John Moloney (Laois-Offaly, Fianna Fail)

There is no provision under the Planning and Development Acts or the Building Control Acts to allow planning authorities to require performance bonds to ensure snagging of multi-unit developments. The question of whether planning authorities should be given such added responsibilities could only be considered following an assessment by the Minister and Department as to whether the adopting of such additional roles would be appropriate for planning authorities and, if so, whether they would have the necessary resources to undertake this important work. Proper advance consultation with local authorities and adequate preparation for any such role would be essential. The Department of Justice and Law Reform has been in ongoing contact with the Department of the Environment, Heritage and Local Government in view of its responsibility for the Planning and Development Acts and the Building Control Acts.

I understand that a review of the enforcement procedures under both codes will be undertaken with the idea of ensuring improved enforcement of statutory requirements. I understand the building review advisory board, which advises the Minister in this area, has established a working group to examine the building control enforcement system. I further understand it will report shortly to the Minister on this issue.

The Bill seeks to deal with completions in the following way. Under section 3(1)(c) the developer will in future be required to enter into a written contract with the owners of the management company setting out the rights and obligations of each party in respect of the other.

It is envisaged that this contract will set out commitments by the developer regarding completion of the common areas and the overall development. If the terms of the contract are not honoured, the apartment owner will have recourse to the dispute resolution mechanisms under section 21. Section 21(4) contains specific provision for the Circuit Court to make an order directing a developer to complete a development in compliance with planning permission, building control standards and the terms of any contract.

The annual service charge issue was raised by Deputies Terence Flanagan, Johnny Brady, Chris Andrews, Rabbitte, Stagg and Kennedy, which is not surprising given the current lack of transparency surrounding the calculation and the apportionment of the annual charge. In many cases, the owners are unsure about what services are provided or are dissatisfied with the services provided. The Government's approach is to provide that each owners' management company must establish a scheme for the annual service charge, which must be approved by a general meeting of the unit owners. Complaints from unit owners that they do not know what the service charge is used for are common. The Bill addresses this issue by providing that all owners in multi-unit developments must be made aware of the proposed charge and the basis of calculation of the charge must be clear and transparent. The Bill goes as far as indicating the categories of expenditure, for instance, insurance, repairs, waste management and so on, which should be covered by the charge. I would also like to stress that the legislation places an obligation on unit owners to pay the agreed charge. The Bill also provides that for the purposes of the charge a developer or building contractor is deemed to be the owner of any unsold unit in a development from the date of the sale of the first unit in that development. This means he or she will be liable for the payment of service charges of all unsold units from that date.

Deputies Flanagan, Brady and Kennedy also raised the issue of sinking funds. The establishment of a sinking fund is also an issue of concern. Many existing developments have no such fund or the fund that has been established is inadequate for its purpose. The Government is concerned about the potentially serious consequences of this and this is why we have provided in the Bill that an owners' management company must establish such a fund for spending on refurbishment, improvement or maintenance of a non-recurring nature of a multi-unit development. Unit owners will be obliged to pay the sinking fund contribution and developers or building contractors will be liable to pay a sinking fund contribution from the date of the sale of the first unit in the development. The Bill also ensures that the requirements to have such a fund will apply not only to new developments but also to existing developments and it is important that the fund would be adequate to cover potential costs of refurbishment or improvement of a development. At the same time, the Government does not consider it should be too prescriptive. The Bill, therefore, provides for an indicative contribution of €200. There is also no longer a minimum of €200 per year and the company can set its own charge.

Deputies Kennedy, Sargent, Durkan and Flanagan referred to the taking in charge of estates. I understand that in February 2008 the Department issued revised guidelines on taking in charge of estates by local authorities. They require that planning permission must address the taking in charge issue at pre-application stage. This is a matter for the Minister for the Environment, Heritage and Local Government.

The Bill forms the centrepiece of the Government's strategy to deal with multi-unit developments and owners' management companies. I thank everyone who contributed so constructively to the debate. The issues raised will be considered in detail in advance of Committee Stage in the context of possible amendment.

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