CityLiving What happens on an estate when people don't pay service charges, asks Edel Morgan

It used to be simple. You bought a house in an estate and the local authority would cut the grass. These days, with many local authorities washing their hands of the maintenance of new estates, residents are being forced to become members of a management company and pay someone else to look after the common grounds.

The problem is, when buying a new apartment or house you have no way of knowing if the management company will operate successfully. If it doesn't, you are in danger of being saddled with a property in a rundown overgrown estate where no one wants to live.

The intricacies of running a management company are such that estates around the country are dealing with the fallout of failure. When things go wrong, the vitriolic finger pointing that ensues can make it difficult to find a resolution.

The larger the estate, the more complicated it becomes. Some residents pay the annual service charge if it means safeguarding the value of their property. Others withhold it because they don't have the money or because they resent that other housing schemes in the locality are being looked after by the county council at no extra charge. When investors in a development fail to pay the charge, they are often difficult to track down. Even when everyone pays up, another eventuality is the mismanagement of funds by the agent appointed to oversee the running of the complex.

The management company of a three-year old estate of over 700 houses and apartments in north-west Dublin has fallen into debt. The estate was developed by Fingal County Council in conjunction with a well known developer as as a model of how social, affordable and private housing could successfully co-exist. With no money in the coffers to pay the landscape contract, residents are now faced with the prospect of watching their once pristine "flagship" estate turn into Shabbyville.

The debt arose due to widescale non-payment of the 2004/2005 service charge. At a recent residents' meeting, many voiced their resentment at being "forced" into agreeing to becoming members of the management company when signing for their house. The private and affordable buyers had to pay two years service charge up front upon signing. However, the management agent began to run out of funds in the second year. A major flooding incident and insurance increases led the agent to increase the charge.

To date only 260 private and affordable residents have paid and Fingal County Council has paid for its 100 units. The management agent has resigned and there are debts of €8,500 in bills. Bank loans of over €50,000 have been taken out to cover the insurance premium.

An interim management company was set up to try to recoup outstanding charges and a Fingal County Council housing officer was appointed as a director of the interim company.

At the residents' meeting, a local councillor said that Fingal County Council has refused to step in until the situation is resolved. She said the service charge was in effect "double taxation" and asked why residents in this first-time buyers estate should have to fork out for a service charge when a nearby affluent enclave has its grass cut by Fingal County Council for nothing.

Fingal County Council's housing officer said that the impeccable appearance of the new estate could only be achieved by setting up a management company. The estate would never have the same "high class" appearance if Fingal County Council was looking after it, he contended. He said the original service charge of €400 per annum was set too low by the developer and estate agent as part of the marketing of the estate. "In hindsight it should have been increased," he said.

He informed residents that "the world has changed" and that Dublin was rapidly expanding with denser development. He reminded those present that they "bought into the set-up" and signed legal contracts to become members of the management company.

The local councillor said that many agreed to a management company to "get a roof over their heads." She challenged the assertion that Fingal County Council wouldn't look after the estate as expertly as a management company. "I've had not one call from estates in the area complaining that Fingal County Council isn't doing its job," she said. A young man opined that he could get a good two-week holiday in Spain for the price of the service charge.

A woman said her main concern was that the residents had to pay public liability insurance for the estate so if anyone hurt themselves within its boundaries, the residents would have to pay compensation, forcing the insurance premium and in turn the service charge upward. "We should put up a big sign up at the entrance to the estate, 'Enter at your own risk' and not pay the insurance" was the rally cry of another resident to general applause. The Fingal housing officer urged residents not to dissolve the management company, as it would have "disastrous" consequences.

So what is to be done? And who ultimately is to blame? Is it the estate agent for setting the service charge too low to sell the units? Fingal County Council for pioneering a flagship estate and then refusing to look after its grounds? The developers for coercing residents into agreeing to an arrangement they were not comfortable with? The management agent for not managing funds properly? Or the residents for not paying their service charge and accepting that times have changed?

That depends on who you ask. Meanwhile the grass grows taller.

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