largest part of the apartment sector. Large public utility companies, typically owned by municipalities, still provide most of maintenance services as local monopolies, including condominium buildings, in cases where some apartments are still owned as municipal rentals. Municipal building maintenance services are under-priced and frequently crosssubsidized through asset sales and commercial renting.<sup>35</sup> Not surprisingly, the level of buildings and ground maintenance in M-F apartment stock has been highly insufficient, resulting in staggering physical deterioration and economic decapitalization.

Skyner (2004) has characterized the Russian stock of apartment buildings with unclear ownership of common areas and land as _de jure_ public. Legal analysis in different countries may lead to different conclusions. However, considering the amount of legal ambiguity in combination with the scale of public under-maintenance and other _de facto_ ownership tasks still performed by the public service providers, one may assume that a large shadow public rental sector still exists in the ECA region.

_Rental Housing Quality._ Is the rental sector marginalized in terms of the quality of housing services provided? There are two central aspects to this question: the concentration of rental housing in the urban apartment sector, and within that sector the selection effects that have led to a specific quality distribution between rented and individually owned (privatized) units.

Concerning the first aspect, the conventional wisdom in the transition countries is that urban apartments, which make up the vast majority of rental units constructed mostly after World War II, are better equipped with amenities than the traditional detached houses of smaller towns and villages. However, the rental sector is caught in the continuing common-area management problems mentioned above that characterize almost the entire apartment stock, which renders the provision of sufficient funds for maintenance and capital repairs difficult. Some of the postwar urban stock in the region also suffers from well-publicized structural defects and mismatch of unit size, layouts, amenities, and locations with today’s demand patterns, which make their longterm sustainability questionable even with proper technical management/maintenance and sufficient ability to pay on the part of occupiers.

The level of apartment stock deficiencies in the studied countries appears profound, in terms of structural defects, deferred maintenance, or dwelling-household mismatches. The findings of recent country analyses are alarming: the Armenian urban apartment stock has been described as progressively deteriorating; many units are physically dilapidated.<sup>36</sup> More than a third of Polish apartments are considered structurally defective, of which half are considered ripe for demolition.<sup>37</sup> The UN-ECE (2001) report estimates that 80 percent of the Romanian apartment building stock will not survive the coming 20 years, because of structural defects and the results of deferred maintenance. Similarly, UN-ECE (2004b) estimates that 20 percent of Russian housing stock, most of it in the M-F buildings, needs urgent capital repairs or rehabilitation

> 35  For in-depth description of this growing problem see, for example, Ellis (2003).

> 36  See Desilets and Vanoyan (2003).

> 37  See Dübel (2004), based on estimates by HypoVereinsbank Polska.

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