What do you get for your service charge?

Apartment living is now part and parcel of the Irish property scene. With sites in most of the cities becoming ever more scarce, developers are opting for apartment schemes rather than houses. Buyers too are happy to settle for an apartment, given the greater security available, the much reduced maintenance and the easier lifestyle that goes with a smaller home.

One of the more contentious issues in apartment living is the annual fee for the upkeep and repair of the building - some disgruntled owners believe they are paying top dollar for a less than perfect service. Costs can be as low as £170 a year and up to £2,000 to £4,000 in fashionable city developments with high-tech lifts, a communal heating system and courtyard fountains.

Carrickmines Wood, an expensive apartment scheme launched last year in Carrickmines, Dublin 18, has annual charges of £850 for a two-bedroom apartment and £1,275 for one of the penthouses. At Pilot View, in Dalkey, Co Dublin, the high-maintenance coastal location necessitates annual fees of £1,500 to £2,000.

Management agency fees cover the building's insurance, upkeep, heating and lighting of communal areas and lifts, garden maintenance, dustbin collection, periodic refurbishment, window cleaning and general administration. In some cases, apartment heating and 24-hour security is included. The better management agencies build in a "sinking fund" to cover major work which may arise in the future.

The amount due from each unit is based on the number of expected occupants, hence a one-bed apartment will cost proportionately less than a three-bedroom penthouse. A good rule of thumb, says Tony O'Farrell of O'Farrell Property Management, is the equivalent of one month's rent in annual fees. Apartment blocks with a small number of units will cost more per occupant than larger schemes where the charges can be spread over a greater number of tenants. The average rate of increase should work out at about five per cent every two years. Most disagreements over management fees are incubated at the planning stage of new developments, when builders invite proposals from management agencies. Builders are acutely aware of buyers' concerns about the scale of management fees. In some cases they opt for the cheapest quote regardless of the realities. In their keenness to win the contract, agencies sometimes submit a low quotation or one that is fixed for five years.

A year or two down the road, occupiers with low-budget maintenance are complaining about the poor standard of service and agencies are having to look for additional large sums for major refurbishment work.

Persuading builders to accept a realistic budget is a big problem for management agencies, says Joe Wyse, of Wyse Property Managers, insisting that apartment owners and their agency are all rowing the same boat. "Builders allow themselves to be dictated to if the agency believes passionately in what they do," he says. According to Tony O'Farrell, developers "risk losing their reputation" with low-pitched fees, adding that high wage increases are partly responsible for increases in annual fees.

The earlier the consultation, the more likely it is that agents can influence the use of low-maintenance materials to keep fees down. Most of the quotations are based on a study of the plans - not an exact science, says Joe Wyse - and are open to minor changes as the development progresses.

When the last unit is sold, the developer invites residents and the chosen management agency to a general meeting. The freehold of the entire residential property is then usually handed over to a management company supervised by a committee of residents. The agency will operate under the newly-formed company's direction, collecting fees and carrying out the administration of the development.

An increasing trend in Dublin city schemes is to install a full-time caretaker for day-to-day cleaning, gardening and minor repairs. This has the added benefit of enhanced security - a serious problem in many city centre apartment blocks. At the Cranford Court apartment complex in Donnybrook, where the annual management fee for a two-bed apartment is £800 including central heating, the janitor mends fuses and will do painting jobs in apartments after hours. The management committee in Cranford Court has no maintenance agency in place, preferring to organise the administration and upkeep of the building themselves, with the help of an accountant.

Adelaide Square, currently under construction by Benton Properties on the site of the former Adelaide Hospital, is a mixed office and residential scheme where a round-the-clock porter will attend to on-going maintenance and provide security. Unusually, the development company plans to undertake the management agency role. This, says company principal Sean Kelly, is to ensure that maintenance is carried out efficiently and property values remain intact.

"The ground the office accommodation sits upon is owned by us. We will interact with the residents' management company to see that our rights are adhered to. We'll not be charging to make a profit, but to simply cover overhead costs," says Mr Kelly.

What happens when apartment owners fall behind in their payments? This is looked upon as a breach of covenant and the management company, which holds a separate legal existence from its members, has the right to invoke its forfeiture clause and divest the shareholder of their property.

In practice, however, when every reasonable effort has been made to recover the money without success, a legal charge is normally put on the property forbidding its sale before the debt is cleared.