Phil Hogan (Carlow-Kilkenny, Fine Gael)

I thank the Leas-Cheann Comhairle for giving Fine Gael the opportunity of raising on Private Members' time an important issue which is concentrating the minds of many of the 500,000 people who live in apartments and mixed developments in urban areas. There are approximately 303,000 apartments in Ireland, including the 60,000 built since 2005, along with 4,600 management companies. The motion sets out the problem as well as the actions the Government can take to resolve it. I shall describe the background to the issues, while my colleagues will make proposals in regard to the required remedies.

Home owners are experiencing a significant information deficit in regard to their rights and responsibilities, particular in the area of management companies and agents and the varying management fees levied on individuals. On various occasions during the past several years, Deputies have asked the Government its proposals for finding solutions to these issues. Every Deputy has been contacted by home owners regarding the types of charges levied, the responsibilities of management companies and the abuse by some companies of the manner by which they are established under company law and the fees they charge. The information we are putting before the House is not new because the problems associated with management companies and apartment living have long been identified. Organisations such as the National Consumer Agency, the Office of the Director of Corporate Enforcement, Dublin City Council and the Law Reform Commission have produced reports and made recommendations on improving the present situation.

In 2006 the National Consumer Agency published a report on the property management sector entitled Management Fees and Service Charges Levied on Owners of Property in Multi-Unit Dwellings, which examined the sector and made 25 key recommendations on regulation of the industry and protective measures for consumers relating to transfer of control, service charges and sinking funds. The report also recommended the establishment of a professional body and qualifications for those working in the industry. The agency also produced a helpful booklet, Property Management Companies and You, which set out in clear terms the manner in which money was being extorted in the absence of proper accounts. There is extensive evidence to suggest that management companies are extorting money through false pretences.

In December 2006 the Office of the Director of Corporate Enforcement commenced a public consultation process on the governance of property management companies, with a particular focus on apartment developments. The office is currently assessing the responses to its consultation with a view to producing recommendations in the near future.

Dublin City Council has produced two comprehensive reports on apartment living and the problems associated with management companies. The first report examined the strengths and weakness of the existing system, while the second investigated survey charges, design and owners' attitudes in 193 private apartment schemes in Dublin city.

The Law Reform Commission has also been examining this issue for the past year and is due to report on it at the end of May. I look forward to seeing the recommendations it makes because the issue is pertinent to the Department of Justice, Equality and Law Reform as well as the Department of the Environment, Heritage and Local Government. I welcome the new Minister for Justice, Equality and Law Reform to the House and congratulate him on his appointment. The issue gives rise to cross-departmental concerns in the areas of property rights, legal standing of property and, from the perspective of the Department of Enterprise, Trade and Employment, company law in respect of ownership and the type of companies established to manage complexes. I do not wish to minimise the difficulties involved. If the problem was an easy one to solve, the Law Reform Commission would not have to get involved.

In the case of multi-unit developments and gated estates, many complexes include both internal and external common areas accessible to all occupiers. These typically include lobbies, halls, stairwells, lifts, corridors and roofs. Owners collectively share common areas and, as part of a management company, enter into legal arrangements that create certain rights and obligations. The need for a management company arose in the first instance to manage all common areas and services in a complex not belonging to or being the responsibility of an individual. Abuse occurs at present where owners of management companies retain ownership of a certain number of apartments and do not pass responsibility for management of the complex to all apartment owners as a single corporate entity, which would allow the latter to run their own affairs at a reasonable price rather than having figures picked out of the air in the absence of proper accounts and timelines on the establishment of structures.

Members and owners of management companies were supposed to make the key decisions on whether to manage the complex themselves or appoint a professional management agent. Most auctioneer firms in Dublin would consider becoming management or letting agents. I declare an interest in that I pay management fees for a property I inhabit in Dublin when I conduct my parliamentary business. It is difficult to know where exactly the money goes and how it is calculated. The accounts may look very fine at the end of the year but the devil is in the detail for many of these companies.

People from various parts of the country have written to Deputies about this problem. Increasing numbers of people live in mixed apartment units and townhouses. Dwelling patterns in Ireland have become denser, particularly in the centre of urban areas, and people have various options for living as close as possible to their places of work. That is a welcome development but they should not be penalised by the unregulated developments currently taking place. Of the total number of dwellings built in 2005, apartments comprised 53% in Dublin city and county, 25% in Limerick city, 22% in each of counties Kildare and Wicklow and 18% in each of counties Louth, Galway and Cork. These substantial proportions indicate the size of the problem we face. It is expected that the 2006 census will reveal that the current estimate of 303,000 apartments has increased to 500,000. A further 50,000 to 100,000 people who live in traditional townhouse developments are also subject to management charges.

The regulations and primary legislation needed to deal with these issues are lacking but Fine Gael is offering the Government an opportunity to consider with urgency the remedies needed. For the past several years questions have been raised on the matter in this House and commitments have been made in regard to legislation. The former Taoiseach spoke a number of times on the Order of Business about the difficulties of addressing the issues involved. Nevertheless I ask that the Minister for Justice, Equality and Law Reform understand that once the Law Reform Commission report comes to his Department, we should not see it put to one side and not dealt with. It is a massive consumer issue which we feel strongly about.

The new Government has made reform a key priority. There is no more urgent matter in the housing area than the reform of the management company and agency area. An authority was set up on an interim basis in 2005 to bring about some kind of reform in this sector, which indicates that the issue affects many constituents. It cannot be properly brought into focus or effect until such time as we have primary legislation on the Statute Book.

The people who are most affected by these issues are young families and professionals purchasing their first home, as well as many newly-arrived workers. They are facing possible negative equity and the last thing they want is to pay management company fees at a time when mortgage rates have increased nine or ten times in the past couple of years. Every penny counts at this stage for many people, and they wish to know the service charge they have to pay is being spent properly or if it is being spent at all. They wish to receive in a more transparent way the type of information they are entitled to as consumers.

The problem is not exclusive to large urban areas, although it is a major issue there. It is concentrated in such areas and many people living in high-density dwellings feel nobody is looking out for them or their rights. This Government has an obligation to do so but has not indicated, in terms of primary legislation, any urgency on the matter in recent years.

We have had much investment and tax breaks introduced in these major urban areas over the years for property developers. They have achieved higher densities than would normally be expected in the centre of urban areas. That has been laid down through national regulation in the Department of the Environment, Heritage and Local Government. There is no point in allowing developers to get the benefits of tax breaks and management agents and companies to extort money from consumers and people living in those complexes without regulating the type of policy which would be appropriate to a very important consumer issue.

Many apartment blocks have been built around the country without linkage to transport arteries, green spaces, facilities for families or energy efficiency. The lack of planning for properly organised management structures in these developments is a policy failure.

Potential solutions to this will be dealt with by my colleagues, Deputies Terence Flanagan and Mitchell. I ask that under the planning and development Acts, companies Acts and frameworks which can be set up by the Minister for Justice, Equality and Law Reform of the day, amendments be brought forward to treat this matter seriously. A cross-departmental solution is required, as I indicated earlier, and this side of the House will facilitate the Minister in bringing forward proposals at the earliest possible opportunity in order to ensure people understand before buying an apartment or townhouse or entering high-density living that there is transparency in the way their costs are levied. They should understand people are not allowed to get away with the type of unregulated approach to modern urban living in a way that has been the case in so many apartment complexes.

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