Estate services fees a rip-off, says Higgins

Legislation may be introduced to regulate housing management companies, Taoiseach Bertie Ahern said, after claims were made in the Dáil of "scams" and a "rip-off" involving the "underhand" privatisation of public services by local authorities.

Socialist Party TD Joe Higgins (Dublin West) said local authorities were dictating that in new housing developments, "crucial public services", including water, sewage, roads and public lighting, should be maintained by private management companies rather than the local authorities themselves.

He said such a system was a "scam" because "the directors of the management companies, for the first five years, are the developers who built the estates, sold the houses and made massive profits from the new young homeowners".

Asking if the use of management companies was now Government policy, Mr Higgins added that before they were "foisted" on people, the builders "had to maintain these basic services for a period of years, until the estate was taken in charge by the local authorities".

The Taoiseach pointed out, however, that local authorities had the power to deal with these issues "and the Opposition parties could usefully direct their councillors in these areas to act on this as between them they have a majority".

Mr Ahern said that many years ago it took a long time for the local authority to take over a housing estate and until such time as "the developer, builder or contractor was completely finished building the estate".

He said it was not Government policy to introduce management companies. "It is not controlled or directed by central Government. If local authorities want to act in a different way or impose restrictions they can do so when issuing planning permission." He also said a valid argument existed for legislation to govern management companies, some of which were "quite good" while others were "quite difficult".

Management companies may have legitimate charges but "where these companies undertake to carry out responsibilities and perform services and charge young people and others but then do not do the work, a question is raised on introducing regulations to force them to carry out that work".

Councillors "from the Opposition parties form the majority in these councils and they should try to be more proactive than they are in dealing with the issue", the Taoiseach concluded.

But Mr Higgins said that "unelected managers of local authorities impose this as a condition and the fundamental inequity is that young people now purchasing a home under great duress and at high cost are saddled with a local tax of between €500 and €1,000 a year."

The "inequity is compounded by the fact that management companies' contracts are presented to young house buyers at the same time as they sign contracts for their new homes".

This was a "significant inequity" because neighbouring estates built a few years earlier, including "millionaires' row", were receiving these public services from general taxation, Mr Higgins said.