The cost of the State’s remediation scheme for defective buildings, estimated at €2.4 billion, will be dwarfed by a further €10 billion for multiple-unit developments where owners are not paying management fees and management companies are not providing a fund for issues such as replacing the roofs, lifts or windows.
A campaign group has claimed legislation around multiple-unit developments – mostly apartment blocks but increasingly private housing estates – is the “Wild West of regulation”.
It is calling for reform of the 2011 Multiple Unit Developments (MUD) Act, arguing many management companies are facing insolvency.
Calling itself the MUD Act Reform Group, the campaign also claims many owner management companies (OMCs) feature unqualified directors who are paying themselves large amounts of money in fees.
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On Tuesday, the group’s co-ordinator, Pat Montague, told the Oireachtas Committee on Housing that the ultimate cost of poor governance would be about €10 billion. This, he said, would make the estimated €2.5 billion cost of the defective building scheme “look like a teddy bears’ picnic”.
“At a very basic level, there is no proper register of owner management companies,” he said. Mr Montague said he knew of one multiple-unit development where two directors of the management company paid themselves “€80,000 and €90,000 a year respectively”.
He told TDs and Senators at Tuesday’s hearing that management companies did not have “effective means for collecting annual service charges. The only way they can collect these monies is by taking costly and time-consuming court cases with no guarantee of success at the end of that process.”
In addition to not securing management fees from property owners, Mr Montague said “too often” shortfalls were made up by management companies raiding “sinking funds”.
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Sinking funds comprise a portion of management charges normally set aside for large maintenance schemes such as replacing lifts, roofs and windows, he said. “Based on two reports in recent years by the Society of Chartered Surveyors Ireland, sinking funds are hugely underfunded, which means that many developments simply can’t undertake these necessary maintenance works,” he said.
He said new regulations around multiple-unit dwellings were formulated three years ago but responsibility for them needed to be transferred from the Department of Justice to the Department of Housing, and this had not happened. “The importance of the transfer is that, frankly, nothing can be done. We are in suspended animation.” He said the regulations were supposed to issue three years ago, having been drafted in February 2022.
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In relation to the State’s Interim Remediation Scheme for Fire Safety Defects in Apartments and Duplexes, Mr Brian Lambe, senior manager with Clúid Housing, told the committee that people who buy property were frequently unaware of their obligations.
Mr Lambe said there would have to be a publicity campaign alongside any new regulations to inform the public of these costs.
Sam Doran, speaking for owners of defective apartments in the group Not Our Fault, told the committee thousands of people were going to sleep at night risking their lives because of fire safety defects in their buildings.
