Offer for housebuyer to use builder's solicitor 'bizarre and questionable'

Builders should be prevented from offering reduced rates to housebuyers to use the developer's own solicitor in the purchase, the Dáil was told.

Fine Gael deputy Olivia Mitchell (Dublin South) said it was a "bizarre and questionable" practice, and should be legislated against.

"There must be an immediate end to the practice of builders offering at reduced rates the services of their solicitors to apartment buyers. This is a bizarre and questionable practice which does not serve the best interests of the buyer."

She was speaking during a private members' debate on the use of management companies.

Labour's environment spokesman Eamon Gilmore claimed domestic rates were back in a new form through management charges for housing estates and apartment blocks. The new "rates" were no longer paid to local authorities but to the private management companies.

"Some first-time buyers pay €500 a year and some pay €1,000 a year. The amount is not controlled or regulated, and it can be charged indefinitely.

"Management charges are a new stealth tax imposed on vulnerable housebuyers, paid to private management companies for services which should be publicly provided."

The Dún Laoghaire TD called on the Government to stop new management companies from being formed and new management charges being levied; to regulate management companies and charges where they currently existed; and to legislate to wind up management companies.

However Minister for the Environment Dick Roche said "the law is emphatic" about local authorities taking charge of public services for housing estates once they were completed to a satisfactory standard.

He added, however, that he was awaiting the Law Reform Commission's recommendations on the issues. Its key objectives included ensuring any possible gaps or deficiencies in the overall legal framework were addressed. The Minister for Enterprise, through company law, would simplify legislation applying to management companies.

He also stressed that there was a "legal obligation on developers to complete estates and to maintain estates until they are taken in charge.

"Nor does it provide a mechanism for a local authority to offload its responsibilities."