Tuesday, 22 November 2005
Dáil Eireann Debate
—to issue guidelines to planning authorities specifying the limited circumstances (mainly apartment developments) where management companies may be permitted, and in respect of those permissions, to set down those services including where possible, all roads, public open spaces, public lighting and water and sewage services which should be completed to ‘taking in charge’ standards, and which should be taken in charge by the local authority;
—re-inforce section 180 of the Planning and Development Act 2000, to the effect that a development which is or has been the subject of a ‘management company’ condition, may be taken in charge by a local authority where a majority of the qualified electors who own or occupy the houses in question, so consent; and
Domestic rates are back. They were supposed to have been abolished after the 1977 general election but they are now, in reality, back with us again, not as they were but in a new form as management charges for housing estates and apartment blocks. They are no longer paid to local authorities but to private management companies. They are being paid for the same public services which used to be provided by local authorities. These include public lighting, management of open spaces, provision and maintenance of roads and, in some cases, the provision and maintenance of water and sewage services. They are paid in the main by first-time home buyers in new housing estates and new apartment developments. They are an additional financial burden on families already overstretched with mortgage repayments and child care costs. Some pay €500 per annum, some pay €1,000 per annum and some pay more. The amount is not controlled or regulated and it can be charged indefinitely. Management charges are a new stealth tax imposed on vulnerable house buyers, paid to private management companies for services which should be provided publicly.
Mr. Gilmore: The Labour Party motion is intended to solve the growing problem of management charges and management companies in private housing developments. The motion calls on the Minister for the Environment, Heritage and Local Government to take three forms of action to address the management company problem, namely to stop new management companies from being formed and new management charges from being levied, to regulate management companies and charges where they currently exist and to legislate for the winding-up of management companies and the ending of management charges and to have housing developments taken in charge and maintained by local authorities.
Mr. Gilmore: The idea of management companies ordering and maintaining residential developments and charging for these services is not new. In the past, however, it was a practice mainly associated with private apartment developments and with some small expensive and exclusive housing developments mainly in what were known as the gated communities.
Normal housing estates, however, did not have management companies or charges. These estates were usually designed, constructed and completed to a standard which the local authority required for taking in charge. In the planning permission the local authority set the road widths and standards, the amount of open space, the quality and location of public lighting etc. and the developer was obliged to complete the development to that standard. As we know, some developers failed in their obligation to complete satisfactorily housing estates. This problem has already been addressed by a Labour Party Private Members’ Bill, which passed Second Stage in this House last spring and for which I am still awaiting a date for the Committee Stage in the select committee. I take this opportunity to ask the Minister to facilitate the taking of that Committee Stage which, apart from dealing with the issue of unfinished housing estates, might also provide an opportunity to legislate for the management company problem which this motion addresses.
In the case of apartment developments, matters were usually a bit more complicated. Common areas within apartment buildings, parking areas, whether within the building or within its curtilage, public lighting, small open spaces and the planting around apartment buildings often did not lend themselves to being taken in charge by a local authority. The solution which was arrived at was that the developer would establish a management company, in many cases comprised of the owners of the apartments, and it would have the responsibility for the care, maintenance and management of the common areas. The apartment owners would pay an annual charge to the management company for these services. In the main, this practice was confined to apartment developments only. It did not apply to housing developments, except in the small exclusive, usually very expensive, private housing developments, where the house owners were opting for the privacy and exclusivity which the management company and management charges gave them. In both cases, the purchasers of both the apartments and houses in these small developments were paying for privacy and exclusivity.
In recent years, however, the practice has grown and widened. First, apartments now constitute a much bigger proportion of residential development. Apartments are increasingly becoming the typical first home for many first-time buyers, except in the big urban areas. Therefore, the use of management companies and the imposition of management charges is no longer an option being voluntarily exercised by the purchasers of these dwellings, but it is being imposed on them by the developer and, in some cases, by the conditions set by the planning authority. Second, many residential developments are now mixed, containing a variety of dwellings from apartments in multi-dwelling blocks, duplexes, maisonettes, town-houses in courtyard settings to the standard semi-detached and detached dwellings.
In these mixed housing schemes, common areas and services, including roads, open spaces, planting, parking and public lighting do not fit easily into the model which local authorities set for taking in charge purposes. I want to give an example of this type of development which I received today. It refers to a development on the western side of this city. It reads that the development comprises of a mix of houses, duplex units and apartments. The total number of dwellings on the estate is 320. The management company is a guaranteed company, without a share capital, which was incorporated in 2003. Each owner of a unit in the estate has a €1 share in the management company. However, the developer and his associate remain directors until the estate is completed and until the last unit is sold. Once the last unit is sold, new directors can then be elected to the management company. If the owners are in agreement, new management agents can be appointment to oversee the day-to-day running of the company. I will return to the issue of selling the last unit.
Some developers have concluded that they can finish housing estates to a different and often lower standard than that required by local authorities if they opt out of the taking in charge process. They can do so by setting up a management company for the housing estate which will either directly charge for the services or appoint an agent for the carrying out of these services which will charge for them. These services should normally be provided through local authorities. It benefits developers in a couple of ways. First, the developer saves on development costs by not having to comply with the standards usually set by local authorities for road widths, amount of open space and so on. It can be a nice little earner for the developers because some operate the condition that they will transfer the directorships of these companies once the last unit is sold. If, however, they retain a single unit in the development, they retain effective control of the management company and in addition to having charged the house buyer whatever enormous amount they charged for the dwelling, they can then continue to charge for management services on an unregulated basis for as long as they want.
Some local authorities now find it convenient to not only facilitate developers to opt out of taking in charge but encourage them to do so and in some cases make it a condition of the planning permission. The unfortunate house buyer is now faced with a pincer movement between the developer seeking to maximise gain on one hand and a local authority that already feels it has too many kilometres of road and acres of open space to manage and that wants to get rid of further responsibility in that regard by letting the developer establish a management company. That saves the local authority from incurring costs in maintaining and developing these services.
The result is a recent major growth in the amount of housing and the number of privately maintained and managed housing estates for which the householder is paying a charge. There are a number of problems with all this. The house buyer, having paid a high price for a home, has to indefinitely pay a private management company for services which should be delivered through a public authority. In many cases — I know this from experience in my constituency — where management companies have been used for apartments and supposedly exclusive developments, management companies collapse, leaving nobody in charge of maintaining and managing common areas in apartments and housing developments. This can give rise to problems of neglect, dereliction and difficulties with insurance and liability.
As a result of developments not conforming to the taking in charge standard, issues of renewal and repair arise early and more frequently. The fancy cobblelock that has been set down instead of normal road surfacing becomes uneven and broken, a water pipe crushes, the fussy planted feature becomes overgrown and the ground level public lighting needs to be rewired and upgraded. The cost of all this work falls on the management company and ultimately back on the householder. The new house buyers who find themselves faced with a management charge will also find themselves faced with the capital cost of renewing water, sewerage and roads — services which are being provided in some cases to a standard below that which the local authority allows. In the course of time, purchasers of homes in privately managed estates will find that they are liable not only for the annual charge for the routine maintenance of these services, but also for the capital costs of repairing and renewing them.
When the householder wishes to sell the house or apartment, there will often be complications with conveyancing. Solicitors inform me that there are many difficulties facing those in privately managed estates when they try to sell their property.
Local authorities are reluctant to take in charge housing developments which had been the subject of management companies because they have not been built to the taking in charge standard, the maintenance of services may have been indifferent over the years and these are additional costs associated with the development. The original developer has benefited financially by building a housing scheme to a standard below that required by the local authority and the local authority will be unwilling, understandably, to pick up the cost ten or 15 years later. The growing use of management companies in housing development is costing householders today, storing up future costs and conveyancing difficulties in the future and creating a future headache and cost for local authorities that at some point will have to step in to clear up the mess.
The whole issue requires urgent attention. At the last general election the Labour Party committed itself to legislating in this area if we were returned to Government. We were not and the problem has continued to grow. Our motion tonight, however, calls on the Minister to take three lines of action. He can immediately stop future housing schemes being developed to below taking in charge standards, stop the setting up of management companies——
Mr. Gilmore: ——stop management charges being levied and require all new housing development to be built to the standard required by local authorities for taking in charge. He can do this by issuing a policy directive under section 29 of the Planning and Development Act 2000. Planning authorities are required to comply with a policy direction given by the Minister under section 29.
Further, recognising that in apartment developments there may still be a need for some private management, he can make planning guidelines under section 28 of the Planning Act. These guidelines could, for example, in the case of apartment or mixed development, distinguish between the internal areas, such as stairwells, where private management arrangements may be needed, and the roads leading to an apartment building where normal taking in charge standards could apply.
Mr. Gilmore: In the case of car parking, for example, it could distinguish between car parking provided within the building where private management would be appropriate and kerbside car parking which should be subject to public management. In short, the guidelines would clarify those services which are and should be public and those which are appropriate for private arrangement.
There is a need for new legislation in this area and the Labour motion calls on the Minister to prepare a Bill to address a number of aspects of this problem: to regulate management companies where they are established and to control the levels of management charge; to protect the consumer, or the house buyer; to strengthen the existing provisions of section 180 of the planning Act; and to allow for the taking in charge by a local authority of a development which is already subject to a management company.
There has been a casualty in the course of the afternoon so I have some latitude in my time. It was intended that I would share with Deputies Stagg and Broughan. I was also to share with Deputy Lynch but, due to circumstances beyond her control, she cannot be with us.
It could be argued that section 180, even as it stands, could be used by the householders in apartments or houses to hold a plebiscite to vote to have the estate taken in charge even if it is subject to a management company. Lest there be any doubt about that, however, the Minister should legislate to strengthen section 180 and to clarify what happens in circumstances where taking in charge has taken place. No one wants circumstances where the cute developer sets up a private management company and the residents vote to opt into the local authority and the public purse must foot the bill for the gains the developer made. There will be a need to provide for what happens when taking in charge takes place. The legislation needs to address how, and in what circumstances, existing management companies can be wound up. I ask the Minister to accept the Labour Party motion. Both he and the Taoiseach are on the record that they do not like the growth of management companies and the imposition of management charges. The Labour Party’s proposal provides the Minister with a means of dealing with the issue effectively. He can stop the rot by regulating the existing companies and legislating to wind them up and for the ultimate taking in charge of housing developments which are subject to them.
Mr. Stagg: I thank our spokesperson, Deputy Gilmore, for raising this important matter. I also acknowledge the points consistently raised by my constituency colleague, Deputy Catherine Murphy, and Deputy Joe Higgins of the Socialist Party on this matter in the House.
The Labour Party tabled the motion in response to widespread concern that management companies, which were intended to deal with the common areas of apartment blocks, are being applied to newly completed or not fully completed housing estates. The Labour Party believes that section 34(4) of the Planning and Development Act 2000 is being misused and abused by county managers to force new owners to sign up to management companies which bring them no benefits and they must pay through the nose for the privilege.
Mr. Stagg: For example, two housing estates in Celbridge, County Kildare, are divided by a public road. One estate has a residents’ association to which the annual voluntary contribution is €100. That estate is maintained by the residents to a high standard and they use contractors to cut grass and do other work for them. The other estate is maintained by a management company and the annual charge is €1,000 but the estate’s management is not as good as the other estate. However, this estate comprises 400 houses which yield €400,000 per annum to the management company. The only work done by the management company is the cutting of grass in the green areas. One would cut a great deal of grass for €400,000 per annum. The company is controlled entirely by the developer and I wonder what happens to the balance of the money when he has cut the grass.
Mr. Stagg: I presume he uses it to carry out his duties as a developer to finish the estate which is not up to the standard for taking in charge. However, it will not be taken in charge at all if the county manager has his way.
County managers, a special and powerful group of unaccountable officials, have seen and grasped an opportunity by using and imposing management companies on householders to privatise the provision and maintenance of public services that were traditionally the responsibility of local authorities. These include roads, footpaths, lighting, landscaping, green areas and water and sewerage schemes. The Minister, in reply to a parliamentary question tabled by my constituency colleague, stated green areas were not necessarily included. However, they traditionally have been and, while residents’ associations help to maintain them, they are the responsibly of the local authority if the estate is taken in charge.
Mr. Stagg: The planning conditions imposed by county managers in this regard are not for a limited period. They are intended to be a permanent feature, thereby, transferring responsibility from the council to the individual householder.
The man who signed his name to that planning condition had no intention of ever taking that estate in charge. We are asking the Minister to call a halt to the managers’ gallop and to have them reverse the decisions taken, thereby preventing a recurrence.
Collectively and individually, county managers represent a significant democratic deficit in our decision-making process. Large tranches of power previously in the remit of elected representatives have been transferred to them and they exercise that power with impunity, ignoring the elected representatives of the public. It is time to put a stop to their gallop, remove them from their highly paid ivory towers and give back to the people, through those they elect, the power that is rightly theirs. The Minister has first-hand experience of the issue I have raised. I call on him to act on this while he has the opportunity. He is aware, on the basis of what is happening in his constituency, of the need for change and I assure him he will have our strong support for action to replace county managers with democratically elected chairmen or mayors with the same powers managers exercise. However, I digress from the main issue.
Mr. Stagg: My county council, on foot of a motion tabled by its chairman, Councillor John McGinley, has set up a working party to report on this matter to the Minister. There is no need for a working party or another report. The council will probably hire consultants to do this work because, even though it employs 67 full-time engineers, they could not fill a pothole without a consultant’s report. When I was a member of the local authority, I asked whether the consultants were more qualified than our engineers. The county engineer replied that we had the best qualified engineers in the world. I asked, if that was the case, why they did not do the work of the consultants. The county engineer replied that I did not understand how the system worked. He said a group of our engineers monitor the consultants while another group interprets their reports. I then went outside to check whether I was in a lunatic asylum or a county council office.
This issue is clear. County managers are misusing a section of the planning Act to impose — wrongly and without a legal basis — management companies on householders, thereby hiving off their responsibilities for services to individual householders and privatising public services by the back door. We want the Minister to put a stop to this practice forthwith and to put in place a procedure for the winding up of the companies, including the removal from the deeds of the individual householders of the lien on their properties imposed by the manager’s planning condition. Legislation is required to regulate management companies and to control their charges in apartment blocks where they may be required. I would prefer if co-operative management could be considered in apartment blocks rather than the imposition of management companies.
Developers are required to give 20% of the houses they build to the local authority for sale or rent to people on the affordable housing lists. Not many have been handed over to Kildare County Council but of those, a significant number has been handed over on estates run by management companies. In fact, much of what we have been offered by the private sector for social housing are more or less shoe boxes designed for singles in yuppie-land. They are entirely unsuitable for the needs of a family and are being offered because it seems they are the cheapest. I am not sure how they measure up. I have been in some and one would hardly get a pram down the corridors in the living quarters.
The people who move in are required to pay a management charge and become shareholders. There is no regulation in this area. I want the Minister to examine if the county council will be the shareholder in such a case and will pay the management charge or whether the individual, probably on social welfare payments, will be required to pay the charge or be thrown out by his or her fellows in the private part of the building. That might be possible too.
The final point made by my colleague in introducing this subject was that domestic rates are back. I am prepared to give the Minister the benefit of the doubt, but that might disappear very quickly when the Minister responds to this motion, which we hope he might accept, given his previous comments. We will know by the Minister’s response whether domestic rates are back.
Mr. Broughan: I am delighted to support the motion brought forward by the Labour Party’s spokesperson on the environment, Deputy Gilmore. Many young people in particular throughout the country are delighted that at long last this issue has reached the political arena in the form of a motion before this House, which the Minister could support. What is happening is a grotesque attempt at privatisation by the back door of all local authority services. I did not believe the Taoiseach when he said when Deputies Burton and Michael D. Higgins raised the matter that he did not understand this, did not know about it and that it had never been brought to his attention. He went on to lecture us that the legislation which is clearly necessary and which is demanded in this motion could not be retrospective and asserted that nothing could be done about the anguish and suffering which young people undergo in new estates in many urban and rural areas.
I have spoken to one or two of the new householders inhabiting the massive new city being built across my constituency, Dublin North-East, the constituency of Dublin North-West and just south of the constituency of Dublin North. There are perhaps 40,000 to 50,000 housing units in place and the first few hundred families have moved into this brave new world of very high density with a total lack of public services and no proper planning organisation. For example, it seems it is only in recent months local authorities discovered there is no national system of education in this country and that it was not possible to provide hospitals or schools or provide even outline planning for them down the line in this vast new district.
Young people who finally managed to put together the €250,000, €300,000 or €410,000 in this new development are being hit by management companies with a minimum extra of €650 as an estate management charge. This is part of the chaotic and disgraceful housing market for which the Minister for the Environment, Heritage and Local Government and his predecessors have been fully responsible. They have been a failure in this area. In the dying days of this Government its representatives have talked about regulating the auctioneering profession. They had eight and a half years to do so, to stop gazumping and the suffering people must undergo when trying to get a roof over their heads. They had eight and a half years to deal with the grotesque, unbelievable and outrageous profits of more than €150,000 to €200,000 per housing unit being made by developers. They did nothing about it. Why would they since those developers own the Minister’s party lock, stock and barrel and they own the Minister? Why would its representatives stand up to them? This disgusting system of privatising basic services and charging people on the double is the final straw to break the camel’s back.
Mr. Broughan: The ideological bent of the Taoiseach and the Government over the past nine years has been precisely to produce the kind of housing market and system which we have with 200,000 units being built over the past three years and more than 50,000 people still on housing lists for ten, 12, 13, 14 or 15 years, as the Minister is aware. The traditional housing system involved water drainage, open spaces, lighting, streets, footpaths and all the basic services of a new estate. They were maintained by the developer under the supervision of a local authority. As public representatives we often had lengthy battles to have estates taken over. I recall one estate in my constituency finally being taken over after ten or 12 years.
Imperfect as it was, that was the system. We now have a cruel, disgraceful abuse of young householders. This is the final attempt to suck the marrow from the bone of people desperately trying to put roofs over their heads, with fees of €200, €400, €600 or €800. Young people are bullied into paying these sums. What choice have they got? When the legal contract is put in front of one, involving the most important transaction in one’s life, someone now points out that one needs to also sign another form. One may be signing one’s life away for two or three years to the gangsters running this system, who may include close relatives of the developer or perhaps the foreman’s son or some other relative who will then be able to levy the charges for another period. It is grotesque that while we have very settled, upmarket, well financed, high-income districts of our cities where people do not pay such charges and would stage a major revolution if they had to do so, young families coming into estates are forced to pay them.
Deputy Stagg correctly noted that much of this goes back to the farce of local administration whereby unelected county managers and planning managers could allow this development to take place. It is sad that Fingal County Council is one of the local authorities to the forefront in trying to offload key public services. A major objective of the next Government must be to introduce a decent system of local government with the election of the chief executive.
If a householder is asked to pay a private management company which is not providing the services being charged for, where does that householder stand legally? One case from the west Dublin area has come to my attention involving a householder threatened with legal action for withholding payment of charges, even though the householder ended up in hospital with water poisoning because the company had not tested the standard of the water and waste had leaked into underground storage tanks and poisoned the water. That happened just a few months ago in the Tyrellstown area. It is also outrageous in this case that residents will have to pay for the replacement equipment for the water supply to the estate even though they are already paying their management fees to the company involved and the water supply was poisoned for a full two weeks last June owing to negligence by the management company.
Householders in that estate face an annual fee of between €200 and €600 depending on the location or proximity to any green area in the estate. This fee could increase by any amount year to year as the contract is open-ended and states that amounts can vary with larger houses incurring larger fees than smaller houses. What the management company does with the money it collects is a mystery to the new residents. The grass is not cut regularly. The roads are not finished. They have not had their top covering and are in need of urgent resurfacing. The lights do not work on half the streets while the lights on other streets are on all day long. During the past 18 months this estate has had three different management companies overseeing service provision in the area. What mechanisms are in place for such charges in any residential estate? Can anybody set up a management company? That is just one of countless examples in the west and north side of the city. It is a disgraceful state of affairs. The Taoiseach and the Minister did know about it and it is shameful they did not take action to remedy it before it became a crisis for so many of our young constituents.
—provide a wide range of services and amenities for the community, and are focused on locations that capitalise on recent and planned transport improvements as set out in Transport 21, published recently by the Government;
—notes that a Law Reform Commission working group is currently examining a range of legal issues in relation to the importance of effective management arrangements for multi-unit structures and that the government will consider recommendations of the group’s final report including the need for any new legislation to regulate management companies;
—notes that the supply of housing has been greatly increased since 1997 and that almost 77,000 units were completed in 2004 which was double the level achieved in 1997 and that 21% of housing units built in 2004 were apartments and that apartments constituted 68% of the housing units built in Dublin City in 2004, and 42% of the units built in the Dublin area;
—recalls the provisions in the Planning and Development Act 2000 whereby planning authorities must initiate the taking in charge of housing estates when requested to do by the majority of the residents who are qualified electors, or by the developer;
—notes the strong provisions in the Planning and Development Act 2000 which require the completion of estates by developers, including the provision whereby the developer can be required to give adequate security for the completion of the development and the strengthened provisions in relation to enforcement of planning conditions;
—notes that the Planning and Development Act 2000 recognised that management companies may be required, in appropriate circumstances, to provide for the maintenance of multi-unit structures, for the communal benefit of all residents;
—notes that in accordance with long-standing policy the application of conditions to a planning permission should in all cases be necessary, relevant to planning and to the development, enforceable, precise and reasonable, and that planning authorities must operate in accordance with these principles; and
—welcomes the fact that as a result of the increase of 6% in the Exchequer contribution to the Local Government fund, as provided for in the Abridged Estimates published last week, the Minister for the Environment, Heritage and Local Government will be in a position to build on the Government’s strong record of strengthening the financial position of local authorities thereby empowering them to continue to improve the quality and range of services they provide to all their customers.”
I welcome the opportunity to speak on an issue which is of importance to the everyday lives of so many homeowners. Since coming into office this Government has led an unprecedented reform of the planning system. We have updated planning law from scratch and have issued an increasing number of planning guidelines — certainly that is the case since I took over this portfolio — to assist local authorities in delivering a quality service and to assist the public with the planning laws.
We have done this because, in the words of the Government amendment, we recognise the importance of well-designed residential development and we are committed to promoting sustainable communities which offer choice to householders across a wide range of accommodation options, embody high quality urban design which is also environmentally progressive and energy efficient and provide a wide range of services and amenities for the community, and are focused on locations that capitalise on recent and planned transport improvements.
The issues raised today relate to the law governing management companies and the appropriate or inappropriate use of planning conditions to require the establishment of management companies. Deputy Stagg mentioned a few and Deputy Catherine Murphy has drawn my attention to them in County Kildare. Another issue raised was the taking in charge of housing estates by local authorities, an area completely reformed by this Government.
In understanding the increased role of management companies, one has only to look at how the supply of housing has changed and expanded in recent years. Almost 77,000 new housing units were completed in 2004 which was more than double the amount completed when the Labour Party was last in Government. Some 21% of the homes built in 2004 were apartments. Even more dramatic, apartments constituted 42% of all houses built in the Dublin area in that year and 68% of the units built in the city council area. In Cork city, apartments made up 43% of all units. More than 100,000 apartments have been built during the past ten years. Deputy Gilmore recognised that the position of apartments is different from that of the traditional houses.
Turning to the law governing management companies, the Government is committed to ensuring current practice should reflect the reality that increasing numbers of people live in apartments. The Law Reform Commission is examining a range of legal issues in regard to the management for multi-unit structures. While management companies have operated successfully in many apartment complexes, problems have arisen in some instances due to a number of factors. Difficulties that have been reported include the standard and cost of service provided by management agents employed by developers or management companies, chronicled by two of the last three speakers; delays in transferring responsibility to owner-controlled companies; and most worrying perhaps for the future, insufficient provision for maintenance or future refurbishment.
I look forward to the recommendations of the Law Reform Commission in addressing the various issues that have been identified. The commission has already done a good deal of work and I understand it expects to issue a consultation paper in the new year. It is not possible to say what the report will contain but a key objective will be to ensure any possible gaps or deficiencies in the legal framework are addressed. It will be necessary to prevent problems arising in the future and to provide a mechanism to rectify difficulties that have arisen with existing apartment complexes. I also expect the report to deal with consumer issues such as the need for transparency in service charges, an issue dealt with by Deputies Stagg and Gilmore. I look forward to receiving the Law Reform Commission report and I will act as speedily as possible on any of its recommendations relevant to my Department.
The Government is already acting in a number of areas. The Minister for Enterprise, Trade and Employment has indicated that as part of the overall review of company law, the law applying to guarantee companies, including apartment management companies, will be simplified. The Minister hopes to bring proposals for legislation to Government early in 2006. The Minister for Justice, Equality and Law Reform recently announced that he intends to establish a new national property service regulatory authority whose functions would include licensing and regulating property managing agents that undertake multi-unit management functions and establishing vetting and complaints procedures.
The maintenance and management of private apartment complexes is ultimately the responsibility of apartment owners, just as in the case of an individual house the house owner has to take responsibility for maintenance, insurance and so on. In the apartment complex context, this is catered for most frequently through management companies, a point recognised in Deputy Gilmore’s contribution.
Deputy Gilmore touched also on the issue of taking in charge, as did Deputy Broughan. Throughout the 1970s, 1980s and the 1990s, the problem related to people suffering due to estates being left unfinished. I have first-hand experience of that in County Wicklow. When we modernised the planning law in the Planning and Development Act 2000 to equip it for the challenges of this century, the Government tackled head on the problem of unfinished estates. Deputy Gilmore referred to the changes that were made. We ensured that new homeowners would not be required to bear the burden of the basic infrastructure by obliging local authorities to take estates in charge once finished. Deputy Stagg characterised some of what is happening in his constituency as a nefarious attempt by some in local government to frustrate the taking in charge of estates. In so far as there is any evidence that is happening I will deal with it.
We equipped local authorities with the tools to get housing estates finished. We have strengthened the powers to enable planning authorities to require adequate security to be provided by developers and to require estates to be finished within a reasonably short period. The Act also strengthens provisions in regard to enforcement of planning conditions. Developers can be required to put forward bonds and to deliver on the permissions they get. They can be forced to complete to “taking in charge” standards. That issue was raised by Deputy Gilmore.
Under section 180 of the Planning and Development Act, local authorities are obliged to take in charge the public services of housing estates, once completed to a satisfactory standard, where requested to do so by a majority of the residents of the housing development, or by the developer. Certainly the inclusion of the majority of residents of the housing development is a novel and welcome change in planning law. The section is emphatic. It is not in any way ambiguous. Once completed, section 180 provides that the planning authority must, I emphasise must, initiate the procedures if requested to do so by the developer or by the majority of the qualified electors who are owners or occupiers of the houses. That is not a desiderata, it is an obligatory provision in the Act. The local authority will then be responsible for the maintenance of public services, and that of any associated pipes, pavements, open spaces, car parks and so on, all of which were mentioned by Deputy Gilmore. He made the reasonable point that a differentiation has to be made between those elements which relate to multi-complexes, to apartments and those which relate to more standard housing.
If estates are unfinished and planning enforcement proceedings have not been commenced by the authority within the relevant period, section 180 also provides that the planning authority must, if requested to do so by the majority, initiate the procedures in section 11 of the Roads Act to take the roads in charge. When they do so, they are precluded from considering the financial implications of taking the road in charge. Many of us had experiences in the past when this provision did not exist because roads issues were frequently used to frustrate the taking in charge process. The section is emphatic and no purpose would be served by the changes suggested in the motion tabled by the Labour Party. I accept they are well meaning but I do not think the change proposed is needed. It is not necessary for legislation to repeat what is already set down in law.
Whether a management company exists for a housing development, the existence of a management company does not override the legal obligation on developers to complete and maintain estates until they are taken in charge. Nor does it provide a mechanism for a local authority to offload its responsibilities. Elected members of local councils have responsibility if there is a common belief or scintilla of evidence that their manager or planning officials are attempting to offload on to residents responsibilities which should apply to local authorities.
The Planning and Development Act, enacted by the Oireachtas in 2000, recognised that management companies may be required, in appropriate circumstances, to provide for the maintenance of multi-unit functions. In considering this issue, we should not lose sight that management companies have an important role, for the benefit of all residents living in shared spaces. Apartment complexes have special management and maintenance needs because of the extent of shared or communal elements involved. Some of these such as corridors, hallways, lifts, stairs, roof and the overall structure of the building are clearly evident. Similarly, external areas such as car parks and planted areas serving the apartments are features of these developments.
Interdependence is an inherent feature of apartment living. This necessitates a range of rights and responsibilities with a mechanism for upholding, enforcing and, where necessary, reconciling these, in the interest of all the owners and residents. This is what management companies are intended to do. They are not intended to be rich sources of funding for people associated with developers. In addition, many housing estates have management companies to deal with the ongoing maintenance and management of the private elements to housing developments, such as looking after the green areas, landscaping, maintenance of community amenities and so on, as mentioned by Deputy Gilmore.
In recent weeks I was informed that some planning authorities now attach conditions to permissions for housing estates whose responsibilities are wider than the limited maintenance role that I have described. This matter was highlighted in a number of questions tabled by Deputy Murphy. This is not acceptable and in response I have asked the Department to obtain a report from planning authorities on their policies for attaching conditions relating to management companies to planning permissions for residential developments. While not all planning authorities have yet responded, initial indications are that practice varies across the country and this matter will need to be addressed. I will make it clear to all planning authorities that I expect planning law to be applied in a consistent manner. I will emphasise this approach in the draft management development guidelines that I will publish next week.
Deputy Stagg referred to Kildare County Council’s misapplication of the relevant section of the planning Act. Members of that council have appointed a committee to report on the issue. The committee will not report to me, it is an internal committee of the council and will report to its SPC. I expect that the councillors will then act.
The planning Acts are framework ones and local authorities have to ensure that any conditions attached are fair, reasonable and enforceable. This has been the consistent thrust of advice from my Department. Local councillors should take this matter seriously and ensure it happens. As I already mentioned, next week I will launch the draft of modern guidelines for planning authorities on development management. Those guidelines will repeat the long-standing advice to local authorities on the conditions appropriate to attach to planning permissions. When I have studied the full results of the survey of local authority practice, I will consider whether any additional guidance to local authorities is necessary on my part. I will be pleased to issue them if necessary.
Whatever other excuses local authorities may have to act in the manner Deputy Stagg has portrayed it is not a shortage of funds. We have vastly increased the resources available to local government. Income available to local authorities through the local government fund rose from less than €800 million in 1999 to €1.26 billion this year. Last week, I announced a further 6% increase in the Exchequer contribution to the fund, which is well ahead of inflation. There is no excuse for any local authority to use the device of a management company to avoid its responsibilities.
The Government’s overall goal is to build sustainable communities, not just housing units. At the same time we need to deal with the differing nature of housing now. Once the Law Reform Commission reports are published they will be examined in detail. For my part, I will review relevant guidelines in areas such as residential density and housing quality to ensure they are modern, quality driven and appropriate to our society’s changing needs. The Government has delivered on housing and will continue to take necessary action. I thank the Deputies for raising the matter in the House. Once the Law Reform Commission has reported——
Mr. J. Higgins: What about the abolition of the existing companies? The Minister has not given any comfort to householders stuck with them. Under Standing Orders the Minister can reply to a short interjection if he accepts it. I am concerned about existing householders who are stuck with these contracts. What will the Minister do about them?
Mr. Roche: Perhaps the acoustics are not what they should be on the far side of the House. I am awaiting the report of the Law Reform Commission and as soon as I receive it I will act on it in its totality. I will consider all aspects of it. Issues exist such as those in Kildare, which I have raised with the council. I will not announce some precipitous action without the benefit of the Law Reform Commission report. The Deputy can be assured that I am as concerned as he is on the matter.
Mr. Roche: Further to the point made by Deputy Stagg, local authority members have a responsibility to take control of their own areas. Local authority members regardless of their party membership have a democratic imperative which no bureaucrat has. I do not accept the suggestion that they must be beholding and bow down before managers. It is time local authority members used their existing powers.
Mr. Roche: There is no point in weaselling around and trying to slide out of it now. His colleague sitting behind him is very good at slithering out of issues. In reality that was his party’s view.
Mr. Gilmore: I ask the Minister to clarify his suggestion that even in an estate where a management company exists the residents of that estate could vote to have the estate taken into charge. In an estate with a management company, can the residents exercise the right under section 180 of the Planning and Development Act to have the estate taken into charge?
Mr. O’Connor: I will take my few minutes and perhaps the Acting Chairman will protect me. I am an admirer of the work of this Minister, not only because he cut his political teeth in Tallaght many years ago, but he has shown all of us in his work, particularly since he became Minister for the Environment, Heritage and Local Government, that he is interested in listening to what Deputies on all sides have to say. He represents his Department in a definite and meaningful way. He has been particularly accommodating in the manner in which he has dealt with this debate and should be complimented in that regard.
Mr. O’Connor: I have had a particular interest in these issues for some time, representing as I do a major population centre in Dublin South West, dominated by Tallaght, which is the third largest population centre in the country. Over the years we have faced challenges as far as taking in charge of estates is concerned. In recent times there has been much highlighting in Tallaght of the fact that the Sundale-Suncroft Estate has not been taken in charge, despite being built over ten years ago. There have been other problems in that regard.
I am particularly interested in what the Minister said about apartments. These are a modern phenomenon. A critic told me yesterday that what used to be called flats are now called apartments. These challenges face my community just as they face many other communities. The Minister knows Tallaght and is aware that it was often said about it that it had the population of a city but the status of a village. We have made much progress over the past 15 years in terms of provision of infrastructure and facilities. Of course, many gaps remain and I am happy, with other colleagues, to continue to represent those needs.
If one looked around Tallaght today, one would see 20 cranes working, even on town centre lands. We suddenly have a different landscape and different types of accommodation buildings. There are a number of apartment blocks on town centre lands and apartment blocks are being built in Tallaght village. People have come to me with concerns about what they see as the challenge of these apartments and the different types of accommodation units being provided. A few weeks ago I raised with the Minister through Dáil business the simple matter, also highlighted by Deputy Gilmore and others, of the difficulty local authorities have registering people on the voting register because apartment blocks are locked up and there are no post boxes. The accommodation is different than traditional accommodation units.
There is much criticism of the units in my community. I highlighted this yesterday at a meeting, with colleagues, including the leader of the Labour Party, with the county manager and his management staff in South Dublin County Council. We highlighted to them the problems that exist with apartment blocks. We also highlighted the difficulties they create for others, including many of the people who live in them.
With regard to the points made in Deputy Gilmore’s motion, it is important that we understand there are difficulties and it is only right that all sides of the House highlight them. I am glad the Minister has given me a sympathetic ear when I brought to him problems in my constituency and local community with regard to apartment blocks. I mentioned the difficulties to him and know he has received correspondence on the matter from people in apartment blocks in Tallaght and in the Kiltipper area, particularly Marlfield. People have pointed out the particular difficulties that exist in these apartment blocks. In many cases these people have moved into Tallaght and have made a big commitment and investment in the area. They are happy to be close to the Square and the Luas.
I have often said, and do not apologise for doing so, that Tallaght is a positive place and it is great that so many people want to live there. There are, however, issues with which we must deal. I am glad the Minister is taking account of the particular difficulties that exist with apartment blocks, particularly in the Kiltipper area, which I have brought to his attention.
I take the view, and I expressed this view to the south Dublin county manager yesterday, that the council should not use these management systems to absolve itself of responsibility for apartment blocks. The council should continue to watch and take action where necessary to ensure that those moving to these apartment blocks still have all their needs dealt with, for example, public liability, landscaping, street lighting and refuse collection. Some correspondence from Marlfield that I shared with the Minister during the week pointed out that there are difficulties with regard to refuse collections and these other issues.
I support what the Minister said in his speech. It is important that we understand that there are new and particular challenges as far as many apartment blocks are concerned. I hope that this is discussed in contacts with county managers, not only in south Dublin but throughout the Dublin region and the rest of the country. I was glad to hear the Minister give credit to our colleague, Deputy Catherine Murphy, on doing her job in Kildare. South Dublin is no different in that regard and there are challenges for the Minister there. I am confident the Minister understands these problems, that he is listening to what we are saying and that he will take action. I will continue to press him on these issues and will bring to his attention the various apartments in Tallaght, particularly those in Marlfield and the Kiltipper area.
It is important that the Minister continues to press the various county managers, south Dublin in my case, to continue to ensure they face the challenges posed by the new phenomenon of apartment blocks. Because of density and accommodation needs and the need to deliver new homes there are particular pressures that require new thinking. The Department, in consultation with local authorities, should be part of that thinking. It must understand that the old ways need modernisation. People expect services. People accept the glossy brochures and the good parts of apartment living and move to apartment blocks, but they still expect to have good services. They do not want to be ambushed by management companies. I know there are good and bad management companies, and in the past few weeks we have heard in the Dáil about both. It is important the Minister consider these issues in a different way.
There is a question with regard to planning permissions and dealing with planning applications in the context of these issues and challenges. I apologise if I have used the word “challenge” too often in this contribution, but it is an important word as far as this issue is concerned.
Mr. O’Connor: It is not just about Tallaght, I am trying to take a national perspective. However, Tallaght will always show the way. I am always happy to show Tallaght as a good example. What is achieved in Tallaght can be achieved in the rest of the country, and that would make us all happy.
I am not afraid to say there are difficulties. Sitting on these benches does not silence me. I am quite happy to come in and represent the issues as I see them. When my constituents stop me in the street as I go about my business, correspond with me, come to my eight clinics every week and to my full-time office in the main street in Tallaght, I listen to what they say and the issues they raise. The issue of apartments is a major challenge. There are many difficulties about-——
Mr. O’Connor: I will. I was hoping the Chair would protect me. More experienced colleagues than me are not waiting to tell me how Private Members’ business operates. I was often in the Chamber when Deputy Gilmore was on these benches. He knows the system better than I do and he should not be trying to con me at this hour of the night. The fact is there are issues and I want the Minister to deal with them, and I have confidence he will. I am glad the Minister of State, Deputy Noel Ahern, who has a radical view of these matters has joined us.
Mr. O’Connor: I am not a bit afraid to say there are difficulties. We should be brave enough to deal with these issues in a cross-party way and get action on them. This is a very important debate. I listened to the earlier parts of the debate and I will continue to listen to the debate tomorrow, as I do every week. It is important that those of us who have the privilege of representing our communities in the Dáil help each other to deal with the various issues. There are many non-party issues to be dealt with.
Mr. O’Dowd: I do not mind if the Deputy tackles me. I thank the Labour Party for initiating this important debate in the House. It is important to note that Independent Deputies have also brought this issue to our attention in recent times.
There have been great changes in Irish society in recent years. New building methods have been introduced and people have started to live in alternative types of buildings. It is clear that apartment blocks are a significant feature of modern life, particularly in urban areas. I have concerns about the quality of construction of some new buildings, for example in my constituency. Some new buildings are excellent, but some of them are not. I am concerned that some of the supposedly fine and shiny apartments will become the slums of the future. I do not have a problem with high-density development, as long as the quality of construction is high and environmental considerations are taken into account. The problems in this area need to be addressed.
Demographic changes are putting pressure on the existing housing stock. High-density apartment blocks, which offer cheaper housing that should be of a high quality, allow many young people to get on the property ladder. The 2002 census showed that over 110,000 households, or almost 9% of the total, are based in apartments. The 210,000 people who live in this type of housing are often single people and couples without children. There is evidence to suggest that this trend is continuing. Over 42,500 flats and apartments were completed between 2002 and 2004. Such forms of housing comprised one fifth of all housing completions in that period. Anecdotal evidence suggests that many residents feel powerless to address the serious problems with apartment complexes throughout the country.
Such problems relate primarily to the failure of builders and managing agents to maintain common areas, even though they charge high management fees. They often make little or no provision for the sinking fund that is necessary to cover the high costs which occur every few years when major refurbishment is needed. Non-payment of management fees is not an option because it would lead to a debt being placed on the property. Such a debt would have to be cleared before the property can be sold. There is no State agency to which residents can complain. Given that there is an increasing number of non-residential investors in the apartment sector, it can be difficult to spur the residents into action.
Urban Deputies and public representatives have no shortage of horror stories about apartment blocks. It is becoming common to encounter gardens which are not landscaped, walls which are not painted, broken lifts, crumbling brickwork, sporadic refuse collection and broken fixtures and fittings. Such problems are becoming the order of the day in a significant minority of apartment complexes. The Government has failed to act in this regard, despite many promises that it would. The programme for Government in 2002 stated that the Government would “consider the introduction of legislation to regulate the establishment and operation of apartment complex management companies”. In May 2003, the then Minister for the Environment, Heritage and Local Government responded to a Dáil question by stating that the regulation of apartment complex management companies was “still under consideration” and that he had “no immediate plans to set guidelines on fees”. In December 2004, the current Minister responded to a question by saying that “a Law Reform Commission working group is examining the law” in this regard. He hoped that the working group would respond “early next year”.
Fine Gael, which has been working on this issue for some time, intends to publish in the next few days a Private Members’ Bill to legislate for apartment complex management companies. Such legislation is necessary because no State regulation is in place, even though the Government made a commitment to put such a regulation in place. The Fine Gael Bill will seek to amend the Residential Tenancies Act 2004 by widening the role of the Private Residential Tenancies Board. We propose to make the board the regulator in this area, for example by imposing a pro-consumer code of practice on managing agents. The code of practice would protect residents in a number of ways. Developers would be obliged to set the same management fee for the first three years of a new complex at a level which ensures that managing agents can meet the established minimum standards for that period. Such a measure will ensure there is no sudden rise in management fees one or two years after an apartment is purchased.
Fine Gael proposes that provision should be made for an adequate sinking fund from the outset. Many management agents set the annual fee without making provision for the large-scale refurbishments which need to be carried out every few years. This leaves residents with a shortfall and a choice of paying several thousand euro at once or living within a decaying physical environment. Neither scenario is tolerable.
Other areas in the apartment sector need urgent attention. A management fee should not be fully payable until managing agents are in place and the various services can be provided. Many builders demand payment of the first year’s management fee before the keys are handed to the new owners, even though the owners may be moving into what is essentially a building site and few of the services for which the fee is paid, such as cleaning, are provided. Owners should be allowed to withhold a portion of the fee until all services are available. Given the complex legal nature of management company arrangements, it is vital that consumers get the necessary protection they deserve. They can rest more easily if the Private Residential Tenancies Board acts as their champion. More needs to be done, however.
Fine Gael has received reports that residents who try to change managing agents have been put at a disadvantage because new agents insist that binding contracts are signed without any probationary period during which the level of service can be assessed. Residents should have the right to insist on a one-year probationary period before deciding to commit to a managing agent for a longer period. Managing agents who adhere strictly to the proposed code of practice will be awarded a special “kite mark” that will alert residents to the managing companies which truly act in their interests.
Given that more people are living in apartments, it is vital that the social welfare code is updated to ensure it provides necessary protection to the most vulnerable people. Two key changes are needed. The rent supplement scheme should be widened to include vouched fees which its recipients must pay for the upkeep of communal areas, including management fees. A mechanism should be put in place to ensure that those living in flats and apartments are not at a disadvantage when refuse charges are waived in respect of those living in a house in their local authority area. It is vital that action is taken on this agenda immediately.
People who live in gated apartments and developments face a special problem when they want their communal areas to be taken over. While the gates are in place to prevent public access, such people are responsible for the maintenance and upkeep of everything inside the gates, such as the lights, the footpaths and the road. If such people are not aware of that responsibility, they may be placed at a significant disadvantage at a later stage.
Mr. McCormack: I join my colleague, Deputy O’Dowd, in thanking the Labour Party for introducing this motion and highlighting the important issue of young home owners throughout the country, who are already stretched to the limit with high mortgages, being forced to pay a new form of stealth tax. As Deputy O’Dowd said, Fine Gael has established a position on the issue of apartment complexes. It is asking for a genuine engagement by Deputies of all parties, including the Minister, Deputy Roche, on how local government should be funded to allow it to meet its responsibilities to householders, businesspeople and consumers. I take it from the Minister’s comments in this debate that the Government intends to hide behind the Law Reform Commission’s study of management fees, just as it is hiding behind the ongoing review of local government financing, which will not be finalised before the next general election. Rather than doing that, I ask the Minister or one of his Ministers of State to give us their views on the way forward in this area when they speak during the second part of this debate tomorrow evening.
Local authorities are compelled to promote the development of rateable properties, rather than a healthy mix of residential and commercial developments, because they depend on commercial rates as a consequence of being given inadequate Exchequer funding. This, in turn, is increasing property prices in urban areas and pushing residential development from town and city centres to poorly serviced and remote locations. Things are no better for those trying to buy a new home. Statistics provided by the Department of the Environment, Heritage and Local Government show that the total collected in development levies increased from €57 million in 1997 to €215 million in 2003. The figures for 2004 are almost certain to be even higher. In Galway city, the total take more than doubled to almost €6 million between 1997 and 2003 and in Cork city, the total take of €766,000 in 1997 increased to €7.5 million by 2003. Such increases have taken place even though the Department’s guidelines state that development contributions “should not be set at an excessively high level” and that local authorities should be mindful of the policies adopted by local authorities in their immediate areas because “major divergence in the level of contributions may be difficult to defend”. Matters have deteriorated to such an extent that four local authorities depended on development charges to fund 10% or more of their total expenditure in 2002.
Management fees are the nub of the issue and it is what this debate is about. There is an absence of information about management fees. We have no idea how many housing estates charge fees, how much they charge or how many will charge fees in the future. I implore the Minister of State to ensure his officials gather data on this area. We cannot come up with a solution if we do not know the scale of the problem.
We rely on evidence in respect of this issue, often based on the first-hand evidence of constituents who call to our offices. I will enlighten the Minister of State about this problem. There is a new development area to the east of Galway city that will be known as the Ardaun corridor when fully developed and there are three estates there, Bhoireann Bheag, Ros Caoin and Caiseal Cam, comprising 650 new houses. All those houses are being charged a management fee of €450. That management fees collected for that estate and a nearby estate of 650 houses, whose households also pay a management fee to another management company, amount to €295,500 per annum. That amount would cover the cost of a great deal of grass cutting. There will be 7,000 houses in that area when the estates are completed. The management fees payable in respect of those houses to the management companies — even if the fee does not increase from €450 although it has increased every year since houses in that area were built — will amount to €3.15 million per annum.
This is not a flat complex but an estate comprising detached and semi-detached houses. There is no need for this estate to be managed. The position is different in closed gate apartment complexes whose occupants might like a management company to manage the complex. However, the example to which I referred is an estate of 650 houses. The management fees in that estate was suddenly raised to €450 last year. The house owners in that estate have no say in the selecting of the management company. They were simply informed by the builder of the management company for the estate and had to accept that company.
I want the Minister of State to state clearly if he will give house owners the authority to set up their own management companies rather than have to accept the management companies set up by builders in the selection of which householders have no say. Deputy Gilmore also asked this question. This practice is a scandalous rip-off. When all the houses to be built in that area to which I referred are completed, more than €3 million per annum will be collected in management fees. That level of fees is beyond a joke.
Ms O. Mitchell: I welcome the opportunity to speak on this issue which I raised last April as it is one of growing concern countrywide. In Dublin some 40% of homes are apartment complexes. The number of apartments built in my local authority last year was a staggering eight times greater than houses. It seems that apartment building in urban areas is becoming more the norm. There is a great need for regulation and legislation of this area. Information is also needed on the operation of management companies. From what speakers have said, it is clear there is a lack of understanding regarding management companies. Many of the problems stem from a lack of information about them and a lack of regulation of them.
Many problems were mentioned but I want to concentrate primarily on management companies in apartment complexes as it is in respect of those that I have discovered there to be the greatest cause for concern. I am not against apartments; they offer choice and variety in the market and mobility. Apartments offer young home owners the opportunity to get into the property market and older people the opportunity to downsize. Unless we regulate this area and ensure that home owners are protected, before too long investment in an apartment could become a liability for the investor, his or her neighbours and an environmental eyesore if the buildings are not maintained. The great risk posed is the decline in the standard of maintenance of the overall complex, the collapse of management companies and eventually apartment owners finding it almost impossible to see their apartments. Solicitors increasingly report that they encounter difficulties in closing sales because management companies have collapsed.
There is an old saying that good boundaries make good neighbours. Part of the root of the problem is that boundaries in apartment complexes are not clear or certainly not as clear as they are in the case of the traditional semi-detached house. In apartment complexes, the overall building and the common areas are the joint responsibility of the owners. When the purchaser of an apartment signs a contract, which is a long-term lease, that purchaser takes on joint responsibilities and responsibilities for maintenance. The purchaser not only has responsibility for his or her apartment but to his or her neighbours. This is often not clearly understood and seldom explained to the purchaser.
In many cases young, inexperienced home buyers are vulnerable to sales talk by developers who seldom make an effort to emphasise that buyers take on a lifetime enduring management charge that is equivalent to the dreaded domestic rates of old that we all, or those of us who are old enough to remember them, hated so much. It was a nightmare for young families to have to pay them. Management charges are becoming that type of burden, particularly when people are unprepared for the obligation to pay them.
The measures suggested in the motion are necessary. There is a need for a dispute resolution agency not only in the case of disputes between the management company and individual owners but disputes between owners. A breakdown in communications often occurs between owners in that they begin to let each other down and do not understand that each one of them is a shareholder in the management company. There is a misunderstanding over what is a management company and what is the property management company that the owners employ. There is often a lack of understanding in that owners may be of the view that they can dump their property management company and seek a better deal from other such companies.
It is necessary to inform buyers at an early stage that when they are informed by a builder of the management charge, they are being enticed to purchase on the basis of what is probably a low one. As Deputy O’Dowd pointed out, the charge is often low initially because there are no services but, as sure as eggs are eggs, the charge will increase. That is not made clear to buyers. There is an onus on solicitors when closing sales to make it clear that this is the case and to make clear the implications of that. The buyers become members of a company with liabilities to other members of that company. Solicitors have a major responsibility to pass on that information to their clients.
One of the barriers to the dissemination of this information is a growing practice that should be stamped out and legislated against whereby builders offer young buyers reduced rates for their solicitors to act for buyers. That is a questionable practice. I am amazed that solicitors have got involved in this practice. In such circumstances how can they possibly be objective and act in the best interests of the buyer? The practice of a builder’s solicitor acting for a buyer should be stamped out. It is a bizarre arrangement which I understand is widespread not only among apartment buyers but house buyers. A person may call to a public representative having bought a house on discovering a road or a motorway is to be built beside the person’s house but the builder did not inform the person of that planned project. When I ask did the person’s solicitor not check that, I discover that the person’s solicitor is also the builder’s solicitor. It is incredible that solicitors lend themselves to being involved in that kind of abuse. It is outrageous.
Increasingly this is the way people will live in urban Ireland. There is an onus on us to ensure that legislation is in place which protects those who purchase and those who live beside those who purchase. We must also ensure that our environment does not deteriorate as, increasingly, it will be an environment for all of us because few of us will live any great distance from apartment blocks. If the market for these houses collapses because they cannot be bought or sold and there is no maintenance on them, it will destroy entire areas and jeopardise the housing market which is such a crucial part of our economy. I support the motion.
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