John Curran (Dublin Mid West, Fianna Fail)
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I thank the Leas-Cheann Comhairle for the opportunity to raise the issue of housing management companies on the Adjournment. I propose to share time with Deputy Andrews.

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Deputy may share time.

John Curran (Dublin Mid West, Fianna Fail)
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Will the Minister of State outline the Government's proposals to ensure housing management companies operate in a fair and transparent manner and that residents are aware of their rights in regard to such companies? We are all aware that the number of housing management companies has increased at an enormous rate in recent years, and many of them are associated with new apartment complex developments. Situations have arisen in many areas that leave much to be desired. Fees are likely to increase at any time and, in some cases, the level and range of services is poor.

This section of the market is poorly regulated. In light of changes in yesterday's budget on tax relief for first-time buyers, it would be remiss not to review this area. Many first-time buyers are on extremely tight budgets and some are faced with considerable fees from the management company of the apartment or housing complex in which they purchase their home. These fees may be the equivalent of two monthly mortgage instalments. Deputies from Dublin frequently encounter constituents who complain that they are paying management fees but receiving only inadequate service or none at all. Fees generally include such services as refuse collection and maintenance of public areas but residents often complain that there is no standard of service in return for the exceptionally high charges.

My colleague, Deputy Andrews, and I seek specific proposals from the Minister for the Environment, Heritage and Local Government in this regard. We accept the need for management companies in gated and enclosed housing and apartment complexes. There must, however, be a level of supervision, regulation and inspection, whether on the part of local authorities or the Department. Residents must have some means of recourse other than the legal route, which is prohibitively expensive for many.

Barry Andrews (Dún Laoghaire, Fianna Fail)
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I thank Deputy Curran for sharing time with me. This is a significant problem for residents in my constituency. Huge numbers of apartments are being built every year and their owners find themselves faced with large bills for management fees. I understand the National Consumer Agency proposed that action be taken to rectify the significant dearth of information in regard to the rights of home owners. First-time buyers, in particular, are often not aware of the rules that apply to the type of ownership that obtains in apartments.

Positive action is required on the part of the Government in respect of this unregulated area. The Minister for Justice, Equality and Law Reform indicated his intention to establish a regulatory authority which will ensure that management agents have certain qualifications and are members of a professional body. These proposals will be welcomed by the 500,000 people who live in apartments and must pay management fees that are often extortionate and in respect of which there is no transparency. I look forward to hearing what action the Government will take.

Tony Killeen (Clare, Fianna Fail)
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I am taking the Adjournment of behalf of the Minister of State at the Department of the Environment, Heritage and Local Government, with special responsibility for housing and urban renewal, Deputy Noel Ahern. I am glad of the opportunity to outline the action being taken to tackle issues of residential property management and to clarify certain matters.

The Government is delivering on its commitment to regulate this sector. The new property services regulatory authority, PSRA, being set up by the Tánaiste and Minister for Justice, Equality and Law Reform, will license, regulate and deal with complaints about managing agents, often a key source of problems. These are commercial entities that carry out the day-to-day work of managing and maintaining the development and collecting charges. When complaints are made about management companies, it is often the case that the issues involved relate to activities of managing agents.

A management company is composed of the homeowners in a development. Some agents provide a good service, but complaints about issues such as poor standard of management and maintenance, high charges and lack of accountability often arise from their role. Legislation to regulate property services, including the establishment and role of the PSRA, is being developed by the Tánaiste and Minister for Justice, Equality and Law Reform. A director of the authority has been appointed and an implementation group is in place to make the arrangements for the early establishment of the authority and its structures.

While the regulation of managing agents will be central to ensuring an effective and user-friendly system of residential property management, there are also certain issues to be addressed with the management companies, or ownership companies, as it might be more accurate to describe them. These companies are constituted under company law and broadly regulated by the Companies Acts. The Law Reform Commission has recommended certain changes to company law to address problems for property management companies in that context. For example, certain company law requirements are considered relatively onerous for the types of entities involved and some companies have been struck off the companies register because of non-compliance. The proposals relating to management companies will be reflected in a Bill to consolidate and reform company law.

As management companies are incorporated under the Companies Acts, the rights of property owners as members of companies are also governed by company law. The company's memorandum and articles of association regulate its activities, setting out its objectives, membership and voting structure, accounts and auditing arrangements, proceedings for meetings and the structure and powers of its board of directors. Members are entitled to attend and vote at the annual general meeting, examine the accounts and memorandum and articles of association and, where necessary, apply to the Director of Corporate Enforcement to have an annual general meeting called.

Directors are appointed from among the members and manage the company in practice on behalf of the members. Their functions include drawing up the annual budget, proposing works and services to be undertaken during the year, the amount to be put into the sinking fund and the level of charges required and informing the members of these and other relevant matters. Where residents have problems with management, they should take these up with the directors in the first instance. Tenants should approach their landlord as they have rights with management companies under the Residential Tenancies Act 2004. In cases where companies are run well, one usually finds the directors are competent people, prepared to put time and effort into the successful running of the company and that the members take an active interest.

The Department of the Environment, Heritage and Local Government has acted to deal with certain planning-related issues that have impinged on management arrangements in some developments. For example, it has been made clear to local authorities that planning conditions requiring management companies should not be attached to planning permissions for traditional housing estates and that the existence of a management company does not relieve developers of their responsibilities for completing and maintaining estates. A working group has been established to delineate local authority responsibility to take in charge public facilities in residential estates and further guidance will issue to planning authorities in early 2007.

The Law Reform Commission is examining legal issues generally regarding management of multi-unit structures. It is due to publish a consultation paper in the coming weeks, to be followed by a conference in late January, open to all interested parties. The commission's paper is expected to address legal issues with a view both to preventing future problems and providing a way to rectify existing problems. In light of the commission report, the Government will consider any necessary further measures.

In the short term, the Department of the Environment, Heritage and Local Government is pursuing with the construction industry measures to address some issues involving developers through a voluntary code of practice. There has been a positive response from the industry.

There is also an information deficit in this area. Better consumer information and awareness will help to avoid some problems and frustration. The National Consumer Agency has published an information booklet on management companies. The Department of the Environment, Heritage and Local Government has also compiled a short general information note, which is provided in response to queries. The PSRA will also have a public information function on property management.

Obligations of management companies are fundamentally matters of private contract. Buyers need to ensure they have proper legal advice and information when signing contracts. The long-standing principle of caveat emptor is very relevant. Buyers, when signing contracts, should be watchful about the obligations into which they are entering. Home owners should take an active interest in the operation of their management company.