Damien English (Meath West, Fine Gael) | Oireachtas source

On behalf of the Minister, Deputy Fitzgerald, who is unavailable today, I welcome the opportunity provided by Deputy Murphy’s Private Member’s Bill to address policy issues related to multi-unit developments.

I want to state clearly that the Government opposes Deputy Murphy’s Bill. Before explaining the reasons for the Government’s opposition, I want to recall for Deputies the reasons the Multi-Unit Developments Act 2011 was enacted. The primary purpose of the 2011 Act was to reform the law relating to the ownership and management of common areas of multi-unit developments and to facilitate the fair, efficient and effective management of owners’ management companies, OMCs. The Act gives residential unit owners, through their membership of the owners’ management company, a say in the management and operation of their development and a direct role in fixing the amount of annual service charge and sinking fund contribution that they are required to pay towards the upkeep and maintenance of the development.

The Act establishes a new statutory framework for the management of multi-unit developments and the operation of owner management companies, and puts new accountability mechanisms in place. A key element of the 2011 Act concerns the transfer of common areas of a multi-unit development from the developer to the owner management company. Section 4 of the Act provides that in those cases in which some residential units have already been sold prior to the coming into operation of the legislation, the developer must transfer ownership of the relevant parts of the common areas to the owner management company within six months of the coming into operation of the Act. In effect, such transfers were to be carried out by 1 October 2011. In the case of completed developments, the developer must transfer ownership of the common areas to the relevant owner management company within six months of the coming into operation of the legislation.

I should add that under section 3 of the Act, a residential unit in a new multi-unit development cannot be sold unless an owner management company has been established by the developer and ownership of relevant parts of the common areas have been transferred to that company.

The Act also contains provisions in relation to the operation of owners’ management companies. Such companies are now required by law to hold an annual meeting and must in advance of that meeting provide unit owners with an annual report setting out details of income and expenditure, as well as assets and liabilities; the annual service charges and sinking fund accounts; planned expenditure on maintenance and repair; insurance cover; fire safety in the development; and contracts entered into by the company. The Act also provides for a system of fair voting rights in owners’ management companies: under the Act, one vote attaches to each unit in a development, and each vote is of equal value. The Act stipulates that an owners’ management company must establish a scheme for annual service charges to fund expenditure on the maintenance, insurance and repair of common areas within its control, and for the provision of common services such as security, legal and accounting services. The annual charge must be calculated and apportioned on a transparent and fair basis and must be approved by a general meeting of the unit owners. Each owners’ management company must also establish a sinking fund to cover outlays on refurbishment, improvement or maintenance of a non-recurring nature of the multi-unit development.

Section 24 of the Act, which deals with the resolution of disputes, provides that a person, such as a unit owner, may apply to court for an order to enforce any right conferred or obligation imposed by the Act, including the obligation on a developer to transfer the common areas to the owners’ management company. If satisfied that a right has been infringed or an obligation has not been discharged, the court may make an appropriate order. However, when applying to a court to commence proceedings, the applicant is required to state whether mediation or other similar dispute resolution process has been attempted. If such a process has not been attempted, the court may, upon its own motion or at the request of a party to the proceedings, direct the parties to meet and attempt to settle the matter. If such efforts prove unsuccessful, the court will proceed to deal with the matter. The Minister’s preference is that parties should try to resolve their differences by means of mediation and seek a remedy before the courts only when such efforts prove unsuccessful.

The protective mechanisms set out in the Multi-Unit Developments Act 2011 apply to all developments that have an owners’ management company structure. This includes not only apartment buildings containing residential units, but also the very many mixed developments and estates which contain apartment blocks as well as duplexes and more conventional housing units in terraces or other formats. If there is an owners’ management company structure in place, the protections afforded by the 2011 Act for unit owners will apply to that development. The need to extend the protections set out in the original Bill to these mixed and more traditional housing developments with an owners’ management company structure was raised by many Deputies and Senators in the course of consideration of the legislation by both Houses. It was pointed out that a large number of these developments had been required to establish an owners’ management company as part of the planning conditions imposed by the relevant planning authority. The extension of the scope of the legislation to these mixed developments has been given effect in Schedule 2 to the Act.

Turning now to Deputy Murphy’s Bill, the Government’s opposition to it is based firstly on the fact that it seeks to remove mixed developments from the scope of the legislation and discard the protection that the Act affords to residential unit owners in such developments. This would create a serious legal vacuum for such owners and could, at least in the short term, render their properties unsaleable. I do not think that is what the Deputy intended and I accept that she said so. It would be an unacceptably retrograde step to take, and is therefore unacceptable to the Minister and Government.

The stated aim of the Bill is “to amend the Multi-Unit Developments Act 2011 in order to better provide for the clear definition of multi-unit development thereby facilitating expedient application of the law in relation to the taking in charge of unfinished estates.” The position with regard to the taking in charge of estates is that the relevant statutory provisions are set out in the planning and development Acts. Therefore, any changes to the taking in charge provisions must be considered in the context of that legislation rather than the Multi-Unit Developments Act 2011, which does not deal with such matters. In her speech, Deputy Murphy raised other issues she wants resolved. While the taking in charge of multi-unit developments which comprise mixed and more traditional housing developments present specific challenges, the removal of such developments from the scope of the 2011 Act cannot be expected to overcome obstacles arising from the legal arrangements which separate the ownership of individual residential units from ownership of the common areas that are vested in an owners’ management company of which unit owners are members.

Any changes to the statutory taking in charge arrangements would be a matter, in the first instance, for the Minister and Department of Environment, Community and Local Government. The Deputy asked whether this Bill could be dealt with elsewhere. I will undertake to discuss this with the Minister for the Environment, Community and Local Government, Deputy Kelly, and the Minister of State, Deputy Coffey, to see if they can accommodate what the Deputy wants to do, because it is probably more appropriate to that Department than to the Act that she is seeking to amend.

In summary, the Minister and Government are opposed to Deputy Murphy’s Bill because it would reduce the scope of the 2011 Act and thereby exclude the many mixed developments that benefit from the Act’s protective provisions. Moreover, any changes to the statutory provisions governing the taking in charge of unfinished developments should be progressed through appropriate amendments to planning and development legislation.

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