Laws proposed to protect flat complex owners

Stringent new laws to protect the rights of 500,000 apartment dwellers are proposed in a consultation document to be published by the Law Reform Commission today.

The commission says a regulator should be appointed to register all apartment blocks, investigate complaints relating to developments and provide assistance to the management companies that run such complexes.

It also says new laws should be drawn up to regulate the service charges individual apartment owners pay for the maintenance of common areas and provision of services.

All services charges should be "reasonable and appropriate" and the proposed regulatory body would have the power to audit management company accounts to ensure they weren't excessive.

Minister for Justice Michael McDowell is expected to address the commission's proposals when he launches the consultation paper this evening.

Only two months ago, the National Consumer Agency called for urgent legislation to protect apartment dwellers in their dealings with property management companies. The absence of legislation was leaving many owners open to exploitation, it said.

In its document, the commission says the need for legislation is imperative given the lack of regulation and the huge growth in apartment living. One in 10 people lives in an apartment, which now accounts for half the new housing units being constructed in Dublin.

The document blames many of the problems that have arisen in the running of apartment complexes on the lack of regulation for management companies, as well as an "understanding deficit" on the part of apartment owners.

Anyone buying a unit in an apartment block automatically becomes a member of a management company, which is legally responsible for the upkeep of the development. Such companies usually employ a management agent to help run the complex.

However, problems have arisen with the failure of developers to hand over control of management companies, the level of service charges levied and the provision of information.

Last week, Director of Corporate Enforcement Paul Appleby said his office had received 30 complaints in two years about the running of management companies, and had gone to court on several occasions to ensure apartment owners' rights were respected.

Mr Appleby warned that badly run flat complexes risked massive devaluation and, in the long run, demolition.

The commission says many apartment dwellers fail to grasp the interdependent aspect of living in a complex, which is different from "traditional" housing with no common areas. They also fail to grasp the concept of service charges, which are essential for the upkeep of a complex.

In some cases, developers have set unrealistically low service charges in order to attract potential buyers; in other instances, owners have found themselves paying exorbitant charges which are used to complete development of the complex.

The commission says buyers should have a statutory right to clear information on service charges, which should be fair and reasonable, but also adequate to meet costs. Demand by a developer for more than a year's advance on service charges should be strictly prohibited by law, it says, and service charges should never be used for "snagging problems".

The National Consumer Agency suggested that regulation of apartment management companies could come under the wing of the proposed new National Property Services Regulatory Authority.

However, the Law Reform Commission questions whether this new body should be given such a "very substantial extension" of its remit. It has invited further submissions on the issue.