Pádraic McCormack (Galway West, Fine Gael)

The practice of local authorities making it a condition of planning permissions for housing developments that an estate management company be established has got out of hand. Young first-time buyers and all purchasers in such estates are letting themselves in for an annual penalty which is much more dangerous than when rates were imposed on houses.

The management companies, which are set up by the developer, are charging householders figures ranging from €450 per annum in housing estates to €2,000 per annum in apartments. In some cases the fees can be doubled from year to year with no right of appeal for the householder. A year ago, when this matter was brought to the attention of the Minister for the Environment and Local Government, he said he would do something about it. More than seven months ago, when I again raised this matter with the Minister in a parliamentary question, he stated: "The Law Reform Commission working group is currently examining a range of legal issues relating to management of multi-unit structures". What about householders in detached or semi-detached houses who are locked into the management company system set up by developers?

In the same reply, the Minister indicated that he did not approve of local authorities including a management company clause in planning permissions and noted that his Department had asked planning authorities to report on their policy on the attachment of such conditions on planning permissions. Nothing has happened since. Two weeks ago, the Taoiseach shed crocodile tears in the House about how this practice penalises householders and indicated it could not continue but neither he nor the Minister is doing anything to address the problem. It did not take me seven months to determine that the practice continues in planning authorities.

Last week, Galway County Council granted permission for the construction of 61 houses in Loughrea — planning reference No. 05/3642 — in a development in which standard houses account for more than 80% of the units. It will include three detached and 42 semi-detached houses, six terraced houses and ten apartments, yet the developer is obliged to establish a management company under a condition of the permission.

Similarly, in Galway City, I can cite two examples of recent decisions to grant permission where such conditions were included. Planning reference No. 05/470 relates to an application at Ballyburcach for four detached houses. Condition 19 of the permission states: "The proposed communal open spaces, car parking areas and access road within the site of the development shall be retained in private ownership and control shall be maintained by a properly constituted management company".

Also in Galway city, a recent decision — planning reference No. 05/833 — to grant permission for a development, including seven town houses at Newcastle Road, featured a condition requiring the establishment of a management company. All annual management company charges imposed as a result of these decisions will be borne by householders who have no control over the charges they will face. Will the Minister get his finger out and, if necessary, introduce legislation to end this practice of local authorities conspiring with developers to impose this additional financial burden on householders?

Is it right that I, a resident of an estate, receive free of charge a service for which all buyers of new houses in similar estates must pay, sometimes at exorbitant rates? The curious aspect of the management company clause in planning permissions is that the developer must set up the management company and these frequently consist of the same personnel as the construction company. In many cases, purchasers of homes in these developments commit to purchasing the house before they know the extra annual charges they will be required to pay to management companies.

It is time this Government woke up. How much more does it think first-time buyers can take? The Government has already added €40,000 to the cost of a house, abolished the first-time buyer's grant, raised VAT charges to 13% and made provision for development charges of up to €9,000 on every house. The annual management fee is equivalent to house rates except that the rates go to the developer rather than the local authority. What will the Minister do about it?

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