2025-04-28
Auditor General: Budgetary institutions are not motivated to reduce the size of the real property they use and the costs of its maintenance
- The State enterprise Turto bankas centrally manages 0.96 million m2 of state-owned real property, 39% of which is in poor condition. The SE Turto bankas plans to spend EUR 591.7 million on its renovation between 2025 and 2034.
- Real property would be managed more efficiently if public bodies and institutions were motivated to optimise the space they use and the costs of its maintenance
- Increasing revenues from the commercial leasing or sale of vacant state-owned real property could help to speed up the improvement of the condition of centrally managed real property.
State-owned real property managed by the SE Turto bankas can be managed more efficiently and generate more income to be used for the renovation of real property, as shown by the results of the National Audit Office‘s audit "Activities of the SE Turto bankas in the Provision of Services for the Management and Maintenance of State Real Property".
In 2024, SE Turto bankas managed 955.3 thousand m2 of state-owned real property. The majority (76.8% or 733.7 thousand m2) of this property is administrative real estate. To reduce management and maintenance costs, the SE Turto bankas is set an objective to optimise the assets it manages, ensuring that they are sufficient to perform the State's functions. The SE Turto bankas has reduced the space of administrative real property by 12.1% by the end of 2024 and aims to further reduce the space of this real property to 475.6 thousand m2 by 2034 (i.e. a 35% reduction compared to 2024).
"Although the reduction targets for the real property space planned by the SE Turto bankas have been achieved and exceeded, some budgetary institutions using the premises managed by the SE Turto bankas still have room to optimise the space they occupy," says Mindaugas Macijauskas, Auditor General.
The aim, he said, is to limit the space of administrative properties to 10 m2 per employee. However, in 2024, 63% of these properties exceeded this standard. "The audit found cases of 20 or 30 m2 per employee. With the prevalence of the hybrid working model, there is potential to optimise the space occupied by state institutions, but there is a lack of awareness and willingness on the part of the organisations and a lack of motivation on the part of the State," stresses the Auditor General.
Currently, 39% of centrally managed state-owned real property is in poor condition. With a target of no more than 15% of these assets being in this condition, the SE Turto bankas plans to spend EUR 591.7 million on asset renovation projects between 2025 and 2034. It is estimated that ensuring that 85% of assets under management are in good condition reduce maintenance costs by around EUR 7.3 million annually. The National Audit Office stresses that achieving these ambitious targets requires the renovation of a large part of the existing real properties and the development of new ones.
Optimising centrally managed state real property not only aims to reduce the costs of managing, maintaining and sustaining the assets, but also to generate additional revenue, stimulate investment in asset renovation and improve the efficiency of the public sector. One of the main ways of generating additional income for this state enterprise is through commercial leasing. The company declares that it aims to increase its income from commercial lease, but there is still no strategy in place for leasing out the assets and the income from this segment is decreasing: the sale of a part of the real property suitable for leasing in the period 2021-2023 has resulted in a decrease of 5 % in the profit from commercial leasing (from EUR 835.85 thousand to EUR 375.9 thousand).
The recommendations of the National Audit Office stress that, in order to ensure efficient management of centrally managed state-owned administrative property, state institutions should be encouraged to reduce the space of immovable property in use, and the SE Turto bankas should prioritise the projects generating the highest return on investment and implement them in a timely manner and within the planned budget.