regional development until 2020”. These programs are aimed at modernizing the entire housing and utilities sector by providing comfortable living conditions for citizens and the functioning of various organizations (Increased funding and local content: how housing construction is developing in Kazakhstan, 2020).

Pavlodar region invested more than other regions in the development of its municipal systems in 2018 — 58.13 billion tenge, including 44.61 billion tenge in electricity, gas, steam and air conditioning, and 13.51 billion tenge in water supply, sewerage system, control over waste collection and distribution. Compared to the same period of the previous year the volume of investments increased by 58.8 %

In the second place in terms of investment in housing and communal services for the first eight months of this year was the city of Almaty with a figure of 35.6 billion tenge. 16.86 billion tenge was invested in the power supply system, gas supply, steam and air conditioning, 18.75 billion tenge in water supply, sewerage system, control over waste collection and distribution. Total investment decreased by 21 % compared to the same period of the previous year. The city authorities recently reported that Almaty is fully ready for the heating season. For these purposes the budget and monopolists allocated a total of more than 60 billion tenge.

Almaty region closes the top five. Since the beginning of the year the volume of investments in housing and utilities in the region has amounted to 30.47 billion tenge. Compared to the same period of the previous year, the indicator decreased by 37.1 %. 21.91 billion tenge was allocated for the modernization of electricity supply, gas supply, steam and air conditioning, and 8.55 billion tenge was allocated for improving water supply, sewerage system, control over waste collection and distribution.

Today the region is actively working on gas supply. Supplying of the Zhetysu region with natural gas is being implemented in stages. According to the regional scheme, 107 localities out of 187 have been gasified in the Almaty agglomeration to date. By the end of 2020, it is planned to increase this figure to 212 localities at the expense of budget funds and attracted private investment. The main event will be the construction of the Zhetygen AGRs and the Baiserke–Zhetygen gas pipeline, which will further supply with gas more than 30 thousand people (Aktanov, 2019).

World practice shows that public-private partnership mechanisms remain an effective management tool in the housing sector. In some countries, such as Sweden, France, and Finland, the state and private business have effectively allocated roles in housing and utilities management. Realizing that private enterprise is more motivated to manage successfully, the state reserves only the function of supervision.

Another successful example of Kazakhstan's PPP in the housing and utilities sector is the introduction of a comprehensive solid waste management system in Almaty. It does not require financial resources from the budget for the construction of a waste sorting plant, but the state provides a guarantee of consumption and allocates plots. The investor company organizes the collection and removal of solid household waste for a fee, compensating for the investment and making a profit. The investor, who signed a long-term contract, has already invested 5.4 billion tenge. In turn, the mayor's office of the largest city in the country provided land and summed up all engineering communications.

Results

In connection with this problem, it seems that along with the work aimed at improving the efficiency of public institutions in general it is necessary to provide for accelerated deadlines at the legislative level for the performance of their duties by state authorities in relation to concession agreements. It is also necessary to increase the level of responsibility of officials for the performance of their functions in full and in accordance with the terms corresponding to the terms of performance of work by concessionaires specified in agreements with them. In fact, this question has something to do with how equal the parties to the concession agreements are. In practice, they are not, and it is necessary to amend the concession legislation in order to equalize the rights of government authorities and private businesses that have agreed to invest in the industry.

It is clear that today there are many problems in the housing and utilities sector that are not solved at once. Water supply and sanitation networks are worn out, and many electric networks remain unattended. To solve these problems new approaches to attracting investment are also being developed. In his messages to the president, Nursultan Nazarbayev has repeatedly stressed that housing and communal services should be transferred to management or to a concession with possible further privatization. The widespread use of this practice will make it possible to actually implement the idea of People first, which is the best practice approved by the UNECE. It also assumes the ability of a businessman to establish a connection with a client and not just listen, but actually hear their consumer (Bednyakov, 2019).

There are three main models for the development of housing and communal services abroad:

• . State ownership and management. This model is used, for example, in the United Arab Emirates, Kuwait, and Turkmenistan. Citizens of these countries do not pay for housing and communal services (or do not pay for a certain amount of these services). In the Middle East this is due to the wealth of the state.
• . The housing and communal services industry is almost entirely privately owned and regulated by market laws, and government intervention is minimized. The most striking example of using such a model is the United States. It should be noted that this practice is accompanied by a strong and independent judicial and legal system.
• . Mixed model. In this model the state can act as a regulator of the most important strategic issues (for example, the maximum tariffs set, as in the UK), and private companies provide services on competitive terms. Users can at any time choose another provider of a service from the many existing on the market. Moreover, the system of providing housing services in London is so flexible that it is possible to simultaneously use several providers to provide the same service at different time intervals of the day (for example, as in the case of electricity transmission).

Table 2. Indicators that characterize investment activity in housing and communal services

Housing and utilities consists of two main interrelated elements:

• the municipal sector consists of systems that provide water supply, gas supply, heat, electricity and water disposal, improvement and maintenance of public facilities and on the territories of localities, as well as special-purpose facilities and territories;
• the housing stock includes multi-apartment residential buildings and individual housing construction and are the main consumers of public services.

The program will ensure the development and adoption of measures to modernize the housing and utilities sector, which will improve its functioning and improve the quality of public services, as well as implement a mechanism to attract investment in the housing and utilities sector (Kondybaeva, 2014).

Taking into account the special importance of providing the population with high-quality drinking water, the Government of the Republic of Kazakhstan decided to develop a special program document. In this regard, this program does not address issues of water supply to localities.

To date, the housing and utilities sector in the Republic is characterized by an inefficient management system of subjects-housing and utilities enterprises and their unsatisfactory financial situation, high operating costs and lack of economic incentives to reduce them.

According to the Agency of the Republic of Kazakhstan for statistics, the total area of the Republic's housing stock was 267.8 million square meters, equating 261.4 million dollars. 97.6 % of housing is privately owned.

Discussions

Based on the analysis of the development of the housing and communal services industry in the Republic of Kazakhstan, as well as based on the opinion of the expert community, it can be argued that the main problematic issues that hinder the increase in investment activity in the housing and communal services sector are related to the imperfection of legislation, primarily concession legislation. In detail, the issues related to the need to improve the legislation on concession agreements are considered in the work of the author (Beketova, 2007). Also, there are many purely sectoral problems in the regulation of the industry, which have been the subject of analysis by many other experts. Such an analysis, for example, is presented by D.Yu. Nifontov in the article “Trends in the development of housing legislation of the Russian Federation” (Nifontov, 2018).

Speaking in general about the problem of attracting private investment in the housing and utilities sector, we can note the following five key problem areas that require immediate solutions at the legislative level:

• the parties to the concession agreements are in an unequal position, which leads to the risk of abuse by government officials;
• insufficient state investment in public utilities, which discourages private investors;
• lack of long-term nature of work with housing and utilities projects: there are no long-term plans for the development of territories, long-term tariffs, tariff modeling;
• the inconsistency of the technical data about an underground network data in public registers;
• procedures for registration of land relations, registration of construction permits and other documentary issues take a long time, which leads to inconsistency of work schedules with the actions of state authorities.

The housing and communal services sector will remain unattractive for large, small and medium-sized businesses. Depreciation of fixed assets, long payback period under strictly regulated tariffs, lack of legal framework for long-term investment and other factors do not encourage the involvement of private capital in the development of activities in this sector of the economy (Kulumbetova, 2007). There are a number of risks in the field of housing and communal services, the reduction of which will increase the investment attractiveness of the industry:

• sectoral risks: the housing and utilities sector is unattractive due to the need for some initial costs and long-term investment in infrastructure projects;
• political risks: with the change of the head of the local executive body, the investment project may be revised and the priorities for the development of public infrastructure may change;
• the local executive body responsible for the level of inflation and the solvency of the local population, as well as the bodies authorized to regulate utility tariffs are forced to agree to increase tariffs;
• financial (currency) risks: long payback period makes borrowers dependent on fluctuations in the national currency and borrowed exchange rates;
• technological risks: due to significant wear and tear of the systems, the used utility systems often stop and have accidents, and in this connection the rates of technological and non-commercial losses are high.

It is impossible to predict the amount of operating costs from such technical factors. Analysis of the state of domestic production of housing and communal services in the domestic market and the data obtained on the basis of foreign trade indicators show that the competitiveness of goods produced in housing and communal services is not high. According to the Customs Control Committee of the Ministry of Finance of the Republic of Kazakhstan the total turnover of goods in 2015 amounted to 280,548.8 million tenge. Including 218 092.8 mln. tenge 62 456 mln. tenge were exported. The main supplier of goods used in the field of housing and communal services is Russia, which imported goods in the amount of 76 878 481.6 thousand tenge, which is 35.2 % of total imports of goods in the field of housing and communal services; China — 31 861 247, 6 thousand tenge, or 14.6 %. At the same time, it should be noted that there is a potential to increase the share of Kazakhstani content in the production of goods, works and services in the field of housing and communal services, in particular; central heating boilers — 2890 units (Kazakhstani content is 68 %); radiators for central heating without electric heating made of ferrous metal — 648 tons (the share of Kazakhstan content is 100 %) (Atamkulov, 2020).

According to the comprehensive plan for the modernization of housing and communal services, as a pilot program in the cities of Ust-Kamenogorsk and Semey complex repairs were carried out, allowing to save up to 30 % of thermal energy with the use of thermal modernization. This project has been successfully implemented. In addition, this year in the country it is planned to repair 1200 multi-apartment residential complexes using this method. All preparatory work on the repair of apartment buildings has now been completed. Regulates capital and current repairs of the common property of condominium facilities.

At the same time, another important task of the comprehensive program is the modernization of heating, energy, gas, water and other infrastructure systems. According to the program, 24.4 thousand km of infrastructure networks will be modernized by 2015. In particular, 1.1 thousand km of heating networks will be involved. 451034 million tenge was allocated for complex measures implemented at the first stage of housing and communal services modernization for 2011–2015 (Bednyakov, 2017).

As it was noted at the meeting, for the first 6 months of this year, the country conducted an energy audit of 415 apartment buildings. As a result of this event, a report on the energy efficiency of apartment buildings was compiled, and the mechanisms for energy saving of residential complexes were determined. In addition, observations were made on the technical condition of heating networks in the cities of Kostanay, Karaganda, Uralsk, Taldykorgan, Taraz, Kyzylorda, Aktobe and Shymkent. As a result, in November 2011 a report will be prepared on the specific definition of the technical and economic condition of the heating networks of eight of these cities and determine its effectiveness.

A new program for the modernization of housing and communal services was developed and adopted in accordance with the task in the Address of the Head of state to the people of Kazakhstan in January 2011 (Mamytbekov, 2005).

The head of state said in his recent address, “In 2008 72 % of communications reached the level requiring repair or replacement. As part of the road map, we have done a lot of work to repair housing and utilities facilities for 2011–2015. Now we have to continue this work. We must carry out a large-scale modernization of water, heat, electricity and gas supply systems, as well as ensure the creation of effective models of housing relations”. Thus, the Head of state instructed the Agency for construction and housing and communal services established in 2011 to develop a program for the modernization of housing and communal services for the period up to 2020. This document was adopted by the government in April this year, consists of three directions.

First, the modernization of heat, electricity and gas supply in accordance with the requirements of the “road map”. Second providing repair of multi-storey buildings. Third, improving the efficiency of the housing and utilities sector.

Chairman of the Agency for construction and housing and communal services Serik Nokin noted that the modernization of state engineering systems will be carried out at the expense of budget funds and the implementation of investment programs of enterprises based on tariff regulation. Modernization of engineering networks that are privately owned is carried out at the expense of tariffs. The construction of new engineering networks that will allow the population to use public services will be carried out at the expense of budget funds. The cost of enterprises formed by tariffs is 71 %, that is, 452 billion dollars. 184 billion tenge was allocated from the budget for the reconstruction of engineering networks. This year it is planned to allocate 18 billion tenge from the local budget.

In addition, according to the Ministry of emergency situations of the Republic of Kazakhstan, there are 414 multi-storey buildings in the Republic, where the project provides equipment for fire protection systems. At the same time, 264 buildings have automatic fire alarms and defects in air injection systems in elevator shafts. In 257 residential buildings smoke removal systems do not work; in 251 residential buildings internal fire water supply does not function.

This situation requires restoration and seismic reinforcement of fire protection systems of multi-storey residential buildings and social facilities (On the approval of the State Program of housing and Communal Development “Nurly Zher” for 2020–2025, 2019).

Since 2012 in the city of Saran (total length of 31.4 km and a boiler capacity of 100 GCal) the construction of heating networks is underway, which, in turn, allowed to eliminate 21 local boiler houses. Completion in 2015.

To reduce wear of heat networks in conjunction with the Ministry of national economy of the Republic of Kazakhstan discussed the project of raising funds from the Asian development Bank for reconstruction of thermal networks in the Soviet operation of the city, which will serve as the basis for a significant improvement in their condition and quality of heat supply. Implementation of the state loan of $200.0 million, the loan term is 25 years, depreciation will be reduced by 27 %.

According to the order of the head of state, work is underway in the region to install common-house heat metering devices. For the period from 2012 to 2018 in the region with the need for 4,448 houses, 3,623 multi-storey residential buildings are equipped with heat metering devices (81.5 %), including 160 devices, or 3.6 % in 2012; 1,456 devices, or 32.7 % in 2018; 3,623 devices, or 81.5 % in 2019.

In addition, the tariff for heat supply services for consumers with or without heat meters is at the stage of approval in ERTOS. In this regard, we ask the population that the invoice for services is not provided based on the readings of metering devices.

In 2017–2019 the companies implemented a number of investment measures through the construction of new substations, their equipment, reconstruction and modernization of electric networks. In 2019 the construction of the 1st stage of the 220/110 kV Zharyk station was completed, which will help to build confidence in the region's electricity supply and increase the capacity of power distribution networks.

In addition, in the period from 2018 to 2019 “Karagandy Zharyk” LLP reconstructed the 110 kV air line “New City-plumbing” 18 km in length.

According to the investment program over the period 2017–2019 the volume of investments amounted to more than 3 billion US dollars. Reconstruction and technical equipment of 10–6-0.4 kV electric networks for the total amount of 10–6-0. 4 kV was performed.

JSC “Zhezkazgan REC” carried out major repairs of 1367.3 km of air lines and 22 stations, in 2014 5 220 kV stations were repaired (“Barsengir”, “Karazhalskaya”, “Zhayrem”, “Stroitelnaya”, “Mointy”) and 3 110 kV stations (“Tsentralnaya”, PS “No. 5”, PS “No. 1”).

In addition, in 2013–2014, JSC “REC” replaced 117 reference power lines in Balkhash, Zhanaarkinsky, Ulytau and Shet districts.

LLP “Karaganda REC” in 2012–2014 made for migrating networks “Chernihivka-Novokurovka”, and the refurbishment and reconstruction of stations “Barchino”, “Taldysay”, “Shubarkol” Nurskaya district, the replacement of transformer in the village of Youth, the reconstruction of 0.4 kV overhead line in Karkaraly district.

Despite a lot of work on repairing and replacing networks, 60 % remain old. In the cities of Karaganda, Zhezkazgan, Priozersk and in the village of Saryagash of the Aktogay district, water treatment is carried out from open sources, through water treatment facilities. Water supply to other cities and rural localities is provided from underground sources. In the region water treatment facilities are located in the cities of Karaganda, Zhezkazgan, Priozersk and in the village of Saryagash, Aktogay district. Cleaning devices are outdated. In this regard, it is necessary to conduct secondary water treatment.

There are 18 operating organizations and enterprises in the region, two of which are the main water utility of “Karaganda Su” LLP and “Heat Supply Enterprise” JSC in Zhezkazgan. In 2018, three-year investment programs and marginal tariffs from 2017 to 2019 were approved as a natural monopoly entity. In addition, three-year investment programs and marginal tariffs of KGP “Balkhash Su”, KGP “UZHKR”, KGP “Taza Su” were approved at 3 state-owned utilities. In order to reduce water prices to the population in 2018, water supply enterprises of the Karaganda region (branch of RSE “Kazvodkhoz”) named after Satbayev, KGP “Taza Su” of Zhanaarkinsky district, KGP “Karatal of nurinsky district”) receive subsidies for water supply services from the state budget.

Only in the Karkaraly district there is no centralized organization that provides water supply and sanitation services.

The total length of water supply networks as of 01.01.2015 is 7,070. 8 km (in the city — 5,442. 6 km, in the village — 1,628. 3 km), including:

• 6,728. 3 km in 2017 (remaining — 5,453. 2 km, in the village — 1,275. 1 km);
• 6,616. 8 km in 2018 (in the city — 5,279. 4 km, in the village — 1,337. 4 km);
• 6,787 km in 2019 (in the city — 5,357. 8 km, in the village — 1,429. 2 km).

The length of the water pipeline has increased by 59 km over the past three years. Due to the increase in water consumption by the population, water distribution increased by 24 %.

In the management of common property that corresponds to a low level of legal awareness and culture of the population in relation to condominium objects, it is impossible to solve the problem in the residential sector without solving the passive problem of apartment owners. Civil liability provided for by current legislation for non-performance or improper performance of their duties by persons who manage condominium facilities, as well as for non-performance or improper performance by individual owners of premises (apartments) of obligations to maintain and operate the common property of a residential building, does not effectively solve the problems of maintenance and repair of apartment buildings (Report on the development of small and medium-sized enterprises of the Republic of Kazakhstan in 2019 by region, 2020).

The positive experience of former socialist countries shows that it is possible to bring the relationship between the subjects of the public sector and consumers of public services to a situation, in which the state practically does not participate in the management of housing and utilities and the service market will be competitive and self-regulated.

Despite the fact that the types of housing and communal services are developing at a good pace, in 2014 they are still low to ensure the sufficiency of public infrastructure and an appropriate level of satisfaction:

• the level of access to the centralized water supply system in cities is 83.9 %, in rural areas — 53.2 %;
• in the total area of urban housing stock, the share of those provided with hot water is 63 % (56 % on average in the Republic), central heating — 76.9 % (62 % on average in the Republic), sewerage system — 91.7 % (80 % on average in the Republic), gas — 64.4 % (88 % on average in the Republic).
• of the total area of the rural housing stock of 87.7 % accounted for water (average in the Republic 94 %), 37,9 % — sewer system (the country's average of 24 %) and 7.3 % for district heating (average in the Republic 4 %), 87,8 % on gas (average in the Republic 88 %), 4,4 % — on hot water (the country's average of 2 %).

The potential of housing and communal services is supported by the state program “Development of regions until 2020”, which aims to provide solutions to housing construction problems to increase housing affordability for the population.

Currently, the heat and power complex of the Karaganda region is one of the largest in Kazakhstan. It consists of 9 power stations and 3 large power grid companies (Karimova, 2018).

In 2012–13173 million us dollars kW.10 % more than in 2011, 16264 million us dollars kW were produced. In 2013 — $13,992 million kW. 6.2 % more than in 2012, $15,504 million kW.t. were produced, which is 4.7 % less than in 2012. In 2014–13741 million US dollars kW including 2 % less than in 2013, 15435 million US dollars. kW.C. consumed 1 % less than in 2013.

These two types of markets will depend on different variables, complementing each other. Based on the doctrine of the formation of the housing stock of the stock market and the housing services market of the housing sector, the author defines the structural system of the domestic housing market:

1. ensuring the normative content of the housing stock;
2. conducting an energy survey of housing and social facilities to develop standard recommendations for energy conservation and drawing up regional plans for social facilities and thermal modernization of residential buildings;
3. development of schemes for financing returnable budget funds and co-financing of apartment owners and placement of projects for thermal modernization and improvement of condominium facilities;
4. to attract apartment owners in the process of thermal modernization of condominium facilities, it is necessary to carry out activities to promote party associations and public associations, energy conservation among the population with the involvement of the potential and funds of NGOs in this activity;
5. development of a mechanism for the creation and functioning of ESCO for the implementation of the project on thermal modernization and creation of energy-efficient equipment for residential buildings, as well as for the implementation of measures to create automated systems for regulating heat consumption in residential buildings and social facilities;
6. it is necessary to implement a pilot project for thermal modernization of condominium facilities.

Conclusions

The analysis of the problematic issues in the sphere of housing in this paper suggests that to attract private investment into the sector in the wider scope conducted is necessary to solve many existing regulation of the industry first. Constant chaotic changes in legislation in the past have led to a huge set of regulations that do not reflect the needs of investors and may contradict each other. This includes both industry-specific legislation and general rules of law applicable to concession agreements. It is necessary to consider this problem as a potential but poorly realized opportunity for investors who are ready to make investments, provided that a reliable transparent regulatory system is built — as is the case in developed countries, whose experience can be borrowed in order to effectively develop the housing and utilities sector. We hope that the rich expert experience accumulated over the years of reforming the housing and utilities sector will be positively perceived by legislators, as well as by executive bodies of state power, and they will pay attention to the most problematic issues for their early resolution, including those outlined in this article.

It was found that the housing market is influenced by such factors as the market price of housing, the cost of construction, the price of materials, prices for transport services, electricity tariffs, the pace of technological changes in the sectors of financial and tax policy, the provision of various benefits, control over the use of land, the amount of rent, building regulations, legal rules and regulations.

Demand for housing is formed under the influence of economic, social, political, demographic, natural and climatic factors at the stages of development of the zhanui life cycle. To individual consumer requests for housing are:

• financial capabilities of the consumer;
• population;
• cost of housing and expenses for its maintenance in normal condition;
• personal preferences of the person, the cost of other goods and services;
• the actual amount of bank interest;
• it is proved that the influence on the location of the publishing house and the presence of social infrastructure on the territory.

Analysis of foreign practices in the organization and regulation of the housing sector has shown that the housing market can solve the problem of housing in society in a harmonious organization of 3 types of market, such as individual housing, commercial or social rental housing, housing and public, i.e. municipal, houses.

Housing construction is one of the priority directions of the development strategy of Kazakhstan till 2050, which is one of the most important tasks of a national nature. In recent years, Kazakhstan has seen a large growth rate of housing construction. This is the most important indicator of the development of the standard of living of the country's population. Now one urgent task is to speed up the solution of housing problems. The government and akims of all levels should take responsibility and show the people of Kazakhstan what will come from the funds. Housing construction is a powerful force that moves our economy forward.

The main quality indicator of housing is the level of improvement that meets the modern requirements of consumers. Currently, new houses will be built with water sewerage, heating and hot water. Over the past 2 years, 7.6 % of commissioned residential buildings have been provided with modern heating equipment. The average size of apartments increases to improve the living conditions of the rural population.

In the period from 2011 to 2014, the housing stock of the Republic of Kazakhstan amounted to 11.7 million US dollars. The state ceased to be the main participant in housing construction, the total share of housing construction for the analyzed period was 2.2 million US dollars, a 22 % decrease in growth rates.

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