Thursday, 8 July 2010
Dáil Éireann Debate
Deputy Terence Flanagan: I welcome the opportunity to continue my contribution on this important legislation. I would like to mention other difficulties faced by apartment owners with regard to the Bill. For example, on the issue of satisfactory completion of a development, there is no legal means of ensuring that a development is satisfactorily completed. The meaning attached to “satisfactory completion” is open to interpretation and is quite vague. The Minister needs to look at this. The key issue is to ensure the developer completes the individual phases of the development properly and within the terms and conditions set down under the planning permission he was granted. I am interested in the Minister of State’s view on that issue.
Both the Law Reform Commission and the Royal Institute of the Architects of Ireland have recommended in regard to the completion of common areas that 5% of the purchase price should be retained and ring-fenced for the completion of unfinished developments. Fine Gael will table an amendment on Committee Stage to include this provision in the Bill.
The Bill points to the courts as arbiters in disputes between owners and management companies. This is the wrong approach to take. The National Property Services Regulatory Authority was set up in 2005, more than five years ago, and has thus far been nothing more than a toothless quango. More than €3 million has been spent by that office to date, but it has not had any statutory work to complete. That authority should be the first port of call in terms of providing mediation services in cases of dispute or where owners have concerns in regard to the calculation of management fees. Recourse to the courts is inconsistent with Government policy in this area and contrary to best practice, and we propose to bring forward an amendment to address this issue. Moreover, consideration should be given to merging the National Property Services Regulatory Authority and the Private Residential Tenancies Board to ensure greater economies of scale.
In regard to management companies’ records, there should be random audits by the regulator to ensure proper records are being kept and that companies are complying with the legislation. Such inspections should be variously announced and unannounced. There is evidence that a number of management companies currently in operation are not keeping proper records.
In regard to voting rights, the Bill indicates that there will be one vote per unit owner, but this will apply only to new developments. What about residents of existing apartment complexes where there are major difficulties, with owners suffering because the developer has dominated the running of the management company? Those people are trapped and the legislation will be of little help to them. Will the Minister of State comment on that?
We must address the issue of management companies that are too large and become insolvent. In Clongriffin, in my own constituency, there are mixed management companies dealing with both apartment complexes and houses. These companies have grown too large and massive arrears have built up. Law abiding citizens who pay their fees are suffering because more than 60% of management fees is outstanding. It should have been the case that one management company was set up for each block of apartments rather than one large entity that is not in a position to deal effectively with the affairs of so many owners.
We welcome the introduction of monetary sinking funds. However, the €200 charge seems very low when one considers the situation in existing complexes where there are problems with elevators and deterioration of exteriors. Significant sums will have to be collected to fix buildings that are in disrepair.
Property management agents are currently unregulated and unlicensed, leaving many owners exposed and vulnerable. The Minister must bring the Property Services (Regulation) Bill 2009, which was recently passed by the Seanad, before the Dáil as soon as possible. The regulation of property agents must go hand in hand with the regulation of property management companies.
Fine Gael supports much of what is proposed in the Bill, including the name change from management companies to owners’ management companies. This change emphasises that the unit owners are the real owners and that it is they, rather than developers and others, who should be in full control of management companies. As I said, the establishment of sinking funds is welcome, as is the setting and collection of service charges and the provision that there will be one vote per householder. We also support the obligation on developers to hand over the ownership of common areas of completed developments to the owners’ management company within six months. In regard to the calling of the annual general meeting, the provision that 21 days’ notice must be given to all owners and that owners’ management companies will be in a position to make house rules is welcome.
The Bill fails, however, to address an issue that has been highlighted in correspondence from Fine Gael and other organisations, namely, the position in regard to single-owner management companies where there are both houses and apartments which require differing levels of maintenance and services. Owners of houses in such developments currently feel they are getting a raw deal in having to contribute to costs that are not relevant to them since they do not share common areas to the same extent as do apartment complex dwellers. They are aggrieved at having to pay the same management fees as apartment owners when all they generally require in the way of communal maintenance is grass cutting and landscaping. This issue must be reviewed. They should be made fully responsible for ensuring there are fire extinguishers on all floors and that they are working. Local authorities should grant fire certificates only if equipment is present and fully operational. The practice of issuing fire certificates without inspecting buildings must no longer continue. This is another example of light touch or absence of regulation in this country. Developers could produce the most perfect of drawings and be granted fire certificates without a fire officer from a local authority stepping foot in a given apartment complex to ensure everything is up to the proper standards and that owners could have full confidence that there is no threat to their safety while living in apartment complexes.
I refer to service fees. Certain apartment dwellers pay a service fee on a yearly basis. The legislation should state that the companies must use the fees collected for fire safety equipment and to ensure it is present on all floors and in apartments. This should be tied into the legislation as well.
I welcome the introduction of the legislation, although there are many holes in it. It has been watered down a good deal since its initial introduction in the Seanad. In this regard, a new explanatory memorandum should be produced because the Government has effectively produced a new Bill. Apartment owners are not pleased that the legislation is a good deal looser than when it was initially introduced. The Minister should provide the House with a proper explanation of why it has taken so long, almost a decade, since the regulation of management companies was first mooted. Why has the Minister taken so long to get it to this stage? Meanwhile, apartment owners are being fleeced as a result of continuous rises in annual service fees. Many are aggrieved that they have not been receiving a proper service and that there has been no one to turn to for dispute resolution or for any grievances they hold with regard to the maintenance of their complex.
Some 500,000 people, including many young people, who live in apartment complexes suffer on a continuous or daily basis. This legislation is unlikely to make much difference to these people in the short term, but hopefully it will do so in the longer term. Many home owners have paid exorbitant money to purchase apartments in complexes and, at a minimum, tight legislation should be in place to protect them, to secure their rights and such that there is someone who can help them with any relevant difficulties.
We know there are many insolvent management companies at present and that fees have not been collected consistently by management agents because certain companies are not functioning correctly. Will the Minister advise on what will happen in cases of extreme difficulty or dire financial situations which arise in an apartment complexes? Who will put things right? Will the State intervene or what will happen ultimately? Hundreds of unfinished housing estates throughout the country are made up of mixed developments and contain unfinished apartment blocks. What will happen to these and what is the future of these unfinished apartment blocks. We envisage this legislation as a first step. However, Fine Gael will table many amendments on Committee Stage.
Deputy Pat Rabbitte: With the agreement of the House I wish to share time with my colleagues Deputies Jack Wall and Emmet Stagg. I thank the Government for agreeing to complete Second Stage of the Bill tonight because of the unconscionably long time we have waited for it. Tens of thousands of people are waiting for this Bill to become law and in this regard I am grateful to the Minister and the Government for rostering it this evening, even if it has proved inconvenient for several colleagues on all sides of the House who wished to contribute to the debate.
Multi-unit developments are a new model of accommodation in Ireland. These developments comprise apartment complexes but also commercial units, usually retail outlets on the ground floor, and duplexes or town houses. These have proliferated in urban Ireland in particular during the past decade, sometimes driven by tax incentives. For example, it is claimed that in the Dublin area these developments accounted for 56% of all housing units built in 2006 rising to 62% in 2007. Nationally, these complexes amounted to 25% of all dwellings completed nationally in 2007. If these figures are correct they are hugely significant.
For more than five years the Labour Party has been persistently campaigning for regulation and for statutory powers to address some of the very serious problems that have been encountered by often unsuspecting buyers. It is true that the issues are complex but it is indefensible that it has taken until 2010 to bring this Bill into Dáil Éireann. Acute difficulties are being experienced by many owner-occupiers at present. Some complexes are badly in need of refurbishment where no sinking fund has been provided and all of this has been exacerbated by the number of developers who have gone bust or who are simply unamenable.
The difficulties facing many owner-occupiers are very serious. Some of these complexes are of poor quality construction and were never approved by building control inspectors but were self-certified at the height of the boom by developers or their architects. In many cases, the management agent is connected to the builder and the builder controls the management company. In some cases, annual service charges are excessive and lack transparency and, in a number of cases, are exploitative. Services for which fees are levied are not being delivered in some cases. Often, there are no sinking funds. For example, I am aware of a survey of 27 management companies which found that after ten years half of these have no sinking fund. Often, there is no disputes resolution machinery. What happens where the developer has walked away leaving the complex unfinished? What happens in cases where complexes are only partially occupied? Many young purchasers were unaware, and appear not to have been apprised by their solicitors, that their contract of purchase effectively wedded them to the management company. As the law stands, a dissatisfied lessee has no practical redress.
In summary, an extraordinary list of problems is being encountered by the predominantly young population who are the owners in these multi-unit developments. Many struggle to repay the mortgage but find themselves obliged to shoulder hefty annual charges as well. During the past decade, the Government has been very relaxed about the accumulating difficulties. While the Celtic tiger roared, the Government focused on the developer and the taxes coming in rather than the difficulties confronting the consumers, that is to say, the young owners. In the worst cases of abuse, it may be too late now to rescue those worst affected. In 2005, the Labour Party published its own guidelines for young dwellers in these complexes. However, the existing law is not up to the challenge and the residents of every development are dependent on the willingness and co-operation of their management company, and often the developer, to ameliorate the difficulties being encountered. In some cases, this was forthcoming up to a point; in others, it was not. Since the crash, this position has worsened.
Having said that, I am bound to acknowledge that there are some positive measures in the Bill. I compliment the Minister and his officials for taking on board many of the changes advocated by the Labour Party, home owners in multi-unit developments, the National Consumer Agency and, most especially, the Law Reform Commission. Further changes require to be made and I hope the Minister will be open to taking these on board as the Bill progresses. It would be a pity, as is said, “to spoil the ship for a ha’p’orth of tar”.
The LRC noted that completion of developments was an issue and highlighted that the current enforcement provisions under the Planning Acts are not sufficient. Subject to scrutiny on Committee Stage, it appears section 5 addresses this defect. However, a further defect under the planning laws relating to the taking in charge provision is not addressed in the Bill. The LRC advocates a development bond that would indemnify the planning authority and hold the developer accountable. The Apartment Owners Network endorses this approach, which incentivises the developer to complete the development to standard. The commission notes that development bonds are usually an enforcement mechanism of last resort. The 2008 circular from the Department of the Environment, Heritage and Local Government stipulates:
Unfinished estates have been a running sore in this country for years. The straightforward requirement that developers finish estates to specification before getting planning permission to move onto a new estate has consistently and repeatedly been resisted by Fianna Fáil because of that party’s unique link to the builders. The Minister should agree to a bond, at least in the case of these complexes.
The officer makes a number of other points but I cannot understand the Minister’s resistance to the notion of the bond. Never has a bond been more badly needed than in this crisis created by the difficulties in multi-unit developments?
In one development in my constituency, Hunterswood, the residents' association made no progress dealing directly with the developer appointed management company board of directors regarding serious structural concerns they had. I made representations to staff of the building control section of the local authority and their attitude was to encourage “residents to engage with the service agent and their management company” and that “as time goes on, increasingly maintenance matters arising will be dealt with whatever Management Company is in place”. This reply indicates an attitude pervading local government that owner management companies should act in lieu of the local authority in ensuring builders complete managed developments to a satisfactory standard.
Against this background, the proposal by the Law Reform Commission for a development bond to hold the developer accountable is vital and I ask the Minister to have a rethink. Existing enforcement provisions are inadequate. In addition to the difficulties faced by home owners in unfinished developments, small contractors are also suffering where they have carried out work for developers but, in some cases, have not been paid. The bond could arguably serve the dual purpose of protecting both apartment owners and subcontractors.
The LRC also recommended that there should be a statutory prohibition on developers seeking payment of more than one year’s service charges in advance. I cannot see where this is addressed in the Bill. I would like to hear the Minister on this point since, in my experience, most owner-occupiers find it difficult to pay one year’s charges up front.
The LRC recommended that there be a statutory obligation on a developer to set up a management company by completion of the sale of the first unit at the latest. A purchaser should become automatically a member of the company at that stage. The Minister might confirm that this recommendation is adequately provided for.
Section 14 provides in respect of voting rights that “one vote shall attach to each unit in a multi-unit development”. I accept this is in line with the recommendation of the LRC. However, I am not persuaded of the one vote, per unit system and, like the Apartment Owners Network, I advocate the one member, one vote system favoured in an earlier edition of the Bill. Where, for example, an investor owns multiple units, he will enjoy disproportionate influence and he could combine with other investors to take control of the management company. At the outset of the life of a complex, the developer will own the majority of the units and, therefore, will have effective control or, at a minimum, greater influence than the average owner-occupier. This could defeat a main objective of the Bill. They are not trading companies or for-profit entities but a vehicle to manage and maintain the living space of its members.
Developments with substantial unsold units pose a particular challenge to those dwellers who reside there. In such circumstances, if the Minister persists with his “one vote, one member”’ system, the developer will have the majority of votes and thus will control the management company. Residents are naturally apprehensive about whether the receiver or perhaps NAMA may decide to sell unsold units to institutional investors in bulk rather than to individual home owners. What will happen in developments where the housing Minister has authorised long-term leasing, a most expensive and inappropriate solution for everyone except the developer and-or the bank?
The bigger long-term deficiency in the Minister’s proposal is that it will impede the establishment of an adequate sinking fund for the type of maintenance and upkeep not envisaged in the annual service charge. Some of these complexes, unless maintained and repaired regularly, will deteriorate into unpleasant living environments. Again, the individual owner-occupier will be most concerned to maintain a congenial environment. The Law Reform Commission, LRC, recommended that no long-term contracts with management agents be made by management companies at the start of the development. This recommendation is not addressed in the Bill, nor is the recommendation for the creation of a regulatory body to keep records of the developments and units held over. Will the Minister set out why he chose not to provide for the LRC recommendation that breach of obligations should constitute a criminal offence? It was envisaged that the regulatory authority would be the prosecuting body. Any unit owner would be in a position to seek an order for enforcement of the developer’s statutory duties from the Circuit Court and an award of damages to cover any loss suffered as a consequence of breach of statutory obligations.
The regulation of annual service charges is badly needed and section 16 appears to fairly provide for this. However, the requirement that the annual budget be approved by a general meeting each year could, in practice, be too onerous and too restrictive. There already will be a need for an annual general meeting and therefore an additional general meeting could be difficult in practice and not the most suitable for the detail involved in the preparation of the annual service charge. If the members do not approve of the performance of the directors in this or other regards, they can dismiss them.
In conclusion, I return briefly to the anti-social behaviour that is torturing so many communities and from the scourge of which multi-unit developments are not immune. Section 20 attempts to address this modern scourge and makes provision for house rules with the objective of “enhancing the quiet and peaceable occupation” of units generally. However, it is not evident how such house rules can be enforced. Section 20 (10), for example, enables a management company to “recover the reasonable costs” of a breach, but how does the management company deal with nuisance, all-night parties, obstructive parking, unsightly littering or dumping? The Apartment Owners Network argues for a monetary sanction and I can anticipate the difficulty associated with that proposal under our Constitution. However, I ask the Minister to seek the assistance of the Attorney General’s office before Committee Stage in devising some meaningful sanction. Otherwise, application and enforcement of the powers in section 20 will be meaningless.
The Bill shows no awareness of the environment in which we now live following the economic crash and the collapse of the construction industry. As developers go bust or AWOL and developments are left half finished or half occupied, will we have to fall back on the local authorities in some instances? Is it not likely that in some cases NAMA will have to do business with the housing authorities? In such circumstances, why should the common areas and public facilities not be provided by the local authority? Should the Bill not anticipate such eventualities?
In the Belfry Hall development in my own constituency the local authority required in the planning permission the construction of a playground in the development for the wider community, not merely the residents of Belfry Hall, and that it be the responsibility of the Belfry Hall management company to maintain and insure this public facility. The developer at Belfry Hall went into receivership and the first the home-owners who were elected to the board of the management company knew about this was when the local authority advised them to purchase public liability insurance for the playground. This is another example of what is happening at present.
Deputy Jack Wall: I thank Deputy Rabbitte for sharing time with me to discuss this very important legislation. Obviously, multi-unit developments are not as common in a rural constituency such as Kildare South as in cities and larger towns. In our case the management structures are in place for smaller developments. The retrospective aspect of this Bill regarding existing developments is more pertinent to my position than with regard to any future developments.
Bad habits and procedures have taken hold and one can see the effect of that on a small development. In one case of which I am aware there are four apartments. Investors own three of them while the fourth is owner-occupied. That person is a director of the company but she cannot get any sense or logic from the other people. One of the apartments is now without electricity and is being used for all sorts of anti-social behaviour and, as such, is a deterrent to having any type of organisation. What could be a very nice apartment block is now marked as a centre for anti-social behaviour.
I believe the county manager in such instances. There were only four apartments. Where was the logic or sense in putting a management committee in place? One of the investors is from Cork, one is from Dublin and the other is unknown. The fourth apartment is owned by a local woman whose husband had a stroke. She is now the only director in place and she is trying to organise everything. All the refuse bins, including hers, are full as a result of the anti-social behaviour of others. What can she do?
I hope the Minister and all the spokespeople will not just focus on the big developments, which might be common in their constituencies and where there is such demand for action. There is also a need to focus on small developments. The Bill identifies areas in that regard. How can this single person try to get some aspect of normality to her apartment block? One has the investor versus the home owner and it just does not work in such small numbers. Consider the cost factor and the sinking fund for getting repairs and so forth carried out. This woman arranges to have the grass cut and gets everything else done. She has asked everyone else to deal with it but they will not. Why should they? They are getting their money into the bank, probably from social welfare, on foot of leasing the property. They feel there is no need for them to be involved in anything else. It is a disaster zone.
I blame solicitors for many aspects of the property bubble. They allowed people to buy properties from plans and drawings, without knowing what would happen with them. Of course, the developments were not carried out according to plan. The next move was to approach the public representative to find out why the roads, lights and so forth were not completed. It is the same with these management structures. It is a disaster. I hope that in considering this issue we will not just look at the big developments and resolve to do something about them. It is vital to consider the two to four unit developments. That is where, in many instances, families, and especially senior citizens, have tried to set up home for their final days and tried to create a family atmosphere.
I hope the Minister will ensure that the retrospective problems created by bad management and bad habits, the investor versus the home owner, will be rectified and that action will be taken to overcome the problems suffered by the people to whom I have referred.
I welcome this Bill and the fact that the Minister agreed to bring it back to the House to complete Second Stage which will allow the Joint Committee on Justice, Defence and Women’s Rights to deal with Committee Stage during the recess.
I accept the drafting of this legislation was complex and while the gestation period of some six years was extraordinarily lengthy, the Bill is an honest attempt to deal with the problems for families arising from unregulated management companies. The Bill has shortcomings that have been pointed out by our spokesperson, Deputy Pat Rabbitte, and the Labour Party’s own legislative proposals took the co-operative route rather than the legislation now before us. There will be an opportunity on Committee Stage to examine these matters in detail and to amend and improve the Bill where required.
While this Bill deals with multi-unit house complexes, the main problem I have encountered is where management companies have been imposed on single-house housing estates. That is not to say that the management companies in multi-unit developments are satisfactory; none that I came across in this category was satisfactory and the worst of them all was in the Abbeylands in Clane. In this development, the company and the agent were directly under the control of the developer and the residents were effectively excluded from the decisions that affected them. In the case of single-house housing estates, the first to start the rot in Kildare was way back in the early 1990s when Seán Dunne’s company, Mountbrook, imposed a condition on purchase that all householders were required to be under the aegis of a management company. St. Raphael’s Manor in Celbridge is still under the yoke of that decision, with a charge against the property for non-payment of fees that are far less than reasonable. The only service provided is cutting of grass in the common areas, the maintenance of which is the responsibility of the developer in any case. Mr. Dunne’s example was subsequently followed by the Kildare county manager. Managers got the authority from section 34 in the Planning and Development Act 2000, subsection 1(a) and subsection 4(i), which state:
Shortly after this Act was enacted, a rush of decisions were made in Kildare that included single-house estate and mixed developments or single and multi-units that had a requirement for a management company. In the case of a single-house estate development in Straffan, the condition states:
In an unregulated market, this gave developers the power and force of law to impose whatever charges they wished for whatever service they wished. In nearly all cases I have come across, the power was abused and young families with heavy mortgage requirements were given no option but to pay up. I do not think this was the intention of this section 34 of the 2000 Act but it was used by county managers to hive off their responsibilities for maintaining housing estates and to privatise that part of their duties. The effect of their decisions was to create a new form of ground rent with young, debt-burdened families left to the tender mercies of the developers, with, in some cases, fees of up to €2,000 per annum being charged to get the grass cut and a burden on the house title in default.
The Minister should now amend that section of the Planning and Development Act to prevent a continuation by county managers of this practice. It never ceases to amaze me that senior public service personnel never miss an opportunity to privatise part of the service for which they are responsible. Is it that they have no confidence in their ability to do the job?
There is absolutely no need for management companies in single unit housing estates. It is much more preferable that the residents organise a residents’ association, charge a modest fee and get the job done. This also has the benefit of developing a community in new estates by neighbours working together and getting to know one another. This loose form of co-operative can also tackle other common issues which individuals are unable to tackle alone.
One might ask what is the urgency in getting this Bill into law. A number of factors create the urgency. Mostly young families are being ripped off for excessive fees for poor services without any choice or say in the matter. Second, because of the close relationship between developers, management companies and their agents — they are regularly one and the same — a situation has arisen in a number of cases where the developer has gone belly-up and where the management company and agent have disappeared along with the developer. In that situation there is no way to pay the fee and the burden of the unpaid fee is registered as a burden on the title of the house. As a result, the householder cannot get clear title and cannot sell the property. This needs to be addressed for those affected.
I thank the Minister for agreeing to bring the Bill forward at this time, thereby allowing it to progress during the summer. I hope this Bill, when completed, will give authority to residents over their own affairs and remove the current power of the developer and his agents, even where the developer has retained ownership of a number of units.
I welcome the opportunity to speak on Second Stage of the Bill. This legislation will be welcome in many parts of the country, particularly in the urban areas represented by Deputy Brady and myself. Much confusion has arisen about the role of managing agents and management companies. This Bill is particularly important and I look forward to its progression to Committee Stage during the summer recess and to being voted upon in the autumn session.
It is also imperative that the Property Services (Regulation) Bill is enacted at the earliest opportunity. The regulation of managing agents is particularly important. No more than management companies and developers who have not been either honest or forthright in their dealings with apartment owners, the same could apply with regard to some inefficient managing agents.
Confusion arises from people not understanding the terms of purchase of an apartment in a complex. This confusion is also fuelled by politicians, most of whom are outside this House and who are doing it for politically motivated reasons. They are exhorting apartment owners not to pay management fees and people do not understand when services are not provided.
This Bill has been debated in the Seanad and many useful suggestions have been made in the other House. In all parts of my constituency there are thousands of apartment complexes. The issue has to be addressed. With regard to public roads, footpaths, lighting and the landscaping of open areas in housing estates, the local county council should take control of those roads, lighting and open spaces. I ask the Minister to bring forward proposals on Committee Stage. Nothing causes more confusion than when a common charge is applied to both house owner and apartment owner. Many householders see no justification for paying the same charges as apartment owners.
I have noted in my constituency there can be a problem in mixed developments of houses and apartments with regard to the landscaped areas which are owned by the management company. In many cases, the landscape maintenance is not carried out by the people engaged by the managing agents to do this work. People are paying for a service from which they do not benefit. We must address this through some legal mechanism so that the ownership of that small strip of land passes back to the houseowner rather than being retained by the management company.
I also have experience of strike-offs. The Bill refers to reinstating management companies that have been struck off within a six-year period. In essence, this will be allowed once all annual returns are completed. This is a reasonable but the issue of money arises. Where the management company has gone into liquidation or has been struck off because of non-payment of fees, the residents must pay fees they do not have in order to reconstruct the company. Can the Minister examine the situation so the residents are not forced to pay fees to reinstate a struck-off company? We should come up with a flexible manner of dealing with this.
I am glad the measures included in the Bill provide for each owner having a vote. We all have experience of a developer owning a substantial portion of the apartments and retaining control. We need equity so that each owner feels part of the arrangement. It is important the membership transfers to the new owner in a totally transparent way when selling apartments. Developers should not be able to get away from completing their obligations and completing developments. This Bill must put the onus on developers in bringing forward the management company speedily, as provided for in the Bill. Equally, they must deal with unsold apartments or incomplete apartments. The Bill goes a long way to deal with this issue, which causes confusion to those who have made representations to me.
Service charges are important and it is vital we make sure management companies provide a budget upfront for all apartment owners. People should clearly understand, in a transparent way, what they are paying for. People are confused when they are sent out a bill for €1,000 or €1,500 and they have no idea what they are paying for. In many cases, they are not provided with a breakdown of the bill when they request it. That must change and this Bill will ensure all service charges are transparent. An annual meeting is paramount, with the budget being agreed in advance by members. The Bill endeavours to deal with this aspect of the problem.
Sinking funds have caused problems for all of us who have dealings with apartment blocks. In many cases, there are no sinking funds for older developments, a matter to which Deputy Cyprian Brady will refer. Maintenance has been ignored and buildings are deteriorating. It is vital we ensure a proper sinking fund. The Bill suggests a minimum of €200. This may be enough in some cases but may not be for larger developments. This is particularly true when one considers roof repairs, painting, decorating and replacement of carpets.
I am glad to see the question of disputes and house rules addressed in the Bill. This particularly applies to apartments rented out to undesirable people who carry on in an antisocial manner with loud music and parties. I am glad this Bill addresses aspects of the problem. In my experience, it irritates people when their neighbours ignore them and the owner of the apartments makes no effort to control the tenants.
In many cases, annual general meetings are held without proper notice to the members. New committees may be elected in this situation. It is vital to ensure new regulations make it mandatory that everyone participating in a block of apartments receives a registered letter to ensure they are given notice of the annual general meetings so they have the opportunity of discussing the accounts, agreeing the budget and being clear about the services provided. I welcome this Bill and I hope we bring forward the Property Services (Regulation) Bill in the autumn so that these Bills can be enacted very soon.
Deputy Cyprian Brady: I thank Deputy Kennedy for sharing his time with me. I have called for this legislation for some time. I welcome the introduction of this Bill because since the late 1980s, when some of the first apartment complexes were constructed in my constituency of Dublin Central, there have been numerous issues concerning some of the aspects of living in an apartment complex addressed in this legislation. I recall a discussion with a senior local authority official a number of years ago. He expressed concern that many of these apartment complexes would be a return to the old slums in Dublin in the 1930s and 1940s. In the vast majority of cases, that has not happened. In many cases the complexes are well-managed and many of the residents are organised and have an input into the day-to-day running of the complex. However, a number of complexes are suffering badly. The local authority provides accommodation on a social basis to the population in Dublin and a mixture of social and private housing exists in many of these complexes. That brings its own problems. Some of the measures in this Bill will deal with those issues. I support Deputy Kennedy in his call for the introduction of the Property Services (Regulation) Bill, which is crucial to supplementing the changes proposed in this Bill.
This Bill legally defines the difference between ownership and management. It solidifies the rights of owners and tenants and specifies their obligations. My experience of voting rights is such that owner occupiers are not aware they are part of the management structure of the apartment complex in which they own apartments. The vast majority in Dublin Central, and particularly in the centre of the city, are tenants and the properties are owned by landlords. That is changing very slowly and we now have a number of owner occupiers who are not aware of their rights as regards voting at annual general meetings. In this context, I welcome the introduction in this Bill of a requirement to produce an annual report that is agreed by all the members of the management company and which is discussed in detail at the annual general meeting.
The issue of service charges has always been an ongoing problem and recently, when times were good, service charges increased phenomenally. However, people, particularly those who find themselves in negative equity, who have experienced a reduction in their working hours or who have lost their employment, are now under severe pressure to maintain the service charges and to keep up their payment. Moreover, there now is quite a number of vacant units that are causing serious problems, particularly in some of the more recent developments.
Deputy Kennedy referred to sinking funds, which are crucial to the proper management and running of an apartment complex. In some apartment complexes, albeit in a small number of cases, no sinking fund exists. However, this legislation will ensure that a sinking fund is put in place. I presume the requirement of €200 per unit specified in the Bill is a minimum contribution, as I imagine that it will be adequate in some complexes but not in others. Many such complexes have been in place since the mid to late-1980s and I know of one particular complex in Gardiner Street in my constituency, which is extremely well-managed and which has the co-operation and involvement of the vast majority of residents, both owner occupiers and tenants, in its management. They work closely with the management company in maintaining an upmarket and high-quality development in the centre of the city. However, they pay very dearly for this and the service charges and contributions towards their sinking fund are highly onerous on some tenants and owners. Nevertheless, a sinking fund is crucial to the proper management and maintenance of many complexes.
A number of speakers have mentioned the issue of antisocial behaviour. It ranges from a barking dog right through to noise and disturbance from parties at all hours of the morning. Moreover, until recently, some developments did not have noise abatement measures built into them during their construction. Consequently, developers are now being obliged to go back at the behest of the tenants and owners to try to resolve such issues. I refer to noises such as those from people walking across the floor and make the point that people must be able to walk across their apartment or to have a radio or television turned on. One can have house rules, which will be fine if everyone obeys them. However, it only takes a very small minority to cause major disruption for quite a lot of people. There must be some kind of regulation and an imposition on people to appreciate this, particularly in apartment complexes in which one lives in close proximity to one’s neighbour, notwithstanding the fact that people have told me they may not see their neighbour from one end of the year to the other. However, this is the modern way of life and the introduction of some form of rules and regulations, particularly in respect of noise, is very much be welcomed.
The division between the rights and obligations of tenants and landlords also is to be welcomed. As for the mediation of disputes, there have been a number of disputes around the city which have never been resolved. Tenants and owner-occupiers find themselves in a very difficult position because the developer had complete control of the management company and chose the management agent. Consequently, such people have absolutely no input or have not even been informed by the developer of the identity of those to whom they should speak in the event of a dispute. In some places, there has been a complete lack of co-operation or exchange of information.
I also welcome the fact that the Bill also covers existing complexes. As I noted, while there have been elements of antisocial behaviour in some complexes, this happens in every housing estate, be it private or public, around the country and is a law and order issue. I have also often noticed recently that many residents of apartment complexes have become involved in their local communities. For example, in one case the tenants and owner-occupiers in a particular complex joined the local community policing forum. They were dealing with issues pertaining to antisocial behaviour and this is greatly to be welcomed. Finally, I note that many such complexes were never designed or built to house families. In future, a major effort must be made to ensure that any future developments take account of a family units which may grow over time. There are no facilities for children in many complexes and this leads to tension within the complexes themselves. However, I greatly welcome the introduction of this legislation and I wish it a speedy passage through the Dáil.
Deputy Alan Shatter: At the outset, I welcome the fact that we are having a debate on this Bill. This is legislation that probably should have been passed a decade ago and it is quite extraordinary that, having been published last year, it is only being debated in the dying hours of this session of the Dáil. Indeed, it would not have been taken if not for the pleas from both Fine Gael and the Labour Party that we complete Second Stage tonight in the hope that we can take Committee Stage during the vacation.
I have heard the very eloquent speeches delivered by my colleague, Deputy Terence Flanagan, and by Deputies from the Labour Party, including Deputy Rabbitte, and I have heard nothing said from this side of the House with which I disagree. I wish to touch on one or two issues that have not yet been raised. If I repeat something to which the other Deputies have referred, I apologise but there are one or two issues that are worth addressing.
In the context of the subject under discussion, which essentially is the apartments built across this country, we should have had legislation put in place a long time ago delineating the rights of those who purchased the apartments, how management companies operating the apartments should function, how the apartment owners should control them and rules to ensure these companies were not controlled by developers in their interests and to the exclusion often of people who acquired apartments. Far too frequently, management fees have been used to complete work that the developer was required to complete but failed to complete under the planning permissions and conditions granted. That occurred in circumstances in which those who owned apartments could not control what was occurring and the developer essentially appointed his own agent to control the way in which the apartment management company was being run.
Like other speakers, I recognise there are a number of very good things in this Bill, but I think though that it requires some further development and I think there are areas that have not been addressed. In the context of dealing with the payment of the annual management charges, one of the huge difficulties for existing apartment owners is that within every major apartment block of which I am aware in my constituency, there always is a number of individuals who fail to pay their annual charges. Furthermore, depending on the efficiency of the management company or agent who has been appointed, these often run into substantial arrears that are to the detriment of other dwellers in that block and they can create a huge difficulty in the context both of the meeting of the real annual charges and expenditure surrounding the apartment but in the establishment of a sinking fund to ensure that future funds are available if difficulties arise simply in the general maintenance area. I regret that this Bill does not implement a particular recommendation that I think was made by the Law Reform Commission, which is that it should be possible to recoup management charges arrears through the small claims court. There should be no necessity to do this through the ordinary courts structure which will make it more long-drawn out and expensive.
There should be easy access to the small claims court, an application that can be made without the necessity for lawyers to be recruited by management companies or agents appointed. In circumstances in which someone has not paid their annual charge it should be possible within three months of arrears accumulating to make that application. The legislation should be amended to deal with that.
In the context of apartments generally, we are regularly critical of developers. There have been some very well constructed apartments in the city and county of Dublin and there have been appallingly poorly constructed apartments which are little short of boxes that have been sold at exorbitant prices to people. Part of the blame for that lies at the feet of the Government for failing to ensure that our planning laws prevented the construction of the poor type of structures we have, but part of it rests with the local authorities. The local authorities have been far too ready to grant inappropriate planning permissions for the construction of apartments that provide no reasonable living space for young couples or families. They seem to believe that all apartments when rented, even when they are two-bedroom or three-bedroom apartments, will be inhabited by two adults who will never conceive children. I am familiar with myriad apartment blocks around the city and county of Dublin which are not children-friendly or family-friendly. Now because we have thousands of young people with young children trapped in negative equity in these apartments they have no way out. They have no alternative to move anywhere. That will create a huge problem if we do not address it. I appreciate it cannot be addressed in the Bill but it is a major problem.
The other problem is the ideological issue which we have had, particularly in the area administered by Dún Laoghaire-Rathdown County Council in part of my constituency where planners seem to be of the belief ideologically that when one constructs apartments one does not provide adequate space for car parking. The ideological view was that everyone should travel by public transport even where public transport was grossly inadequate. I am aware of apartment blocks in my constituency in Sandyford where if one has a two-bedroom apartment one might have been sold one parking space or one parking space came with it. In circumstances where a couple or two individuals are living in an apartment who both have to work and have to go in completely different directions to work, who have to work just to pay the damn mortgage on the overpriced apartment that they have purchased, and they need cars to get to their work as there is no possibility of using public transport to get to work because it is so poor, there is not even basic car parking spaces. There are not car parking spaces for visitors or family to visit young couples who feel isolated.
I am talking about the Sandyford-Stepaside area in my constituency. It is a complete disgrace that we had a local authority so ideologically committed to public transport that it did not allow for the very basic facility of visitor car parking. If someone has a birthday party for a child and relations are coming from outside Dublin or other parts of Dublin there is nowhere to leave cars. There are double yellow lines everywhere. It is quite outrageous.
In the context of this particular Bill there are areas of difficulty that need to be addressed. One of the problems is where one has large numbers of vacant apartments and developers have got into difficulties and apartments are being sold now by way of fire sales, either by estate agents or by liquidators or receivers. There is a real difficulty with regard to the completion of outstanding works within the apartment complex. That is an issue that needs to be dealt with. It will become an even greater problem in the context of NAMA. When NAMA starts getting vesting orders for multi-unit blocks to be transferred to it and it gets involved in the sale of apartments and fire sales — NAMA is the body that may initially be involved in the organisation of the companies as provided for in this Bill to run the apartments — we need specific provisions relating to how NAMA will interact with certain functions in regard to the Bill when it takes over from developers. The Bill makes provision in particular with regard to developers but it does not deal with receivers, liquidators or NAMA where those individuals have taken possession of apartment blocks or they are involved in the sale.
The final point I wish to make is one other Members have raised but it really needs to be said. I just cannot understand why the Bill is confined to multi-unit developments with the definition given. Again, in my constituency and in other parts of Dublin there are developments which incorporate apartment blocks and individual houses, all being looked after by a management company. The units remain private. They are not taken in charge by the local authority and services have to be paid for in the context of cutting the grass and other matters. Under this Bill, those who own single unit houses within a complex are excluded and their situation is not addressed because the house is not a multi-unit. People own individual houses next door to apartments within the same development and subject to charges levied by a management company but they are not properly addressed in the Bill. This is something which should be considered and dealt with.
Deputy Leo Varadkar: I welcome the fact that we are having a debate on the Bill. At a rough count there are approximately 600,000 people in management company developments, there are 4,600 management companies altogether and 400 different management agents. In my constituency of Dublin West at least 7,000 of the 32,000 housing units are covered by management companies. I include areas such as Tyrrelstown, Ongar, Hollystown, the former Phoenix Park racecourse, Diswellstown, Farmleigh, the Waterville area around Blanchardstown hospital and some of the apartments around the Blanchardstown centre.
I know a little bit about the subject myself as I live in a management company development and pay management fees. Management companies can apply to many different types of development. There are apartments, gated housing, un-gated housing and mixed developments, not just in terms of a mix of houses and apartments but in terms of developments that are partially commercial and partially residential.
The legislation is overdue. There was a commitment to it in the programme for Government of the first Fianna Fáil Government in 1997 but it was not done. Much work has been done by the Fine Gael party, the Labour Party and the Law Reform Commission, the National Consumer Agency, the Office of the Director of Corporate Enforcement and also the Apartment Owners Network. The legislation is very much needed for a number of reasons. There has not been a clear law up until now. In many cases developers controlled developments through golden shares or through provisions which allowed them not to have a proper AGM until all the units were sold. There is also the fact that many charges are unfair. AGMs are often held improperly. In many cases there are not sinking funds or, as in the case of my development, the issue of unpaid fees for the past ten years arises. There is also the fact that there are still concerns over the completion and transfer of developments.
I am not convinced that the Bill as drafted is adequate. It has been watered down and amended in the Seanad. Reading through the Seanad debate I found it difficult to understand exactly what the amendments were about and their significance. I very much endorse Deputy Terence Flanagan’s call for a new explanatory memorandum to the Bill.
I organised a public meeting which was an interesting thing to do where I presented to people who live in management company developments in my area what was in the Bill and asked them what they thought of it and what should be in it. My contribution is based on that. There are many good things in the Bill. As I am time constrained I will not mention them but there are some areas about which I have concerns and would like clarification in the Minister’s response, or if not then at least at some stage. The first issue relates to the one unit, one vote provision. That seems to have been slightly changed in the Seanad but I do not fully understand what happened in that regard. Perhaps someone might explain how that has been changed. I would like to know in particular whether the provision will apply retrospectively and if it will apply to existing management companies. Will it apply to them or if it will only apply to new developments that have yet to be built? That is crucial for everyone who currently lives in an apartment development. I would also be interested to know how it affects the master lease rules in existing developments.
Deputy Rabbitte proposed that it should be one member, one vote. I can see problems with that as well. If someone owns, for example, three apartments in a development he or she is paying three times as much in fees and therefore to a certain extent that would give him or her greater voting rights but there might be a mechanism to prevent any one owner or developer having a controlling interest of greater than 50%. That can be done in a different way. What should be in the Bill, but which is not, is a proper system for the dissolution of management companies. Management companies have been dissolved in Castlecurragh in my constituency but this involves a very difficult process. There should be a proper system for achieving this.
There should be a proper system for the separation of management companies. In mixed developments, management companies for the apartments should be separate from those for the houses, if there should be one for the Houses at all. There is no proper system of separation. Separation can be achieved but it is extremely complicated. It involves splitting the folio and title, closing one company and establishing two or three new ones in its place. There needs to be a better system to achieve this. From reading the transcript of proceedings in the Seanad, I believe the legislation now applies to mixed developments. Perhaps this can be clarified.
What is the position on agents? There are a number of cases in Dublin 15 in which management companies have not filed annual accounts or, in some cases, have been struck off or are close to being struck off, yet their agents are still sending bills on their behalf. Will this be addressed in the Bill?
I agree with Deputy Shatter’s proposal that we should allow owners of management companies to use the small claims court procedure to pursue debts. It is very hard and expensive to pursue debts. There should be a specific provision on solicitors’ obligations, including the obligation to inform buyers of houses or apartments in management company developments as to what they are doing. Many people tell me they did not understand what they were buying into and that their solicitor did not explain it. When I heard this on the first few occasions, I did not really believe it, but now I have heard it too many times not to believe it. This needs to be addressed in the legislation.
Solicitors should be obliged to inform the management company of a change of ownership. There have been a number of cases where management companies have not been informed when apartments have been sold, resulting in the sending of bills to people who are no longer the owners.
The completion of developments comprises a difficult area. In the case of a traditional housing estate, the council determines at the time of taking charge whether the development has been built in accordance with the plans. If it has been, a bond is paid. This system does not work because the bonds are so small. They are trivial in Ireland by comparison with those in the United Kingdom. There are many developers who are happy enough to forego their bond knowing full well that completing the development properly would cost a lot more. I hope the Minister for the Environment, Heritage and Local Government will consider this in his reforms and increase significantly the bonds developers must pay so they will not be worth losing, thus incentivising them to finish their jobs.
The system is complicated in multi-unit developments because they are not taken in charge. Who determines whether the development has been completed according to the plans? In theory, the local authority should do so but this does not really happen because the developers do not request the refund of the bonds because they are so small. What happens is that the developer transfers ownership of the common areas to the management company, which it then controls. Nobody ever checks before the transfer that the development has been completed in accordance with the plan. Consequently, management companies comprising residents often find out they are the owners of common areas transferred to them by developers without having had a say in ensuring those areas were checked for snags and completed. This is not covered in the legislation in so far as I interpret it.
If a management company is struck off, a six-year period must elapse before it can return to the register. This is good. It is not clear where the sinking fund goes when a company is struck off, nor is the fate of the common areas clear. Does a sinking fund that has accumulated transfer to the Minister for Finance if a company is struck off and cannot be recovered?
According to the first draft of the Bill, a €200 sinking fund was to be imposed on everyone. This would be difficult in some cases. It would be very appropriate in some cases but not necessarily in all cases. I know of some developments — in the Waterville area of Dublin 15, for example — in respect of which the developers left behind very large sinking funds worth from €40,000 to €100,000. There is no reason to charge people €200 on top of their existing management fee in such circumstances.
The owners of houses in mixed developments often pay a small management fee of only €150 or €200. To add an extra €200 to this would be unreasonable. A sinking fund is for long-term repairs that may be required to apartment buildings, not houses. I am not clear whether this was addressed in the amendments in the Seanad.
Will there be provisions for the bonding of sinking funds? I am very concerned about management companies and agents collecting huge sums in sinking funds that are not regulated at all. I am concerned that such funds, where they exist, could be dipped into or invested inappropriately. There should be a system in which sinking funds would be bonds. I look forward to hearing the Minister of State’s response to my queries and requests for improvements.
Deputy Trevor Sargent: Tá mé ag roinnt mo chuid ama leis an Teachta Chris Andews. Cuirim fáilte roimh an deis labhairt ar an mBille um Fhorbairtí Ilaonad 2009. I ndáiríre, tá sé thar am go mbeadh an dlí seo againn. Tá sé thar a bheith deacair ar a lán daoine atá ag déanamh iarrachta íoc as na hárasáin, srl., atá acu go dtagann billí uafásacha móra anuas orthu gan aon fhreagracht, i ndáiríre, uathu siúd a ghearrann na costais sin orthu.
As the newly appointed spokesperson on justice for the Green Party, I welcome the opportunity to engage on this legislation from the Department of Justice and Law Reform. I have had hundreds of representations from people in my constituency, Dublin North, who have had problems, often intractable and frustrating, with management companies. While one may say a buyer-beware caveat should have been adhered to when making a purchase and receiving legal advice, that is not very comforting for anybody. Legislation in this area has been lacking and it is high time we had it. I hope that when this legislation is passed, many people will have a say in and an ability to influence their own destinies, more so than heretofore.
As a consequence of the exploitation of apartment dwellers and the unjustifiable fees demanded, many of us in the Green Party, when negotiating the programme for Government, were determined to ensure this legislation would be rigorous and that it would be forthcoming as quickly as possible. It is important that we consider Second Stage before the recess so we can deal with Committee Stage.
Let me give a flavour of correspondence I received from a certain individual. He states he purchased a duplex unit under the shared ownership scheme with Fingal County Council. He was told by the council the management fee would be €550 per year and that this would include insurance and bin charges. He says that others were told different things. He was told the charge was for the year. He lives in a courtyard where there is no street lighting. There were lights but they were not switched on until late October or the start of November, thus creating a danger for pedestrians in the area. The manager of the management company resigned and the director was a developer. A new management company was introduced and again the developer appeared as a director. This is bizarre but unfortunately not unique or unusual. My constituent has not been able to make contact with the individuals concerned, never mind have a say in his destiny. He was landed with a bill of €940 in service charges for his duplex apartment, including an additional €250 fee for refuse services. This differed considerably from what he was told to expect. When he was given a breakdown of the charges, they included such services as external window cleaning, but there is no record and certainly no evidence of window cleaning ever having been carried out.
Unfortunately, this type of carry-on has been rife and many people have rightly complained. It is no wonder that so many of us have been approached by people who have become fed up and frustrated by this level of exploitation. As other Deputies stated, some of this exploitation has also been visited upon householders in estates that include apartments and are caught up in management company structures. We need to clarify the matter, as amendments may be necessary to ensure we do not create a blind spot in respect of those who, while not living in multi-unit developments, are affected by the same issues.
Some Deputies referred to refusals to pay management fees. I have encountered such incidents, but I hope they constitute the end of this type of stand-off. As Deputy Terence Flanagan stated while discussing fire safety, a genuine risk is created when a stand-off leads to fees not being paid, in that stair-wells might not be cleaned and rubbish might accumulate. Before people know it, they will have created the conditions that can become the subject of an inquiry as to why rubbish was left to accumulate and a fire was caused, although hopefully one without tragic consequences. I share the Deputy’s concerns about fire safety and inspections, but I hope we will see an end to the type of militant stand-off that could end in a fire disaster.
I hope the Minister for Justice and Law Reform will provide clarification on a number of issues before we consider amendments. Local authorities must be involved in the drafting of this legislation. In some instances, a management company has been established as an easy way for a local authority not to take charge of a development. During the time of the so-called building boom, the perception might have been that taking charge of further developments would have stretched local authorities’ staffing resources to an unmanageable degree. Therefore, management companies were an attractive interim or longer term arrangement. The system has become fixed and we are left with a legacy of places with management companies that should not have them. For all intents and purposes, they are straightforward housing estates, not multi-unit developments.
This matter must be revisited and clarified, given the level of confusion affecting the residents of estates in my constituency. With residents from one estate, I met the Minister of State, Deputy Cuffe, to try to iron out where building regulation law was inadequate. While it might be inadequate in some respects, it might also be the case that local authorities have not provided sufficient levels of inspection or followed up on complaints and have instead off-loaded those complaints to a management company that is not qualified or in a position to take on what the local authority should have been doing. I hope the legislation can iron out this grey area. If additional legislation is required to upgrade our building control regulations, let us have it quickly because people are suffering for want of robust legislation.
This Bill is essential, but building regulation law must be tightened. The responsibilities of management companies need to be defined and responsibility for building control needs to be clarified. There should be no confusion. Local authorities need to be involved, as it is their responsibility to ensure proper building regulation is in place. Residents should expect no less.
Deputy Chris Andrews: I welcome the opportunity to contribute on the Bill. The term “multi-unit development” is used to describe a building comprising multiple residential properties that share certain physical areas, such as car parks, halls and gardens, and certain services, including security and waste disposal. Notwithstanding Deputy Sargent’s comments, the Bill will give home owners who live in multi-unit developments like apartment blocks or small housing estates much greater and long awaited legal protection when enacted. I am pleased to note that the legislation will cover not only new developments, but those that have already been completed.
As a public representative for Dublin South-East, I am all too familiar with the considerable problems people have experienced with developers who have been reluctant to hand over developments’ common areas after their completion. I regularly receive correspondence from constituents who have experienced difficulties with the property management companies assigned to manage a particular set of apartment blocks. The most common problem seems to be a lack of transparency as to who is responsible for what and little is seen in return for the money being paid.
The Minister for Justice and Law Reform has touched on how current legislation does not meet the needs of people living in these new types of development, which only became popular in the early 1990s. There has been a significant growth in apartment living in recent years, with areas such as the docklands being developed into prime residential locations. However, many people were anxious to purchase and did not inspect to any great level of detail the ownership arrangements into which they were entering, namely, their responsibilities and those of the developers, the fees and other rules. Adjusting to apartment living takes people a while.
The first and most welcome aspect of the legislation is that ownership of the common areas will be transferred to the property management company before any apartment is sold. This will ensure that the practice of developers holding onto a few apartments or units in order to retain control of the management company will be stopped. It will also ensure that developers cannot return and make changes at will. In cases where the common areas have not already been transferred to the property management company, the Bill provides that they must be transferred within six months of its enactment. This is an important provision.
Another important feature in the legislation is the new court-based dispute resolution mechanism, which will apply to new and existing multi-unit developments with a strong emphasis on mediation, which is the desired route. If mediation fails, the court may make an order where it is satisfied that a right has been infringed upon or an obligation has not been discharged.
This is critical in ensuring that people have somewhere to turn if a developer or management company is not discharging their duties correctly. Another new requirement will be a minimum contribution of €200 per unit for a sinking fund to meet any large and non-regular costs. The sinking fund makes the financial aspects of maintaining an estate smoother and easier. We are all familiar with stories of half finished hallways, gardens and recreational areas that are not maintained despite people paying in some cases exorbitant maintenance fees.
This leads me on to how management fees are arrived at and justified. Apportionment refers to the method in which the percentage of the overall service charge for the development is attributed to individual owners. The calculation may be based on a number of factors, for example the size or type of unit, the services availed of or the total number of units in the development. In the future an owners’ management company must establish and maintain a scheme of annual service charges and this must be approved by a general meeting of the company’s members.
The annual charge must be calculated on a transparent basis and be fairly apportioned between apartment owners. The service charge may not be used to defray expenses on matters which are the responsibility of the developer or builder. Service charges in respect of any unsold units must be paid by the developer, and will not be fobbed off to those people already in situ in a particular development. That is an important aspect to the Bill and very welcome.
The Director of Corporate Enforcement has, in the past, made reference to the growth of management companies being struck off the Companies Register for failure to file annual returns. The consequences of this for property owners is often more serious than they realise. For example, it may be difficult to get an insurer to cover the structure of the building, mortgage lenders may invalidate the mortgage on an uninsured property and no one can issue share certificates, so it will be difficult to sell the property, in the event. Under this new legislation struck off property management may be restored to the Companies Register within a six-year period provided all outstanding annual returns are submitted. The Department and the Minister have engaged very actively with the public on this piece of legislation, which is most welcome and has been positively received.
One aspect of it that has been brought to my attention recently concerns an individual being allocated an apartment from the social housing list, where the landlord is a member of a voluntary housing group, perhaps. There is a sense among people allocated such social housing apartments that they are not being consulted as regards the management of the particular apartment block, and voluntary housing management should be engaging with social housing tenants within the various apartment blocks. If this were to be done, it would make a positive difference. Obviously the service charge is at a reduced rate for people allocated social housing units, but there is still a strong case for their being involved in management decisions that affect the whole apartment block. Some 20% of the apartments in the Dublin docklands have been let as social housing, and this has been very positive. However, that in itself brings difficulties because the individuals living in these units believe they are being excluded in a way that affordable or private tenants are not, and this is something the legislation could examine in more detail.
During the property boom people were often so anxious to purchase, critical details may have been overlooked in their desire to secure a home. Eventually, people realised they were liable for unexpected fees and had few or no rights, only after they had made a purchase. This legislation, when enacted, will ensure that the entire process is clarified and that people will have a much greater say in how their development is run. That is why I welcome the Bill and look forward to its speedy enactment.
Deputy Bernard J. Durkan: I am delighted to at last have an opportunity to speak on this long-promised Bill. It must be about seven years since it was first mooted. Several promises were made as regards when it would come into the House. I do not know what the reluctance was. It looked as if it could give rise to an embarrassing situation and nobody wanted to bring the Bill before the House when we could debate it. It is here now, and I am not so sure that it will work, but I hope it does. It is like much of the legislation we have passed over the years to address particular issues that Members will readily recall. Four or five years later we find they have not addressed the issues at all.
No pun intended, there is a multiplicity of issues in this particular situation. For instance, there was then and now. As we hear so regularly, “that was then, and this is now”. The situation that arose with most of the developments which are the subject matter of this legislation was prevalent in the boom time. Developers could not get out of their estates quickly enough. It was a question, in many cases, of a management company being set up to complete the development and take on responsibility for the planning permission conditions imposed in the first place. That, of course, resulted in very serious problems.
In the greater Dublin area, certainly, there are numerous cases of residents who are deeply dissatisfied and object strongly to the operation of some management companies. Some management companies have worked well and shown consideration, where responsible people were in charge who tried to do their work in accordance with company law and everything else. I have to pay tribute to them. Others were apparently set up by developers to allow them to abdicate their responsibilities and move away to more lucrative pastures. People say that there is a reluctance on the part of some residents to pay the charges. Such assertions must be measured against the current climate.
For example, in most new housing situations, the charges and costs imposed on residents are massive when one considers that the unfortunate people concerned bought their dwellings when the Celtic tiger was roaming the land and they were in fear of never getting a foot on the housing ladder or having a home of their own. They went in fear of having to rent for the rest of their lives, and they were scared. They queued up all night in many situations to have the privilege and honour of putting a deposit down on an apartment or house. Having waited all night, they could be told the following morning that the particular apartment type they wanted had gone up overnight by a further €25,000 or €30,000. In one particular block in the Lucan area, the price of the houses increased by €80,000 over a weekend, which was absolutely crazy. I can well understand that we now have a situation whereby unfortunate home owners are in difficulty. Usually they will have to meet substantial mortgage repayments, in the region of €2,000 a month, or certainly €1,800 or €1,900 a month for a very modest type of house. On top of that if both partners are working they might have to pay for child care facilities, which comes to another €2,000 a month, which now means €4,000 a month overall. On top of that they have ordinary day-to-day household expenses. If they do not live near a rail station or other public transport mode, they could face at least €1,000 a month for motoring costs. To fund such activity a person must be on at least €80,000 a year. How can one expect people to afford such charges?
When first introduced, the building control legislation was perceived to be a panacea for all building difficulties. However, even a superficial inspection of some developments around the country would shock one. Many of them would not pass any building regulation tests because nothing was complied with. They were thrown up in a hurry without, for example, proper insulation. The developer could not care less as they were handed over to the unfortunate purchaser and management company.
Some have referred to the architectural flair of many of these new developments. Architectural flair, how are ya. While I accept there are some exceptional developments, others would remind one of a Mediterranean resort in which the developer had gone bust, leaving behind buildings of appalling quality.
An earlier speaker referred to duplex apartments. I do not know how anyone gave planning permission for this type of apartment. They have an open stairwell on the outside on which mothers with children must drag their prams. Did we learn anything from experience? At a public meeting recently I heard someone describe this type of apartment as a much sought after development. These are where one house is planted on another with a stairs outside like on a grain loft in the old days.
The Government claimed the country was awash with money in the boom times. I recall the then Tánaiste and Minister for Justice, Equality and Law Reform claimed the Government did not need the revenue from stamp duty on house sales. During that time, house builds were woeful. It is sad to see what has happened now in the downturn.
I can well understand why we have Mexican stand-offs with residents in particular areas feeling aggrieved at having to pay for what they regard as an inferior product. For example, there is the wood effect put on the exterior of many apartment blocks. While it looked great for the first year, it began to fade in the second year and then turned a really nasty colour in the third. These effects do not weather well in this country’s climate which is very different from those where such effects are used successfully on exteriors.
All Members have been inundated over the past eight years with requests from residents concerned with the operation of their management companies, particularly where the companies are not well disposed towards their residents and attempts made to extort exceptionally high charges with little or nothing in return.
The need for a management company in estates of single houses is not obvious to me. In fact, services provided by the local authority in the past are now provided by the management company in return for a fee. There are so many charges to be paid by the unfortunate resident that he or she will not know where to start or finish. This is at a time when incomes have come down due to the various income levies imposed and some households have lost one if not both incomes.
It is fine to say they should not have entered into those contracts during the Celtic tiger and should have known what they were doing. It must be remembered, however, back then people were told if they did not get on the property ladder they would be renting for the rest of their lives. This was also the time when people were paying up to €2,500 a month in rent for fairly modest properties. If regulations had been applied more rigidly during the course of the building boom, we would not have so many of the problems we have now.
There used to be a house-builders guarantee scheme which was replaced by the Home Bond scheme, the answer to everyone’s prayers. The scheme is scarcely able to exist now. In most cases where a householder or apartment owner seeks the bond to cover some external repairs, they are informed they are not the scheme’s responsibility. In the case of pyrites present in cement in some housing developments in north Dublin, the maximum payment from the scheme will be €30,000 when the entire house will need to be levelled and rebuilt.
In future developments in which management companies will be involved after completion, I suggest consideration is given to low-maintenance grounds and facilities — in other words, trees and grass, for example, that would not have to be cut regularly. These would be more suited to multi-unit developments than ordinary housing estates. The more cost burdens are put on the heads of the unfortunate residents, the less the chance they will actually be able to meet their commitments leading to the management company collapsing. I accept companies have to collect fees and charges from those residents who refuse to pay. However, when those residents explain their circumstances, the whole matter suddenly is brought into perspective. This is on top of developments not completed in accordance with planning permission conditions and not functioning properly with ongoing maintenance problems which should be the responsibility of the developer in the first place.
I hope we can learn from the experience of the past ten years to good effect. I recall speaking on this very subject in the House nine years ago. The media was very helpful to me, giving me a full picture on the back of the following day’s newspapers. They were not really applauding me for what I said, but I had predicted all the issues that are now facing the general public — the possibility of a collapse in the housing market, the quality of developments and maintenance costs, which will increase as time goes by. For a poor development that is poorly finished and requires ongoing maintenance, these costs will increase with every passing year. We can have all the management companies we like; it will not change anything. There are builders who will now tell one openly that some of the developments built over the last ten years will fall down. They cannot see how they will last for 30 or 50 years. There are major issues facing us in this regard.
I must point out that there are distinctions: as well as those responsible for problems, there are some builders and developers who have been very conscientious, and it shows. When one drives into the estate, one can tell straight away that they have done a good job. There are others — God help them — who just rushed in and then rushed out as quickly as possible. Development levies were not paid to local authorities and still have not been paid. For some developments, the conveyancing was not done properly. Where there was the option of estates being taken in charge by local authorities, some of them were never completed in accordance with requirements and, as a result, the taking in charge will drag on for years.
I hope that some of what is contained in the Bill will address the issues that have arisen. Every Member of this House has personal information about what the requirements are and have been over the last number of years. We should try not to allow a repetition of the problems we have seen. We should try to ensure that certain standards apply — that, like the guarantee scheme, it does work. It is an insurance scheme; it is supposed to work. Thirty years ago, under the house building guarantee scheme, local authorities were able to strip the roofs off houses, take them down to the foundations if necessary and rebuild them — and they did so, leaving them fit houses. We cannot do anything like that any more.
I could go on but you will be glad to know, a Leas-Cheann Comhairle, that I will not. We hope this Bill does something to address the issues faced by people living in such units. For the sake of the unfortunate householder who has the responsibility of paying a mortgage on a monthly basis, along with a whole lot of other charges, we must ensure the management company charges do not become larger than the mortgage itself.
Deputy Joan Burton: Like other Deputies, I have been raising this issue for the last seven years. Given that my constituency of Dublin West has one of the highest concentrations of management companies in the country, it is an enormous issue. Despite this, we do not even have an audit of all of the housing units — apartments and ordinary houses — that are under the control of management companies. However, I estimate that there are between 7,000 and 10,000 such units.
The principal of a management company is very often the developer of the estate or one of his children or relatives, or the foreman — or one of his relatives — from when the estate was a building site. Some of these people have now deserted the developments, although they are not necessarily bankrupt. In one particularly outrageous case, the developer is cooling his heels in sunny Spain, and has been for some time, while the residents of the estate are facing serious difficulties. That is replicated elsewhere. We have another charming developer, also well known in Deputy Upton’s constituency through being involved in the case of a building that was knocked down despite various court orders, who has put the people in the management company of an estate in Castleknock through enormous difficulties.
There are developers whose behaviour with regard to management companies is appalling. They are holding people, particularly young people, to ransom. Many of those caught up in the management company trap are young people in their late twenties and early thirties who bought, because they were advised to do so, at the top of the market. Apartment management charges range from around €1,400 per year, which is quite cheap, to well over €2,500 per year. In the case of apartment blocks with lifts, when something goes wrong it is a case of “think of a number”.
I welcome the fact that this Bill is at last before the House. I will not suggest it is perfect, but the process of discussion in both the Seanad and the Dáil has resulted in an improved Bill. At this point, I am desperate to see legislation of some kind for management companies, even if it is not perfect, although that is not something I would normally acknowledge.
Management companies are another element of the general housing crisis. What is happening increasingly is that people in estates can no longer meet their mortgage payments and are not paying the management company service charges, which means that the management companies themselves are becoming insolvent, if they are not already. The knock-on effect is that residents face being locked into the developments, unable to sell their properties if and when the property market ever revives.
In addition — this may be something in which NAMA will become involved — there are unsold apartments or houses in many developments which the developer has held on to with the aim of selling himself. However, this means that the developer has kept control of the management company because the development is not complete. It may well be that the units are now no longer saleable. People have bought into developments where, in some cases, fewer than 25% of the units have been sold, and they are now trapped. The rest of the units are not being sold and those living in the sold units are in a kind of no-man’s land. I hope this legislation will provide a way out for people who have been left marooned as one of a small number of purchasers in an unfinished development.
This is not happening only in my constituency but all around the country. It is particularly notable in areas such as the upper River Shannon, where there was much overdevelopment. Some of the newly built houses in Leitrim village are, from a Dublin perspective, beautiful houses but they are in what are basically unfinished estates. Unless some solution is devised, after two or three years of unoccupancy and hard Irish winters, many of those estates —particularly those subject to the NAMA process — will end up having to be knocked down. To people living in Dublin city, these appear to be high-quality three and four-bedroom houses, but they have no future.
All of these developments are under management companies. County managers and planners, along with developers, must take responsibility for slipping the requirement for a management company into almost all planning permissions over the past eight years as a way of forestalling costs relating to taking in charge and passing the costs of the estate or the apartment unit on to the new owners. They seemed to believe that as property prices were constantly rising, owners, particularly young people, would accept management companies as a kind of afterthought because they were so glad to get any property that would let them into the property market.
I recall being in a queue one day in the old TSB, now Irish Life and Permanent, in Blanchardstown. A man in the queue turned to me and told me he was queuing for his son. When I asked why, he told me his son was buying an apartment just over the boundary of Dublin 15 in County Meath and that he had sent him down to get the money as the son was about to sign for the apartment. He mentioned that the only concern was that there was a clause in the contract about a management company. I said that just meant that his son would have to pay charges. He asked if I thought the charges would be significant. The apartment was close to Dunboyne, in Clonee in County Meath. The man had not a clue that the likely cost would be €1,000 plus. His son was borrowing up to the hilt to get into the market. I told him I thought he should discuss those issues with his son, but I have no idea what happened. I often pass the block of apartments and notice that they do not seem fully occupied.
I congratulate the lawyers and all other people who manage residents’ associations, like the Apartment Owners’ Network and people in my constituency in residents’ groups in Ongar, Tyrellstown, Clonee and parts of Castleknock, including places like College Wood which has a difficult developer — whom I share with Deputy Upton — on all the work they have done in the area of management companies. Many young people in these apartments, despite the fact they are in financial difficulties, are highly resourceful and have a community spirit. If the Government puts in place a fair management company structure and establishes owner managed companies, OMCs, that will give a framework of hope to these young people that will allow them take control of the situation.
I have relatives in the United States and am familiar with condominium control there. The system there works. It costs money, but as a result the places in which people live are kept clean and tidy and are well looked after. A sinking fund is established and general jobs in the apartment complex, like painting of exteriors, are done. These are positive measures and I welcome them in this Bill.
Deputy Mary Upton: Like my colleagues, I welcome the opportunity to speak on the Bill. I have raised this issue on a number of occasions, both on the Order of Business and through parliamentary questions. I have a practical reason for raising the issue, the fact that I represent a constituency where there has been an explosion of apartment developments of one kind or another, the quality of many of which leaves much to be desired. At the time planning applications were submitted for many of these apartment blocks, I felt I was turning into a serial objector because of the number of objections I felt obliged to put before the planners. I have been vindicated in many cases. I do not take particular pleasure in that because of the unfortunate effect of that bad planning on victims, due to bad planning, design and quality and the number of unfinished apartments. Young couples are particular victims. At the time they bought into the concept of the apartment, what they were being offered by way of services and facilities was of a very poor standard. We cannot turn back the clock with regard to many of these developments, but we have seen the effect of the bad decisions on young couples, many of whom are in negative equity and have no chance of being in a position to sell those apartments.
I represent the constituency of Dublin South-Central and have received numerous complaints from constituents who live in apartments. Often they are desperate to discover their rights with regard to the complexities of the management agencies and the ever present spectre of a developer who seems to hold extraordinary control but seldom seems to take any responsibility for the many shoddy and incomplete apartment blocks that exist. This situation was created as a result of Government policy which provided tax breaks to developers. A number of developers in my constituency availed of these tax breaks. Government policy allowed the increase in density and brought on planning legislation that encouraged a systematic shift from the traditional Irish home towards apartment ownership. Not to be totally negative, some apartment blocks are good, high quality, well finished and well managed. However, the quality of many leaves a lot to be desired.
The legislation to enshrine the rights of the owners was never enacted and this is at the heart of the problem. This leaves apartment owners and some householders in a very weak position vis-à-vis the developers. Deputy Burton mentioned what we might call our shared developer. I have had many tussles with the same developer. Unfortunately, he won, a situation I found quite extraordinary. These issues need to be examined and addressed. Hopefully, they will not occur in the future.
While I welcome the legislation, there is an element of it being too little, too late, particularly for the people I have mentioned such as young couples who bought into these apartments and now cannot afford the mortgages. In many cases the management of the apartments is appallingly bad and there is little chance of being able to sell them. A number of issues will need to be addressed on Committee Stage and I hope that will happen. I understand that much of this legislation will not apply retroactively. In other words, it cannot apply to existing apartment blocks. What are the people in these apartments expected to do? This issue needs to be teased out carefully on Committee Stage to ensure that as many rights as possible can be applied to current apartment dwellers.
For the most part, the legislation looks to the future. That is good and positive. However, what about people who are in a situation where the improvements in conditions will not apply? These people will remain victims. We have still got tens of thousands of vacant or unfinished apartments and houses throughout the country. Some of them are in ludicrous locations and there is little chance of them becoming anything other than derelict buildings shortly. Some of the sections of the Bill refer only to developments that are completed after the Bill is enacted. Given the state of the Irish property market, it is unlikely there will be a significant amount of development over the next decade. In contrast, we had a glut of unparalleled and exponential growth in apartment complexes and other housing developments over the past decade. Very often, these were instituted under the guise of the management company.
Most of those who have spoken in this debate have mentioned the problems surrounding the handing over of, or failure to hand over, the common areas to the management company. Mention has been also made of situations where developers hold weighted voting rights in a way that allows them retain control of the management company. I am aware of a number of cases in my constituency where an unfair management company structure has been established, which effectively discriminates against the rights of the owners to the benefit of the developers.  There are hundreds of similar cases wherever we see a glut of these apartment blocks. Even with regard to developments that will come under the legislation, the voting system has been set as one unit, one vote. I understand there may be valid reasons for that and that people will have some rights, in that people who have a unit pay a management fee and, therefore, have some rights. However, this leaves this area open to abuse such as abuse of power by developers or landlords who have several properties. As such, they will have several votes which will allow them to control the voting rights and thus effectively control the management company. It would be a much fairer system to have one member, one vote rather than one unit, one vote. In an owners’ management company where the company is limited by guarantee, not for profit and established for the benefit of members equally, it is normal to have one member, one vote, according to the report published by the Apartment Owners Network. The Minister must examine this carefully with a view to safeguarding the rights of each individual who purchases an apartment rather than the developer who will more than likely control a number of apartments and will therefore be entitled to the same number of votes.
Section 22 provides for unit owners to pursue developers in the courts in order to force them to complete the development under the terms of section 21 which deals with planning permissions. Section 23 provides that the Circuit Court shall have “exclusive jurisdiction”. That in itself sounds fine, but the maximum fine a Circuit Court can levy is just over €38,000. Given that some developments are left unfinished and may require hundreds of thousands of euro in investment to be completed to the planning permission requirements, this does not offer adequate sanction. This is relevant to the case referred to by Deputy Burton, where a paltry fine was imposed for what seemed a very serious breach of planning.
The provision for a mandatory sinking fund is important but is not required to come into effect until three years after the first transfer of ownership of a unit in a multi-unit development. This seems to be something of a sop to developers who are likely to remain owners of apartment complexes for several years but will not be required to contribute to the sinking fund even though depreciation begins almost immediately from the time of completion of the apartments.
There are many aspects of the Bill to be welcomed. However, at a practical level, it is vital that apartment owners are fully aware of both their rights and their responsibilities. This information must be available in a user friendly fashion and there must be provision for that in the Bill. I acknowledge that when people sign a contract it is the responsibility presumably of their solicitor to inform them of what exactly is involved. However, ordinary people signing up to these types of arrangements are often overwhelmed by legalese and need some clarity. Anybody who has had any interaction with apartment owners knows there is widespread confusion about the structure of management companies and that people often do not realise that they themselves are part of the company. This is the type of detail that must be explained carefully to prospective apartment owners so that they know exactly what they are taking on. It seems all the cards are held by the developers who, even when they default on their responsibilities, are able to escape any serious penalties.
Recent developments in regard to an apartment complex in my own constituency highlighted the vulnerability of apartment owners relative to the sleight of hand of developers. This particular developer controlled the management company because of the number of units he held, either occupied by him or a member of his family or leased out to tenants. He has now run off with the management fees and the apartment owners are left high and dry. They have been advised to cut their losses because it will cost far more to pursue the developer through the courts. These are the types of practical issues that must be addressed. Overall, however, I welcome the Bill as a positive initiative.
Deputy Charlie O’Connor: I welcome the opportunity to contribute to this debate. The Multi-Unit Developments Bill 2009 seeks to introduce regulation of multi-unit developments by addressing issues relating to the obligations of developers and the governance of owners’ management companies. It aims to protect the owners of units in both new and existing multi-unit developments. It also provides for the transfer of common areas to the owners’ management company prior to the sale of any units, which I strongly support. It makes provision for voting rights and makes the establishment and maintenance of schemes of service charges and sinking funds mandatory. Both mediation and court-based resolution systems are set out for resolving disputes. This Bill, along with the Property Services (Regulation) Bill 2009, will, if enacted, provide new regulation in the area of property management.
Deputy Charlie O’Connor: I represent Tallaght, Brittas, Bohernabreena, Greenhills, Templeogue and Firhouse. As a political activist, something I have always found difficult about these types of residential developments is that it is often difficult to access them in order to visit constituents. Luckily enough, many of my constituents look up my telephone number, contact my full-time office or come to one of my nine weekly advice clinics, one of which I missed tonight because I had to be here. They find me, talk to me and I deal with the issues.
I take this opportunity to thank the Minister of State, Deputy Finneran, who was kind enough to come to Tallaght recently for a happy event in Old Bawn community school where he met the school’s participants in the BT Young Scientist exhibition who had done an excellent project on depression. I am always pleased to welcome Ministers to my constituency. I would also be happy to meet any Opposition spokespersons who would like to visit me.
Like other colleagues, I have always had difficulty with the concept of management companies. I can only talk about my own constituency but there was a time when there were few or none of these types of developments. Tallaght was developed following the publication of the Myles Wright report in 1967 which recommended that new towns be built in Lucan, Blanchardstown, Clondalkin and Tallaght. Most of the early development in Tallaght was housing rather than apartments and it is only in recent years that the phenomenon of apartment blocks has been prevalent. One of the down sides of the recession in recent years can be seen when one visits The Square in Tallaght, which is on the Luas line and is a good place to visit. There are many vacant apartments there which is a problem for the local community. Likewise, in Tallaght village — an historic site marked by St. Maelruain’s church and graveyard and the priory — an issue that upsets locals and visitors alike is the huge number of apartments that were perhaps constructed with good intentions in the good times but are now unoccupied. These vacant dwellings create environmental and social issues and put great pressure on local services. It is very upsetting for the people who have made their lives in the community. Somebody has to grasp that particular problem.
If one suggests that vacant apartments should be brought under social housing schemes, one is likely to meet some resistance. However, the reality is that the volume of apartment accommodation in my constituency that remains unoccupied is a significant problem that will have to be tackled. Meanwhile, the number of planning applications lodged with South Dublin County Council for the construction of even more apartments in the area is striking. For example, there is a huge site in the middle of the village which used to have an Esso garage.  It is now in a terribly derelict state. There are signs around it and the hoarding is poor. It appears an absolute mess and it looks terrible to people who come to the village.
Suggestions have been made about other developments. Along the Tallaght road there is a fine little development. Discussions have been held with the local community. I am pleased those responsible for it are reaching out to the community but they are discussing the possibility of even more apartments. This is an issue in my community and people have raised it as a difficulty. They have no wish for more vacant apartments. This is a challenge for the public representatives and communities.
I refer to the difficulties for people in apartments who are subject to charges from management companies. I have no wish to demonise management companies, save to say problems have arisen for people who have bought apartments and made a commitment. Other colleagues have made this point which I am pleased to repeat. There is a very significant financial burden on many couples, including the young and not so young. They realise additional charges apply. As other colleagues have stated, in some cases the common areas are not kept, the grass is not cut and the green space cannot be sorted out. I spend a good deal of time dealing with constituents in such places as the Belfry in Citywest, and Marlfield and Deerpark in the general Tallaght area, not too far from the Square. The difficulty is the council maintains it is not its business because the area has not been handed over and difficulties remain as far as the management company is concerned.
I attended a meeting with other colleagues some weeks ago in Kiltipper Gate. This is a lovely development where many people have gone to the trouble of making their home and are perfectly pleased except for these issues which are not being dealt with.
In the context of the Multi-Unit Developments Bill it is fair to say to the Minister of State that these are the issues we have been discussing for some time. Like other colleagues, I have corresponded with the Minister of State, tabled questions and raised matters through other business. These are real issues. Many of those involved were from my community to begin with but there are others who have come into my community as well. They are fully entitled to have everything properly organised. It is time for legislation to deal with these issues, to give people confidence and to help them to get these issues sorted out. Only tonight I received correspondence in respect of Carrigmore near Citywest, where people want their children to play in the open space, especially during the good weather, but this is a problem. There is a conflict between the management company and the council.
I have no wish to upset the Leas-Cheann Comhairle by straying too much but I have mentioned Citywest several times. It would be remiss of me to let the occasion go without mentioning that in recent days myself and other colleagues have been upset about what is taking place in the Citywest Hotel. It is not in my constituency but that of the Minister of State, Deputy John Curran, Deputy Paul Gogarty, the Minister, Deputy Mary Harney, and Deputy Joanna Tuffy. Many of the 400 workers who live under the threat of losing their jobs this week because of the difficulties with the company are from my constituency. As other colleagues have done, I express solidarity with them and I hope the issues will be dealt with.
Deputy Charlie O’Connor: I appeal to the receiver, as I did publicly yesterday, to do what can be done to preserve those jobs. It is critical this is done. I trust the issues that all of us are bringing to the attention of the Minister of State in respect of this Bill will be dealt with. I trust the provisions will be implemented as quickly as possible and that the various issues that people have asked us to deal with which are upsetting people in their new homes can be addressed.
I do not suggest that we should be less than secure in these places. I have always enjoyed the ability to knock on doors, talk to constituents and offer assistance regardless of whether they like me. I have heard from other colleagues that they have exactly the same problem in apartment blocks in their constituencies and I am aware the postman often has the same difficulty.
I could discuss this Bill for a long time and there are many other issues of concern to me but because of the time of night and because I have other duties I will conclude presently. I listened carefully to the debate this morning about the Dáil recess. I was impressed by the comments of the Tánaiste, Deputy Mary Coughlan. She pointed out that whatever about what unfolded this morning, much of which was for television, everyone in the House needs that little break. Like everyone else, I will continue to work. I will work tomorrow and at the weekend, although I will go to see Dublin play on Saturday and Shamrock Rovers on Sunday. However, I will be dealing with the issues and continuing my work and all my colleagues will do the same. I realise those in the media may not be listening now but I hope they pick up on this and understand that simply because we are not in the Dáil Chamber does not mean we are not dealing with the issues. I guarantee the Leas-Cheann Comhairle that people will contact me over the weekend about the issues related to this Bill and I will continue to represent them on these issues. I will all colleagues a happy summer and I thank the Leas-Cheann Comhairle for his courtesy.
Minister of State at the Department of Health and Children (Deputy John Moloney): I thank Deputies for their contribution to the debate. It is clear the Government’s objective of ensuring fair, efficient and effective management of bodies responsible for the management of common areas in multi-unit developments which the proposals in the Bill are designed to achieve are broadly shared on all sides of the House. While Deputies were broadly supportive of the Bill’s objectives, several detailed issues were also raised. These can be considered in the required detail on Committee Stage in due course.
Some references were made to the delay in bringing forward the Bill. However, this is a complex Bill including aspects of property, company and planning law and, as such, it required extensive consultation between various Departments and stakeholders. The Government’s objective has always been to bring forward the most comprehensive legislation possible which would benefit owners of apartments in new and existing developments. I believe this objective is being met through the Bill.
Deputies Terence Flanagan, Pat Rabbitte, Michael Kennedy and Leo Varadkar raised issues of completion. One of the issues discussed at some length in the Seanad was completion of common areas of multi-unit developments. This arises under three headings: compliance with planning permission under the Planning and Development Acts; compliance with building control standards under the Building Control Acts; and the snagging of internal and external common areas.
Deputy John Moloney: There is no provision under the Planning and Development Acts or the Building Control Acts to allow planning authorities to require performance bonds to ensure snagging of multi-unit developments. The question of whether planning authorities should be given such added responsibilities could only be considered following an assessment by the Minister and Department as to whether the adopting of such additional roles would be appropriate for planning authorities and, if so, whether they would have the necessary resources to undertake this important work. Proper advance consultation with local authorities and adequate preparation for any such role would be essential. The Department of Justice and Law Reform has been in ongoing contact with the Department of the Environment, Heritage and Local Government in view of its responsibility for the Planning and Development Acts and the Building Control Acts.
I understand that a review of the enforcement procedures under both codes will be undertaken with the idea of ensuring improved enforcement of statutory requirements. I understand the building review advisory board, which advises the Minister in this area, has established a working group to examine the building control enforcement system. I further understand it will report shortly to the Minister on this issue.
The Bill seeks to deal with completions in the following way. Under section 3(1)(c) the developer will in future be required to enter into a written contract with the owners of the management company setting out the rights and obligations of each party in respect of the other.
It is envisaged that this contract will set out commitments by the developer regarding completion of the common areas and the overall development. If the terms of the contract are not honoured, the apartment owner will have recourse to the dispute resolution mechanisms under section 21. Section 21(4) contains specific provision for the Circuit Court to make an order directing a developer to complete a development in compliance with planning permission, building control standards and the terms of any contract.
The annual service charge issue was raised by Deputies Terence Flanagan, Johnny Brady, Chris Andrews, Rabbitte, Stagg and Kennedy, which is not surprising given the current lack of transparency surrounding the calculation and the apportionment of the annual charge. In many cases, the owners are unsure about what services are provided or are dissatisfied with the services provided. The Government’s approach is to provide that each owners’ management company must establish a scheme for the annual service charge, which must be approved by a general meeting of the unit owners. Complaints from unit owners that they do not know what the service charge is used for are common. The Bill addresses this issue by providing that all owners in multi-unit developments must be made aware of the proposed charge and the basis of calculation of the charge must be clear and transparent. The Bill goes as far as indicating the categories of expenditure, for instance, insurance, repairs, waste management and so on, which should be covered by the charge. I would also like to stress that the legislation places an obligation on unit owners to pay the agreed charge. The Bill also provides that for the purposes of the charge a developer or building contractor is deemed to be the owner of any unsold unit in a development from the date of the sale of the first unit in that development. This means he or she will be liable for the payment of service charges of all unsold units from that date.
Deputies Flanagan, Brady and Kennedy also raised the issue of sinking funds. The establishment of a sinking fund is also an issue of concern. Many existing developments have no such fund or the fund that has been established is inadequate for its purpose. The Government is concerned about the potentially serious consequences of this and this is why we have provided in the Bill that an owners’ management company must establish such a fund for spending on refurbishment, improvement or maintenance of a non-recurring nature of a multi-unit development. Unit owners will be obliged to pay the sinking fund contribution and developers or building contractors will be liable to pay a sinking fund contribution from the date of the sale of the first unit in the development. The Bill also ensures that the requirements to have such a fund will apply not only to new developments but also to existing developments and it is important that the fund would be adequate to cover potential costs of refurbishment or improvement of a development. At the same time, the Government does not consider it should be too prescriptive. The Bill, therefore, provides for an indicative contribution of €200. There is also no longer a minimum of €200 per year and the company can set its own charge.
Deputies Kennedy, Sargent, Durkan and Flanagan referred to the taking in charge of estates. I understand that in February 2008 the Department issued revised guidelines on taking in charge of estates by local authorities. They require that planning permission must address the taking in charge issue at pre-application stage. This is a matter for the Minister for the Environment, Heritage and Local Government.
The Bill forms the centrepiece of the Government’s strategy to deal with multi-unit developments and owners’ management companies. I thank everyone who contributed so constructively to the debate. The issues raised will be considered in detail in advance of Committee Stage in the context of possible amendment.
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