Bill to regulate management firms for apartment blocks

LONG AWAITED legislation to regulate management companies for apartment blocks was introduced in the Dáil yesterday.

Minister for Justice Dermot Ahern described it as a short but complex Bill and said while it was designed to apply to future housing developments, the majority of elements would apply to existing multi-unit buildings.

Mr Ahern said it would improve consumer protection for the owners of apartments in multi-unit developments and reassure the public that high standards will be applied and maintained.

But Terence Flanagan (FG, Dublin North East) condemned as “unacceptable” the delay in introducing the Multi-Units Development Bill and said that “up to 500,000 apartment owners must endure on a daily basis the problems created by management companies”. A proper explanation had not been given as to why it had taken so long.

“Like the banks, reform is coming years too late to help many apartment owners,” he said. “The housing bubble has well and truly burst, yet apartment owners who are in negative equity and who have lower incomes than before must still pay management service fees far in excess of what they should be to developers.”

Mr Flanagan said “apartment owners have been left in the lurch without any protection despite all they are paying”.

The Bill should have been introduced a decade ago before the boom “and not now when the property market has crashed. We now have a situation where some management companies are insolvent and in disarray as a result of being poorly managed and run into the ground by developers. Others were too large from the beginning and fees and arrears were not collected.”

Mr Flanagan said the “perception is out there – and the Minister must nip it in the bud if it is incorrect – that he was lobbied heavily by his party’s buddies in the property industry who did not want this legislation to be introduced”.

But Mr Ahern rejected the claim and insisted: “I was lobbied by nobody. My officials dealt with any representations received on this proposal.”

The Minister told the House the Bill would provide new transparency standards on service charges and sinking fund contributions along with proper annual meetings to manage the affairs of the company and the adoption of house rules to improve the quality of life for residents and resolve disputes.

He said the Bill would facilitate the fair, efficient and effective management of bodies responsible for the management of such common areas. It forms a key part of the Government’s strategy to deal with the completion of the common areas of multi-unit developments and the smooth and efficient operation of the owners’ management companies.

The Bill also deals with partially completed developments and requires the developer to transfer ownership of the common areas in the development to the management company within six months.

Mr Ahern said he wanted to ensure the transfer of the common areas did not absolve a developer from obligations to complete a development.