Mary Upton (Dublin South Central, Labour)

Like my colleagues, I welcome the opportunity to speak on the Bill. I have raised this issue on a number of occasions, both on the Order of Business and through parliamentary questions. I have a practical reason for raising the issue, the fact that I represent a constituency where there has been an explosion of apartment developments of one kind or another, the quality of many of which leaves much to be desired. At the time planning applications were submitted for many of these apartment blocks, I felt I was turning into a serial objector because of the number of objections I felt obliged to put before the planners. I have been vindicated in many cases. I do not take particular pleasure in that because of the unfortunate effect of that bad planning on victims, due to bad planning, design and quality and the number of unfinished apartments. Young couples are particular victims. At the time they bought into the concept of the apartment, what they were being offered by way of services and facilities was of a very poor standard. We cannot turn back the clock with regard to many of these developments, but we have seen the effect of the bad decisions on young couples, many of whom are in negative equity and have no chance of being in a position to sell those apartments.

I represent the constituency of Dublin South-Central and have received numerous complaints from constituents who live in apartments. Often they are desperate to discover their rights with regard to the complexities of the management agencies and the ever present spectre of a developer who seems to hold extraordinary control but seldom seems to take any responsibility for the many shoddy and incomplete apartment blocks that exist. This situation was created as a result of Government policy which provided tax breaks to developers. A number of developers in my constituency availed of these tax breaks. Government policy allowed the increase in density and brought on planning legislation that encouraged a systematic shift from the traditional Irish home towards apartment ownership. Not to be totally negative, some apartment blocks are good, high quality, well finished and well managed. However, the quality of many leaves a lot to be desired.

The legislation to enshrine the rights of the owners was never enacted and this is at the heart of the problem. This leaves apartment owners and some householders in a very weak position vis-À-vis the developers. Deputy Burton mentioned what we might call our shared developer. I have had many tussles with the same developer. Unfortunately, he won, a situation I found quite extraordinary. These issues need to be examined and addressed. Hopefully, they will not occur in the future.

While I welcome the legislation, there is an element of it being too little, too late, particularly for the people I have mentioned such as young couples who bought into these apartments and now cannot afford the mortgages. In many cases the management of the apartments is appallingly bad and there is little chance of being able to sell them. A number of issues will need to be addressed on Committee Stage and I hope that will happen. I understand that much of this legislation will not apply retroactively. In other words, it cannot apply to existing apartment blocks. What are the people in these apartments expected to do? This issue needs to be teased out carefully on Committee Stage to ensure that as many rights as possible can be applied to current apartment dwellers.

For the most part, the legislation looks to the future. That is good and positive. However, what about people who are in a situation where the improvements in conditions will not apply? These people will remain victims. We have still got tens of thousands of vacant or unfinished apartments and houses throughout the country. Some of them are in ludicrous locations and there is little chance of them becoming anything other than derelict buildings shortly. Some of the sections of the Bill refer only to developments that are completed after the Bill is enacted. Given the state of the Irish property market, it is unlikely there will be a significant amount of development over the next decade. In contrast, we had a glut of unparalleled and exponential growth in apartment complexes and other housing developments over the past decade. Very often, these were instituted under the guise of the management company.

Most of those who have spoken in this debate have mentioned the problems surrounding the handing over of, or failure to hand over, the common areas to the management company. Mention has been also made of situations where developers hold weighted voting rights in a way that allows them retain control of the management company. I am aware of a number of cases in my constituency where an unfair management company structure has been established, which effectively discriminates against the rights of the owners to the benefit of the developers. There are hundreds of similar cases wherever we see a glut of these apartment blocks. Even with regard to developments that will come under the legislation, the voting system has been set as one unit, one vote. I understand there may be valid reasons for that and that people will have some rights, in that people who have a unit pay a management fee and, therefore, have some rights. However, this leaves this area open to abuse such as abuse of power by developers or landlords who have several properties. As such, they will have several votes which will allow them to control the voting rights and thus effectively control the management company. It would be a much fairer system to have one member, one vote rather than one unit, one vote. In an owners' management company where the company is limited by guarantee, not for profit and established for the benefit of members equally, it is normal to have one member, one vote, according to the report published by the Apartment Owners Network. The Minister must examine this carefully with a view to safeguarding the rights of each individual who purchases an apartment rather than the developer who will more than likely control a number of apartments and will therefore be entitled to the same number of votes.

Section 22 provides for unit owners to pursue developers in the courts in order to force them to complete the development under the terms of section 21 which deals with planning permissions. Section 23 provides that the Circuit Court shall have "exclusive jurisdiction". That in itself sounds fine, but the maximum fine a Circuit Court can levy is just over €38,000. Given that some developments are left unfinished and may require hundreds of thousands of euro in investment to be completed to the planning permission requirements, this does not offer adequate sanction. This is relevant to the case referred to by Deputy Burton, where a paltry fine was imposed for what seemed a very serious breach of planning.

The provision for a mandatory sinking fund is important but is not required to come into effect until three years after the first transfer of ownership of a unit in a multi-unit development. This seems to be something of a sop to developers who are likely to remain owners of apartment complexes for several years but will not be required to contribute to the sinking fund even though depreciation begins almost immediately from the time of completion of the apartments.

There are many aspects of the Bill to be welcomed. However, at a practical level, it is vital that apartment owners are fully aware of both their rights and their responsibilities. This information must be available in a user friendly fashion and there must be provision for that in the Bill. I acknowledge that when people sign a contract it is the responsibility presumably of their solicitor to inform them of what exactly is involved. However, ordinary people signing up to these types of arrangements are often overwhelmed by legalese and need some clarity. Anybody who has had any interaction with apartment owners knows there is widespread confusion about the structure of management companies and that people often do not realise that they themselves are part of the company. This is the type of detail that must be explained carefully to prospective apartment owners so that they know exactly what they are taking on. It seems all the cards are held by the developers who, even when they default on their responsibilities, are able to escape any serious penalties.

Recent developments in regard to an apartment complex in my own constituency highlighted the vulnerability of apartment owners relative to the sleight of hand of developers. This particular developer controlled the management company because of the number of units he held, either occupied by him or a member of his family or leased out to tenants. He has now run off with the management fees and the apartment owners are left high and dry. They have been advised to cut their losses because it will cost far more to pursue the developer through the courts. These are the types of practical issues that must be addressed. Overall, however, I welcome the Bill as a positive initiative.

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