Pádraic McCormack (Galway West, Fine Gael)

I join my colleague, Deputy O'Dowd, in thanking the Labour Party for introducing this motion and highlighting the important issue of young home owners throughout the country, who are already stretched to the limit with high mortgages, being forced to pay a new form of stealth tax. As Deputy O'Dowd said, Fine Gael has established a position on the issue of apartment complexes. It is asking for a genuine engagement by Deputies of all parties, including the Minister, Deputy Roche, on how local government should be funded to allow it to meet its responsibilities to householders, businesspeople and consumers. I take it from the Minister's comments in this debate that the Government intends to hide behind the Law Reform Commission's study of management fees, just as it is hiding behind the ongoing review of local government financing, which will not be finalised before the next general election. Rather than doing that, I ask the Minister or one of his Ministers of State to give us their views on the way forward in this area when they speak during the second part of this debate tomorrow evening.

Local authorities are compelled to promote the development of rateable properties, rather than a healthy mix of residential and commercial developments, because they depend on commercial rates as a consequence of being given inadequate Exchequer funding. This, in turn, is increasing property prices in urban areas and pushing residential development from town and city centres to poorly serviced and remote locations. Things are no better for those trying to buy a new home. Statistics provided by the Department of the Environment, Heritage and Local Government show that the total collected in development levies increased from €57 million in 1997 to €215 million in 2003. The figures for 2004 are almost certain to be even higher. In Galway city, the total take more than doubled to almost €6 million between 1997 and 2003 and in Cork city, the total take of €766,000 in 1997 increased to €7.5 million by 2003. Such increases have taken place even though the Department's guidelines state that development contributions "should not be set at an excessively high level" and that local authorities should be mindful of the policies adopted by local authorities in their immediate areas because "major divergence in the level of contributions may be difficult to defend". Matters have deteriorated to such an extent that four local authorities depended on development charges to fund 10% or more of their total expenditure in 2002.

Management fees are the nub of the issue and it is what this debate is about. There is an absence of information about management fees. We have no idea how many housing estates charge fees, how much they charge or how many will charge fees in the future. I implore the Minister of State to ensure his officials gather data on this area. We cannot come up with a solution if we do not know the scale of the problem.

We rely on evidence in respect of this issue, often based on the first-hand evidence of constituents who call to our offices. I will enlighten the Minister of State about this problem. There is a new development area to the east of Galway city that will be known as the Ardaun corridor when fully developed and there are three estates there, Bhoireann Bheag, Ros Caoin and Caiseal Cam, comprising 650 new houses. All those houses are being charged a management fee of €450. That management fees collected for that estate and a nearby estate of 650 houses, whose households also pay a management fee to another management company, amount to €295,500 per annum. That amount would cover the cost of a great deal of grass cutting. There will be 7,000 houses in that area when the estates are completed. The management fees payable in respect of those houses to the management companies — even if the fee does not increase from €450 although it has increased every year since houses in that area were built — will amount to €3.15 million per annum.

I will outline to the Minister of State information I received by way of letter from a person who called to my office last week. The person's letter states:

[Householders are] . . . very sceptical of the role 'Management Companies' have to play in the running of housing estates. . . . I would like to explain the . . . concerns . . . [outlined by this person. The couple bought their house from the building company] . . . in November 2002, putting down a booking deposit. There was no mention of Management Companies at that time. In the spring of 2003 our solicitor told us that she had received the Contract and that it contained a clause whereby we would not be sold the house if we did not sign up to having a certain Management Company and paying them a 'fee' in advance, of 380 Euro. As we had already sold our last house . . . [they could not back out of the new deal and were forced to go along with this.]

It turned out that we are paying for sewerage maintenance and ESB public lighting and maintenance as well as gardening etc.

This is not a flat complex but an estate comprising detached and semi-detached houses. There is no need for this estate to be managed. The position is different in closed gate apartment complexes whose occupants might like a management company to manage the complex. However, the example to which I referred is an estate of 650 houses. The management fees in that estate was suddenly raised to €450 last year. The house owners in that estate have no say in the selecting of the management company. They were simply informed by the builder of the management company for the estate and had to accept that company.

I want the Minister of State to state clearly if he will give house owners the authority to set up their own management companies rather than have to accept the management companies set up by builders in the selection of which householders have no say. Deputy Gilmore also asked this question. This practice is a scandalous rip-off. When all the houses to be built in that area to which I referred are completed, more than €3 million per annum will be collected in management fees. That level of fees is beyond a joke.

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