Terence Flanagan (Dublin North East, Fine Gael)

The Minister must admit that it has taken a considerable time to get to this stage. That is unacceptable to all of those who are suffering as a result of the failure to regulate the industry.

Up to 500,000 apartment owners must endure on a daily basis the problems created by management companies that are not functioning correctly. Many have been ripped off, year in and year out, by the management fees they are being charged, without any means of redress. Good work has been done in this area by the Law Reform Commission and the National Consumer Agency which produced succinct reports setting out the problems encountered by apartment owners. This Bill does not go far enough to protect those home owners. Looking around this city and other towns and villages throughout the State, one cannot fail to notice the poor condition of some apartment complexes. This is a consequence of the lack of direction from Government and the absence of regulation to ensure standards are maintained. There is concern that some of these complexes may become slums in the future as a result of this neglect.

Apartment owners have been left at the mercy of unscrupulous developers for too long, to the detriment of their property and the environment. Recent issues involving apartment complexes run by management companies have come to light, including anti-social behaviour in certain complexes and where children have lit fires and caused serious damage to apartment complexes. Only for management companies having proper insurance in place, there would have been more expense and problems encountered. Some apartment complexes are open to trespassers and have neither proper fire escapes nor fire equipment. The protection and safety of apartment complex owners is not being taken seriously in this legislation. I was particularly concerned at Dublin City Council's report entitled, Successful Apartment Living, which revealed shocking statistics that 75% of private apartment schemes in Dublin have inadequate fire safety provisions.

Fine Gael has been proactive in this area for many years. Two Private Members' Bills were introduced. In May 2008, we published our policy document, A fairer Deal for Modern Living, which set out clearly our policies regarding the management of multi-unit developments. Members of Fine Gael have campaigned and called repeatedly in the Dáil and the Seanad for the property management sector to be regulated.

The problems facing apartment owners are numerous. In many instances, the management company is still controlled by the developer, leaving owners powerless. The companies are insolvent and owners are powerless. Services are poor, fees are not paid, there is no sinking fund, the management company is in considerable debt or has even been struck off the Companies Register, thus leaving the residential units unprotected, uninsured and unsaleable.

The Fine Gael policy document on owner-management companies highlighted the main difficulties facing apartment owners. I will outline the points which are not being dealt with adequately in the Bill. There is a significant information deficit surrounding the property management sector. Many property owners do not understand the basic definitions of a management company and a management agent. Many people signed up to management companies without realising what they were doing. They believe they were not properly advised by their solicitor. There is a need for solicitors in future to provide basic information in a booklet and in simple English so that owners understand they are signing up to pay an annual service charge when purchasing an apartment. Apartment owners need to know their rights and responsibilities. Basic education and training supports should be made available to people who will have the responsibility of being directors of management companies. The property services regulator's office should provide this advice. Some apartment owners are hesitant about becoming directors of a management company as they believe it is an onerous task and they will only get grief from fellow owners about decisions made. Owners need to be informed and properly educated in this regard but this area is not being tackled adequately in this Bill.

Dublin City Council is to be commended on the establishment of the apartment owners forum and the good work it has done. As a public representative I have referred apartment owners who have encountered difficulties with their management company to Dublin City Council which has been in a position to provide expertise and help and to point people in the right direction. These forums should be available in all local authority areas.

With regard to the taking in charge of a development by the local authority, it is often unclear what the maintenance responsibilities of the developer are as against the responsibility of the management company. Grey areas exist in this regard and this point is not addressed in the legislation. The extent of the area to be taken in charge by the council should be clearly marked on a site layout drawing so there is no confusion among parties. If a road within a development is due to be taken in charge by the council, repairs and maintenance is the responsibility of the developer until the road is taken in charge. If the road is not to be taken in charge, it is the responsibility of the management company and the cost of the maintenance must be raised through management fees. There is confusion and it is the case that some developers have not accepted responsibility in certain areas.

A significant problem facing apartment dwellers is the allocation of service charges and this Bill fails to deal adequately with this issue. The Bill states that service charges should be set in a transparent manner but this is vague and non-prescriptive. Clearer detail is needed in the legislation to ensure that management companies have insurance, that regular fire checks are taking place and that the fire-fighting equipment is up to the correct standard. People's lives should be the priority.

An amendment to the Bill is needed to allow for the calculation of the service charges. A professional quantity surveyor should be responsible for setting the charge. The legislation should require owner companies to plan ahead five years when calculating their service charges. This would be of assistance to apartment owners who can budget correctly for their annual service charges. I note the Minister is including an amendment regarding the initial service charge and this is to be welcomed. The breaking down of the service charge estimate by service type and the option to veto a service charge with 75% of the vote, is to be welcomed.

The Bill needs to provide a solution regarding arrears of service fees owing to management companies. This makes it difficult for management companies to carry out their work within complexes. As a first step the issue should be referred to the property regulator for adjudication rather than clogging up the courts.

See this speech in context