Olivia Mitchell (Dublin South, Fine Gael)

I welcome the opportunity to speak on this issue which I raised last April as it is one of growing concern countrywide. In Dublin some 40% of homes are apartment complexes. The number of apartments built in my local authority last year was a staggering eight times greater than houses. It seems that apartment building in urban areas is becoming more the norm. There is a great need for regulation and legislation of this area. Information is also needed on the operation of management companies. From what speakers have said, it is clear there is a lack of understanding regarding management companies. Many of the problems stem from a lack of information about them and a lack of regulation of them.

Many problems were mentioned but I want to concentrate primarily on management companies in apartment complexes as it is in respect of those that I have discovered there to be the greatest cause for concern. I am not against apartments; they offer choice and variety in the market and mobility. Apartments offer young home owners the opportunity to get into the property market and older people the opportunity to downsize. Unless we regulate this area and ensure that home owners are protected, before too long investment in an apartment could become a liability for the investor, his or her neighbours and an environmental eyesore if the buildings are not maintained. The great risk posed is the decline in the standard of maintenance of the overall complex, the collapse of management companies and eventually apartment owners finding it almost impossible to see their apartments. Solicitors increasingly report that they encounter difficulties in closing sales because management companies have collapsed.

There is an old saying that good boundaries make good neighbours. Part of the root of the problem is that boundaries in apartment complexes are not clear or certainly not as clear as they are in the case of the traditional semi-detached house. In apartment complexes, the overall building and the common areas are the joint responsibility of the owners. When the purchaser of an apartment signs a contract, which is a long-term lease, that purchaser takes on joint responsibilities and responsibilities for maintenance. The purchaser not only has responsibility for his or her apartment but to his or her neighbours. This is often not clearly understood and seldom explained to the purchaser.

In many cases young, inexperienced home buyers are vulnerable to sales talk by developers who seldom make an effort to emphasise that buyers take on a lifetime enduring management charge that is equivalent to the dreaded domestic rates of old that we all, or those of us who are old enough to remember them, hated so much. It was a nightmare for young families to have to pay them. Management charges are becoming that type of burden, particularly when people are unprepared for the obligation to pay them.

The measures suggested in the motion are necessary. There is a need for a dispute resolution agency not only in the case of disputes between the management company and individual owners but disputes between owners. A breakdown in communications often occurs between owners in that they begin to let each other down and do not understand that each one of them is a shareholder in the management company. There is a misunderstanding over what is a management company and what is the property management company that the owners employ. There is often a lack of understanding in that owners may be of the view that they can dump their property management company and seek a better deal from other such companies.

It is necessary to inform buyers at an early stage that when they are informed by a builder of the management charge, they are being enticed to purchase on the basis of what is probably a low one. As Deputy O'Dowd pointed out, the charge is often low initially because there are no services but, as sure as eggs are eggs, the charge will increase. That is not made clear to buyers. There is an onus on solicitors when closing sales to make it clear that this is the case and to make clear the implications of that. The buyers become members of a company with liabilities to other members of that company. Solicitors have a major responsibility to pass on that information to their clients.

One of the barriers to the dissemination of this information is a growing practice that should be stamped out and legislated against whereby builders offer young buyers reduced rates for their solicitors to act for buyers. That is a questionable practice. I am amazed that solicitors have got involved in this practice. In such circumstances how can they possibly be objective and act in the best interests of the buyer? The practice of a builder's solicitor acting for a buyer should be stamped out. It is a bizarre arrangement which I understand is widespread not only among apartment buyers but house buyers. A person may call to a public representative having bought a house on discovering a road or a motorway is to be built beside the person's house but the builder did not inform the person of that planned project. When I ask did the person's solicitor not check that, I discover that the person's solicitor is also the builder's solicitor. It is incredible that solicitors lend themselves to being involved in that kind of abuse. It is outrageous.

Increasingly this is the way people will live in urban Ireland. There is an onus on us to ensure that legislation is in place which protects those who purchase and those who live beside those who purchase. We must also ensure that our environment does not deteriorate as, increasingly, it will be an environment for all of us because few of us will live any great distance from apartment blocks. If the market for these houses collapses because they cannot be bought or sold and there is no maintenance on them, it will destroy entire areas and jeopardise the housing market which is such a crucial part of our economy. I support the motion.

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