Olivia Mitchell (Dublin South, Fine Gael)

I appreciate the opportunity to speak on the motion. I checked my records this morning and saw I had first raised this issue in April 2005. In November of that year, Fine Gael had a Private Members' motion suggesting reforms and regulatory control of property management companies along the lines of Deputy Hogan's proposal. However, here we are in 2008 and nothing has happened despite the promises made on many occasions since that time. Meanwhile, the building boom has come and gone.

In urban Ireland, certainly in my constituency, that boom has consisted almost entirely of apartment building rather than the building of conventional houses. In my constituency, the ratio is 8:1. Any legislation we now pass is too late to help the many new home owners over those years. This drift is causing problems not just for those buying apartments, but for the rest of us who live in urban Ireland. It is now the dominant home form, certainly in Dublin, and if there are problems, this will impact on all of us.

It has been heartbreaking to see the difficulties, the lack of information and sometimes the downright robbery young starter home buyers have been subjected to. Equally worrying is the future impact on the environment if this area is not regulated. Given the value that we place on home ownership in Ireland and the high incidence of home ownership, which is probably the highest in the world, it is inexplicable that we have made absolutely no move to protect the owners of this significant part of the housing stock. We can assume it will continue to be a significant part of the housing stock because urban land will become scarcer and it is inevitable that we will build in a more compact form.

As my colleague said, there are now approximately one third of a million apartments in Ireland. That is not bad in itself. It is good that it gives young people an opportunity to get into the property market, gives older people an opportunity to downsize and facilitates worker mobility. All of these factors are positive but unless we, as legislators, regulate the sector and ensure that owners are protected, what is the biggest investment in their lives for many young people will eventually become an unsaleable asset.

For every urban public representative, the same story is coming from apartment owners — lack of information, lack of transparency, poor planning, lack of control of their own management companies, of which they do not seem to realise they are members, and, in some cases, downright abuse by developers of unsuspecting new, young home purchasers. Not to put a tooth in it, developers write contracts to suit developers. They then collect management fees from the hapless purchasers and in some cases use them to finish apartment blocks which others will buy.

The crucial point is developers are allowed to control the management companies until all of the blocks are completed and until it suits them to move out. Meanwhile, they collect fees from the individual owners but do not themselves pay fees for the residences that remain in their ownership. The hapless purchaser signs the contract. I have seen cases where the fees are then used to clean the windows of the next apartment block, to prettify the development so the developer can sell more houses or even to finish off the development, which the developer is required to do in any case under the planning permission.

Why do owners sign up to these contracts, which are so clearly not in their interest and put them in such an unfavourable and powerless position? One of the reasons is the egregious practice of builders offering to pay the fees of the solicitor of the purchaser. Obviously, the builders do a deal with the solicitors to do a job lot of conveyancing. The young buyer, not realising the implications of this, thinks it is great and signs up for it but the solicitor is not going to look after the interests of the buyer in the way he or she would if the buyer was paying. It is human nature and is inevitable that he who pays the piper calls the tune. They will not upset their paymasters.

I was horrified by the lack of basic advice being given by solicitors to new home owners in some cases. They would not even advise them of basic issues such as to examine their development plan or consider what is perhaps planned for next door. Many young purchasers get a big shock when they eventually find out what is to be built next door.

Reform of this area, along the lines of the Fine Gael motion, must involve mandatory use of standard contracts such as those that now apply in the rental sector. Full information must be made available to purchasers about what they own, what they own in common with other buyers, what their duties and responsibilities are as shareholders, the need for a sinking fund and the reality of escalating annual service charges. As legislators, we have a responsibility to those young purchasers to empower them and to ensure they control and manage their own affairs, and have the information to protect their joint investment.

We must also regulate the property management companies which are springing up. This is a great new area for people with absolutely no training who can set themselves up as property managers. It requires no training or registration, yet they control huge amounts of owners' money. It is outrageous that there is no control in this area. While I do not want to suggest all builders or developers are involved, nevertheless, there is a widespread practice whereby the builder sets up a property management company. He does not pay into it but all the other home owners do and the money is effectively at the disposal of the builder, through his son or some other indirect mechanism through which he controls the property management company. The unfortunate owners cannot sack the property management company because the builder has maintained control of it.

Nonetheless, the one point I want to stress above all is the danger of people not paying management company fees. It should be brought home to people that management fees are inevitable where there are common areas to be maintained and where the exterior of a building is the joint responsibility of the owners. If the fees are not paid, there can be no maintenance. The exterior becomes shabby and values fall. People cannot sell and when they move out, renters move in. The owner has even less interest and fewer fees are paid, and the spiral of degradation is almost inevitable. This will affect the environment of all and is the biggest threat to the value of apartment owners who fail or refuse to pay. It also places a huge burden on those who do pay. It is in everybody's interest that everybody pays and understands when they sign up that they will have to pay in perpetuity. Lack of maintenance and the absence of a sinking fund to cater for large-scale external repairs will produce a spiral of degradation. Rundown or shabby apartment blocks are not in anybody's interest.

Regulatory reform must include a well-publicised certainty that unpaid fees will be recouped by the management company when the apartment is being sold. This is not understood by people who decide it is a mug's game and that they will not bother paying management fees. As a long-term solution there should be a lien on the property and owners should know this. In the short term, there should also be a mandatory "name and shame" option involving mandatory notification to all complex owners of those who fail to pay their management charge. This would help to ensure compliance.

Abuse of controlling positions in management companies by some developers has already led to a resentment and a negative attitude to paying management fees by many apartment owners. This will become a real problem where developers are no longer selling their apartments but are maintaining ownership of them and renting them out. Given that the housing market has weakened and with many developers retaining ownership, it is imperative that they cannot use their extra voting power in the management company to disadvantage individual owners and, crucially, that they are obliged to pay the management fee for every apartment that they retain. Otherwise, the buyer loses, which seems to be the norm in this relationship, which is unfair to young purchasers.

It is essential that we have regulatory reform along the lines suggested in this motion. I ask the Minister to take the motion seriously. It is a vital issue in urban Ireland because this is becoming the way people live. If apartment blocks do not succeed, God help us all because it will destroy urban Ireland.

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