National Audit Office of the Republic of Lithuania

Press Release


17/11/2020

National Audit Office of Lithuania: more efficient real estate management in municipalities would maximise public benefits

Real estate (RE) in Lithuanian municipalities is not always managed efficiently in a targeted and complex manner, therefore, the maximum benefit to the public is not ensured, which is demonstrated by the report prepared by the National Audit Office of Lithuania (NAOL) which presents the summarised results of audits of the management of RE owned by municipalities carried out by municipal control and audit services.

The NAOL together with municipal control and audit services (MCASs) conducted a joint audit of the RE held by municipalities (https://www.vkontrole.lt/pranesimas_spaudai_en.aspx?id=25135). The project was joined and carried out by 55 (out of 60) MCASs. The NAOL summarised the results of the audits conducted by MCASs and prepared a report, the purpose of which is to provide a summarised information on how much and what type of RE is owned by municipalities and how effectively it is managed. The summary report on the  audit results is based on 48 (out of 55) performance audit reports carried out by MCASs, that were published and submitted to the NAOL by 13October 2020.

“We are grateful to municipal control and audit services, which have significantly contributed to this joint project. The MCASs not only assessed the RE status in municipalities and thus contributed to the changes and concrete results in each of them, but at the same time it enabled us to find common areas of real estate management requiring changes, provide a general overview and identify general directions of improvement that will help to achieve a more efficient and better quality management of municipal real estate,” says Auditor General Mindaugas Macijauskas.

During 2017– 1st half of 2019, 55 municipalities owned 46.1 thous. RE objects (buildings, premises, and their parts) with an area of 12.1 million sq. m and a book value of EUR 2.2 billion.

According to the data of this report, the audits identified shortcomings in the management of municipal RE.  For example, municipalities do not have precise data on the extent of real estate they have transferred in trust; beneficiaries of the municipal RE use the estate, although the loan agreements have expired while the tenants were in debt of almost EUR 1 million. The shortcomings identified indicate the lack of efficient RE management decisions in municipalities.

“This joint audit revealed differences in the management of RE in some municipalities: some of them (Vilnius, Vilnius District, Klaipėda City Municipality) have a RE management strategy and the audit did not identify significant real estate management shortcomings, while others do not have a RE management system and do not have detailed information about the estate held and its management.  Each municipality should remedy the shortcomings indicated in the reports of the RE management audit carried out by municipal controllers and implement the recommendations made by them, while seeking efficient real estate management, to take advantage of best practice revealed in the audit results summarised by the NAOL auditors,” says the President of the Association of Municipal Controllers Gintaras Radavičius.

58% of municipality-owned RE consists of residential premises and buildings attributed to the municipal housing and social housing fund and rented to socially vulnerable persons (families) and other persons residing in the municipality who are entitled to municipal housing support. The need for social housing in municipalities remains high – the number of persons (families) waiting for it decreased only by 1.8% during the audit period (in 2017, 9.9 thous. persons (families) were waiting for social housing, and in 1st half of 2019 – 9.7 thous.).  Housing problems can be solved by increasing the efficiency of management of the municipal housing fund – it has been found that municipalities do not always have accurate and factual information on the number and type of residential housing they hold. Insufficient control of the use of rented social housing and the fulfilment of contractual obligations entails the risk of inappropriate use of municipal and social housing.

There were also cases where municipalities did not have precise information on the RE held by them, had no decisions taken on what to do with the unused real estate, or there were delays in making decisions regarding the RE without an owner, and the state-owned land parcels used for the exploitation of the real estate were not formed. Such cases determine that the management of RE in municipalities does not always ensure the maximum benefit for the society. 

The prepared report is systematised information for the public and various decision-making institutions on the RE owned by municipalities. The analytical data summarised in the report create conditions for municipalities and the Association of Lithuanian Municipalities to familiarise with the general real estate management situation in municipalities. This can lead to the application of best practices of real estate management and sound real estate management decisions.

 

National Audit Office of the Republic of Lithuania
Pamėnkalnio str. 27, LT-01113 Vilnius
www.vkontrole.lt