Joan Burton (Dublin West, Labour)

Like other Deputies, I have been raising this issue for the last seven years. Given that my constituency of Dublin West has one of the highest concentrations of management companies in the country, it is an enormous issue. Despite this, we do not even have an audit of all of the housing units - apartments and ordinary houses - that are under the control of management companies. However, I estimate that there are between 7,000 and 10,000 such units.

The principal of a management company is very often the developer of the estate or one of his children or relatives, or the foreman - or one of his relatives - from when the estate was a building site. Some of these people have now deserted the developments, although they are not necessarily bankrupt. In one particularly outrageous case, the developer is cooling his heels in sunny Spain, and has been for some time, while the residents of the estate are facing serious difficulties. That is replicated elsewhere. We have another charming developer, also well known in Deputy Upton's constituency through being involved in the case of a building that was knocked down despite various court orders, who has put the people in the management company of an estate in Castleknock through enormous difficulties.

There are developers whose behaviour with regard to management companies is appalling. They are holding people, particularly young people, to ransom. Many of those caught up in the management company trap are young people in their late twenties and early thirties who bought, because they were advised to do so, at the top of the market. Apartment management charges range from around €1,400 per year, which is quite cheap, to well over €2,500 per year. In the case of apartment blocks with lifts, when something goes wrong it is a case of "think of a number".

I welcome the fact that this Bill is at last before the House. I will not suggest it is perfect, but the process of discussion in both the Seanad and the Dáil has resulted in an improved Bill. At this point, I am desperate to see legislation of some kind for management companies, even if it is not perfect, although that is not something I would normally acknowledge.

Management companies are another element of the general housing crisis. What is happening increasingly is that people in estates can no longer meet their mortgage payments and are not paying the management company service charges, which means that the management companies themselves are becoming insolvent, if they are not already. The knock-on effect is that residents face being locked into the developments, unable to sell their properties if and when the property market ever revives.

In addition - this may be something in which NAMA will become involved - there are unsold apartments or houses in many developments which the developer has held on to with the aim of selling himself. However, this means that the developer has kept control of the management company because the development is not complete. It may well be that the units are now no longer saleable. People have bought into developments where, in some cases, fewer than 25% of the units have been sold, and they are now trapped. The rest of the units are not being sold and those living in the sold units are in a kind of no-man's land. I hope this legislation will provide a way out for people who have been left marooned as one of a small number of purchasers in an unfinished development.

This is not happening only in my constituency but all around the country. It is particularly notable in areas such as the upper River Shannon, where there was much overdevelopment. Some of the newly built houses in Leitrim village are, from a Dublin perspective, beautiful houses but they are in what are basically unfinished estates. Unless some solution is devised, after two or three years of unoccupancy and hard Irish winters, many of those estates - particularly those subject to the NAMA process - will end up having to be knocked down. To people living in Dublin city, these appear to be high-quality three and four-bedroom houses, but they have no future.

All of these developments are under management companies. County managers and planners, along with developers, must take responsibility for slipping the requirement for a management company into almost all planning permissions over the past eight years as a way of forestalling costs relating to taking in charge and passing the costs of the estate or the apartment unit on to the new owners. They seemed to believe that as property prices were constantly rising, owners, particularly young people, would accept management companies as a kind of afterthought because they were so glad to get any property that would let them into the property market.

I recall being in a queue one day in the old TSB, now Irish Life and Permanent, in Blanchardstown. A man in the queue turned to me and told me he was queuing for his son. When I asked why, he told me his son was buying an apartment just over the boundary of Dublin 15 in County Meath and that he had sent him down to get the money as the son was about to sign for the apartment. He mentioned that the only concern was that there was a clause in the contract about a management company. I said that just meant that his son would have to pay charges. He asked if I thought the charges would be significant. The apartment was close to Dunboyne, in Clonee in County Meath. The man had not a clue that the likely cost would be €1,000 plus. His son was borrowing up to the hilt to get into the market. I told him I thought he should discuss those issues with his son, but I have no idea what happened. I often pass the block of apartments and notice that they do not seem fully occupied.

I congratulate the lawyers and all other people who manage residents' associations, like the Apartment Owners' Network and people in my constituency in residents' groups in Ongar, Tyrellstown, Clonee and parts of Castleknock, including places like College Wood which has a difficult developer - whom I share with Deputy Upton - on all the work they have done in the area of management companies. Many young people in these apartments, despite the fact they are in financial difficulties, are highly resourceful and have a community spirit. If the Government puts in place a fair management company structure and establishes owner managed companies, OMCs, that will give a framework of hope to these young people that will allow them take control of the situation.

I have relatives in the United States and am familiar with condominium control there. The system there works. It costs money, but as a result the places in which people live are kept clean and tidy and are well looked after. A sinking fund is established and general jobs in the apartment complex, like painting of exteriors, are done. These are positive measures and I welcome them in this Bill.

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