Dáil debates

Friday, 13 November 2015

Multi-Unit Developments (Amendment) Bill 2015: Second Stage [Private Members]


10:00 am

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I move: "That the Bill be now read a Second Time."

This is a very simple Bill. I tried to get this issue addressed in the first instance a few years ago by getting the evidence and giving it to the Minister in the hope that it would be included in an amendment to another Bill, but that has not been forthcoming. As a consequence, I decided to table this Bill. It is very simple. It is about how the definition in the Multi-Unit Developments Act is being interpreted. It will cause problems if it is not redefined in a way that was intended in the Multi-Unit Developments Bill, as originally proposed, which was subsequently amended in the Seanad. That change in the definition has caused the problem.

In 2011 or 2012 I was advised of a housing development in Celbridge consisting of nine houses. The solicitor advised the council when the planning application was being made that there was an obligation to set up a management company for the development. There were no apartments or duplexes, only nine terraced houses. The council spoke to the solicitor and it was advised that it was contrary to the county plan and Government policy as set out in a Department of the Environment, Community and Local Government circular. When I alerted the Minister I was asked to provide some information and I got a letter from Kildare County Council. The then Minister, Deputy Shatter, agreed to liaise with other local authorities to see if the same thing was occurring. I have heard nothing since even though I have made inquiries by way of parliamentary question and so on. It is about how this is interpreted and the Bill suggests a different interpretation.

In the early 2000s we started to see management companies typically being included in planning applications. They vary in type from a management company that has a lien on a property to something that is less difficult to untangle. The Multi-Unit Developments Act was introduced on foot of a Law Reform Commission report. Many people were complaining - I am quite sure the Minister of State knows this because it would have been typical practice in our constituency - that they arrived at their solicitor's office and the solicitor said, "This is just a requirement. Sign this or you don't get your keys." They did not realise that there was a recurring cost every year in the form of management company fees. These were not people buying apartments but people buying houses. It may well have been a mixed development and there may well have been some apartments within that. The Multi-Unit Developments Act was intended to apply some legal arrangements to multi-unit developments of apartments or where there were shared internal spaces such as lifts or common areas that had to be maintained.

There are all sorts of problems in that. It created a new bill, which in some cases was equivalent to another month's mortgage. When estates were being taken into charge there was a doubt over whether this could proceed if there was a dual responsibility with the local authority on one side and a management company on the other side. I am essentially trying to undo these. I have approximately a dozen examples, each of which is constructed differently.

I got legal advice on how to wind down a management company in order that I could give some generic advice to people who found themselves in that position, particularly but not exclusively in my constituency. It is quite an onerous task. In some cases the management companies have ceased to exist because they have not complied with company law and have been struck off. It causes all sorts of problems for people who are selling their houses if a solicitor completes a search and discovers there is a deficiency or something that is not quite as it should be. That is the issue around management companies generally.

The point I am making with this Bill is that some of these developments should not have management companies. Some if not all the local authorities are interpreting this as a requirement under the Act to insist on a management company, which is at variance with the Department of the Environment, Community and Local Government circulars. If that is insisted on, it gets included in the planning permission. As we know, a planning application is a legal process. Solicitors completing searches will go through it to ensure it is in compliance. There could even be complaints to local authorities that they are not in compliance if the management is not included.

In some cases management companies have operated in a manner that people would not have anticipated. For example, some people have got into significant mortgage distress and cannot make their mortgage repayments. The mortgage is often the first thing that is paid. However, often a parking permit will not be provided if the management company is not paid. At times it can create an unhealthy environment within a housing estate where neighbour is pitched against neighbour.

Formerly, in my experience, housing estates were generally managed by residents in an informal way, where they collected a residents' fee and collaborated in cutting grass and other maintenance. That practice was a good initiative in terms of community building. Management companies, particularly where there are issues of dispute, cause the opposite kind of community engagement and involvement.

I have no difficulty with management companies being in place where they are required, and I believe some of the provisions of the Multi-Unit Developments Act have been helpful. They have not always been followed to the letter of the law, but at least the law exists. While I have no difficulty with companies required to be in place, I do have a difficulty where we oblige estates to have them or where some local authorities make the inclusion of a management company an obligation in situations in which that should not be the case. This adds costs for people in situations in which it is unnecessary to do so and causes problems in getting those estates taken in charge. I have checked the law and obtained legal advice on this issue, and despite what the Department of the Environment, Community and Local Development says, if a management company continues to exist, there is often resistance to taking an estate in charge.

Deputy Michael McGrath tabled a Bill in the House some weeks ago seeking a reduction in property tax for specific groups of people living in housing where there is a management company. I have some sympathy for that view because those people are paying a management fee for all of the management services within their estate and receive no services from the local authority, not even road sweeping. Such people would surely feel aggrieved if they have to pay the same property tax as everybody else. It is vital we do not put impediments in place to getting estates taken in charge so that a more normal arrangement can apply, similarly to neighbouring housing estates.

The definition in the Act requires that all new residential developments, both apartments and conventional housing, will require a management company, as stated. This is contrary to national, and often county, policy. I am aware that in Kildare, the local authority was surprised the first time this happened and went out and got legal advice. It then came back and agreed that the developer's interpretation of this was right.

I do not care if the Minister accepts this proposed amendment and includes it a Government amendment in another Bill. I do not care whose name goes on it. What I care about is that people turn up at a solicitor's office, having struggled to get a large deposit together, and are then told they cannot have the keys of their house until they sign up to the management company. This involves money that they probably would not have factored into their budgets in terms of household costs. Then when the estate is completed and they try to get the estate taken in charge, they discover they have all sorts of issues in regard to winding down the management company. Most people only want to view a showhouse and then buy their house. If they can get the money together, they want to buy the house, move in and get on with their lives. They do not want to get involved in this kind of complicated legal arrangement that is surplus to requirement, adds to their costs and should have been dealt with when the Minister's attention was drawn to it.

It does not take a legal genius to read the definition in the Act and come to the view that some developers and solicitors have come to. Increasingly, I find that people are precluded from selling their houses where, for example, an estate has not been taken in charge or the bond has lapsed. This is an impediment to selling the house. Why would we put people in harm's way when that is unnecessary? I suggest it would only take 20 minutes to remedy this situation. I do not care if the Minister does not accept my Bill, provided she commits to dealing with this issue before Christmas. This situation should not be allowed to continue. We are starting to see a situation in which developers are making applications to build and we do not want to have a condition like this tied into planning permissions. This condition should not be there as it will cause problems for people in the future.

Before the Multi-Unit Developments Act was enacted, the issue of management companies arose over and over again. I remember debating the issue here in 2005 and 2006. I remember the celebrated case relating to management companies in Tyrellstown, which forced hands a little on the issue. This was probably the first piece of case law that showed some of the inadequacies regarding the issue. If I remember correctly, this involved a mixed estate with significant numbers of houses and apartments and with some management companies set up directly by the local authority.

I urge the Minister to sort out this issue. If my Bill is accepted, all it will require is five minutes on Committee Stage. I do not care if the Department wants to repackage it as something else, provided something is done. It makes me angry to see something like this continue when it is unnecessary, will cause problems, will cost people money, will cause significant administrative hassle for local authorities and will need solicitors to check back and forth on the issues. The provision is at variance with the Department of the Environment, Community and Local Government's circulars. To be honest, I do not know why I have to raise the issue here and why it was not dealt with when it was drawn to the Minister's attention three or four years ago. It should have been dealt with quickly and without fuss then. I am surprised that did not happen, given that it is such a glaring difficulty. I urge the Minister to accept the Bill and amend it in whatever way is required so that we can deal with this issue as quickly as possible.

10:10 am

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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On behalf of the Minister, Deputy Fitzgerald, who is unavailable today, I welcome the opportunity provided by Deputy Murphy’s Private Member’s Bill to address policy issues related to multi-unit developments.

I want to state clearly that the Government opposes Deputy Murphy’s Bill. Before explaining the reasons for the Government’s opposition, I want to recall for Deputies the reasons the Multi-Unit Developments Act 2011 was enacted. The primary purpose of the 2011 Act was to reform the law relating to the ownership and management of common areas of multi-unit developments and to facilitate the fair, efficient and effective management of owners’ management companies, OMCs. The Act gives residential unit owners, through their membership of the owners’ management company, a say in the management and operation of their development and a direct role in fixing the amount of annual service charge and sinking fund contribution that they are required to pay towards the upkeep and maintenance of the development.

The Act establishes a new statutory framework for the management of multi-unit developments and the operation of owner management companies, and puts new accountability mechanisms in place. A key element of the 2011 Act concerns the transfer of common areas of a multi-unit development from the developer to the owner management company. Section 4 of the Act provides that in those cases in which some residential units have already been sold prior to the coming into operation of the legislation, the developer must transfer ownership of the relevant parts of the common areas to the owner management company within six months of the coming into operation of the Act. In effect, such transfers were to be carried out by 1 October 2011. In the case of completed developments, the developer must transfer ownership of the common areas to the relevant owner management company within six months of the coming into operation of the legislation.

I should add that under section 3 of the Act, a residential unit in a new multi-unit development cannot be sold unless an owner management company has been established by the developer and ownership of relevant parts of the common areas have been transferred to that company.

The Act also contains provisions in relation to the operation of owners’ management companies. Such companies are now required by law to hold an annual meeting and must in advance of that meeting provide unit owners with an annual report setting out details of income and expenditure, as well as assets and liabilities; the annual service charges and sinking fund accounts; planned expenditure on maintenance and repair; insurance cover; fire safety in the development; and contracts entered into by the company. The Act also provides for a system of fair voting rights in owners’ management companies: under the Act, one vote attaches to each unit in a development, and each vote is of equal value. The Act stipulates that an owners’ management company must establish a scheme for annual service charges to fund expenditure on the maintenance, insurance and repair of common areas within its control, and for the provision of common services such as security, legal and accounting services. The annual charge must be calculated and apportioned on a transparent and fair basis and must be approved by a general meeting of the unit owners. Each owners’ management company must also establish a sinking fund to cover outlays on refurbishment, improvement or maintenance of a non-recurring nature of the multi-unit development.

Section 24 of the Act, which deals with the resolution of disputes, provides that a person, such as a unit owner, may apply to court for an order to enforce any right conferred or obligation imposed by the Act, including the obligation on a developer to transfer the common areas to the owners’ management company. If satisfied that a right has been infringed or an obligation has not been discharged, the court may make an appropriate order. However, when applying to a court to commence proceedings, the applicant is required to state whether mediation or other similar dispute resolution process has been attempted. If such a process has not been attempted, the court may, upon its own motion or at the request of a party to the proceedings, direct the parties to meet and attempt to settle the matter. If such efforts prove unsuccessful, the court will proceed to deal with the matter. The Minister’s preference is that parties should try to resolve their differences by means of mediation and seek a remedy before the courts only when such efforts prove unsuccessful.

The protective mechanisms set out in the Multi-Unit Developments Act 2011 apply to all developments that have an owners’ management company structure. This includes not only apartment buildings containing residential units, but also the very many mixed developments and estates which contain apartment blocks as well as duplexes and more conventional housing units in terraces or other formats. If there is an owners’ management company structure in place, the protections afforded by the 2011 Act for unit owners will apply to that development. The need to extend the protections set out in the original Bill to these mixed and more traditional housing developments with an owners’ management company structure was raised by many Deputies and Senators in the course of consideration of the legislation by both Houses. It was pointed out that a large number of these developments had been required to establish an owners’ management company as part of the planning conditions imposed by the relevant planning authority. The extension of the scope of the legislation to these mixed developments has been given effect in Schedule 2 to the Act.

Turning now to Deputy Murphy’s Bill, the Government’s opposition to it is based firstly on the fact that it seeks to remove mixed developments from the scope of the legislation and discard the protection that the Act affords to residential unit owners in such developments. This would create a serious legal vacuum for such owners and could, at least in the short term, render their properties unsaleable. I do not think that is what the Deputy intended and I accept that she said so. It would be an unacceptably retrograde step to take, and is therefore unacceptable to the Minister and Government.

The stated aim of the Bill is “to amend the Multi-Unit Developments Act 2011 in order to better provide for the clear definition of multi-unit development thereby facilitating expedient application of the law in relation to the taking in charge of unfinished estates.” The position with regard to the taking in charge of estates is that the relevant statutory provisions are set out in the planning and development Acts. Therefore, any changes to the taking in charge provisions must be considered in the context of that legislation rather than the Multi-Unit Developments Act 2011, which does not deal with such matters. In her speech, Deputy Murphy raised other issues she wants resolved. While the taking in charge of multi-unit developments which comprise mixed and more traditional housing developments present specific challenges, the removal of such developments from the scope of the 2011 Act cannot be expected to overcome obstacles arising from the legal arrangements which separate the ownership of individual residential units from ownership of the common areas that are vested in an owners’ management company of which unit owners are members.

Any changes to the statutory taking in charge arrangements would be a matter, in the first instance, for the Minister and Department of Environment, Community and Local Government. The Deputy asked whether this Bill could be dealt with elsewhere. I will undertake to discuss this with the Minister for the Environment, Community and Local Government, Deputy Kelly, and the Minister of State, Deputy Coffey, to see if they can accommodate what the Deputy wants to do, because it is probably more appropriate to that Department than to the Act that she is seeking to amend.

In summary, the Minister and Government are opposed to Deputy Murphy’s Bill because it would reduce the scope of the 2011 Act and thereby exclude the many mixed developments that benefit from the Act’s protective provisions. Moreover, any changes to the statutory provisions governing the taking in charge of unfinished developments should be progressed through appropriate amendments to planning and development legislation.

10:20 am

Photo of Clare DalyClare Daly (Dublin North, United Left)
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Listening to the Minister of State reminded me a little of the experience, which Deputy Murphy referred to, of people in constituencies such as ours who were told when queueing to buy houses that if they did not sign then the price would go up by €10,000 or €20,000, and not to worry about the detail of the management company because they could later dissolve it. The experience was of course radically different. The Government's response to Deputy Murphy's Bill today is similar. The fear is that if it agreed with Deputy Murphy this would remove the protection of the Multi-Unit Developments Act 2011, when the point being made, in part, is that the Act has not provided the protection we thought it would and has not solved the problem created by the mushrooming of management companies in the early 2000s, which arose from a change in the nature of the buildings going up at that time and the move away from the traditional semi-detached type of development to more duplexes, which had probably never been heard of before then, combined with apartments, terraced houses and so on. People found out, to their amazement, only a couple of years after moving into those houses that they were expected to pay an annual fee for services that would normally have been deemed public services, such as grass-cutting, the maintenance of lights and upkeep of the general area. In many instances these people had bought modest dwellings at massively inflated prices and were paying this annual fee when those services were provided out of the public purse by the local authority to people in more settled and affluent dwellings down the road. This situation has been aggravated by the introduction of the local property tax, because these people are now hit on the treble through general taxation, which should fund local authority services, local property tax, which should also cover that, and the management company fee. In most of these instances, the hard-pressed families who are struggling to pay their mortgages and other bills are not getting any service for the money requested.

The Multi-Unit Developments Act 2011 was designed to make it easier for owners to control the management companies and to exercise democratic control over the bills and how those companies would be structured. In practice that has not worked, because many of these developments are too large. In a development with 500 owners, made up of duplexes and apartments, there will never be wholehearted agreement. That is impossible, particularly when there are different interests at play - for example, the apartment owners need a collective interest but the house owners less so. It is understandable, however, that apartment owners would not want to lose the revenue from the house owners’ contribution. Even where there is a clear division between services, many management companies exist for no reason. People think that once the local authority takes in charge the roads, footpaths, lighting and large green areas, the management company will dissolve and go away, but they then discover that the management company has taken over the services the developer was responsible for prior to that. They realise the management company existed in name only to provide public liability insurance and probably the maintenance of tiny incidental pieces of open space with a bit of shrubbery, which any able-bodied child could fix.

A management company is certainly not required in that regard. The Multi-Unit Developments Act is not fit for purpose in that it does not allow people who do not get any service to dissolve a management company or to protect their own interests in that regard.

In my area, there is an estate comprising over 400 units, all of which are standard housing units of various types. There are no apartments or duplexes in this estate. Most of the services, including the roads, large green areas and so on, have been taken over by the local authority. Outside of that there are a few incidental pieces of open space and a little on-street car parking, which is used to legitimise the existence of a management company. Many of these open spaces and so on exist only to perpetuate and fund management companies. People do not get any services, which is absolutely ludicrous.

Deputy Murphy is trying by way of this legislation to correct an anomaly in the 2011 Act. In my view, we need to review the Multi-Unit Developments Act 2011 in its entirety. The deficiency identified by Deputy Murphy whereby, unwittingly, the 2011 Act, rather than protecting people by ensuring they do not enter into an arrangement whereby they could not dissolve a management company, might actually frogmarch them into such an arrangement. That is ludicrous. I do not see any sense in the Government refusing to accept this Bill. As I said, we need to review the 2011 Act in its entirety.

There are a number of other estates in my area comprising 100 units or less, which are evenly made up of houses, apartments and duplexes, with an even division of services. It is easy to delineate that the houses in these estates get no services and so they can be easily sliced off. The idea that even in those types of areas which are more manageable residents have not been able to exercise the withdrawal of houses from management companies exposes the limitations of the 2011 Act, which is a body of work that we have to review. For the moment, it is useful that Deputy Murphy has highlighted and flagged this issue. The Government would be mad not to accept this legislation. We should be trying to prevent what is happening in this area. While the 2011 Act provides some protection for apartment owners. it does not protect the many other property owners in these multi-unit developments. The purpose of that Act was to assist property owners in these developments in maintaining control over and making decisions in relation to management companies, including dissolution of same if they so wish, but it is not fit for purpose in this regard. In that sense, Deputy Murphy's Bill is welcome and I support it.

10:30 am

Photo of Niall CollinsNiall Collins (Limerick, Fianna Fail)
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Fianna Fáil compliments Deputy Murphy on bringing forward this Bill. She has been a longstanding campaigner on the issue of multi-unit developments and we believe her proposals should be considered by the Government.

It is important to point out that people currently living in multi-unit developments pay management fees and are obliged to pay local property tax as well, such that they are paying on the double for services. This is another anomaly that should be addressed by Government. Fianna Fáil has published a Bill on this issue.

It is important that the definition provisions are as simple as possible. The Law Reform Commission has previously done much work in this area, in respect of which it has produced a report and recommendations for reform. This Bill seeks to redefine the definition of a multi-unit development such that a structure requiring a management company would be a multi-unit development of not less than five units with one roof. The Multi-Unit Developments Act was piloted through the Oireachtas by former Minister, Dermot Ahern, in 2009-10. It introduced sweeping reforms for the owners of existing and new apartment and multi-unit residential complexes. It updated legislation in apartment management and ownership and significantly refocused legal protections towards owners of apartments. These comprehensive reforms were designed to improve the regulation of multi-unit developments and the governance of management companies in such developments in the context of the dramatic growth in apartment living in recent years. Many people who have purchased apartments in multi-unit developments may not have fully realised the type of ownership arrangement into which they were entering and the responsibilities involved in membership of the property management company. In some cases, developers were slow to transfer ownership of the common areas to the property management company and these delays have caused frustration for owners who want to become involved in managing and maintaining their developments.

The 2011 Act complemented work in other areas. In 2007, the Department of the Environment, Community and Local Government produced design standards for new apartments. New guidelines on sustainable residential development in urban areas were produced in 2008. In 2009, new regulations setting standards for rented accommodation were introduced. The National Consumer Agency has also taken a keen interest in this issue and has engaged with many of the relevant bodies with a view to improving consumer protection in advance of this legislation. The Office of the Director of Corporate Enforcement also produced an publication entitled, Company Law Handbook on Residential Property Owners' Management Companies.

The 2011 Act amended the law relating to the ownership and management of the common areas of multi-unit developments. It seeks to facilitate the fair, efficient and effective management of bodies responsible for the management of such common areas and to provide for related matters. Former Minister, Dermot Ahern, also introduced new property

In its report on multi-unit developments, the Law Reform Commission identified key issues to be addressed, including such matters as when a property management company is to be established and by whom; the timing of the transfer of ownership of common areas; the mechanics of taking control of the company by the apartment owners; and internal governance arrangements for owners' management companies. The 2011 Act provides that a "multi-unit development" means a development being land on which there stands erected a building or buildings comprising a unit or units and that as respects such units it is intended that amenities, facilities and services are to be shared and subject to section 2(1) the development contains not less than five residential units. The Act also makes provision for multi-unit developments with fewer than five units.

When Deputy Murphy originally introduced her Bill she said that a flaw in the legislation means that any development of more than five houses is deemed to be a multi-unit development, which imposes on it a requirement to introduce a management company. According to Deputy Murphy, that is how the local authorities are interpreting the legislation and that rather than resolving issues the legislation is posing new difficulties. She also said the issue is a one of definition and has proposed a new definition. It is highly unlikely that former Minister, Dermot Ahern, ever intended that the Bill should result in the circumstances identified by Deputy Murphy. Accordingly Fianna Fáil believes this Bill should be considered and supported.

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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I welcome this positive and constructive Bill and commend the work of Deputy Catherine Murphy in this regard. I ask that the Government consider its focus. It is disappointing that the Bill is being opposed by the Government. Far too often the Government appears to view legislation from this side of the House as an excuse to practice its dissection skills. It sets out to pull apart legislation rather than build on it. On the few occasions I presented legislation before this Government, I received this treatment. Instead of recognising the need for the legislation and allowing it to be built on at further Stages, the respective Ministers or Ministers of State sought to highlight minor flaws in it, as they found it, and took it upon themselves to engage in a lecturely critique of my legislative skills. This is pointless engagement. If an issue is important, it should be addressed. If a Bill is constructive, it can be built on. The Government should not oppose legislation for the sake of it, as the Government often feigns we on this side of the House do.

This Bill recognises a flaw which went unnoticed in the 2011 Act, a flaw missed due to the incredibly protracted and stalled nature of its passage through the House. The Act which this Bill seeks to amend was published in 2009. It sets out the basis for how common areas should be managed in multi-unit developments.

Unfortunately, the definition of this term was far too vague to fit the intention of the Government at the time. While the Act made sense and was intended to deal with a real need, under scrutiny, it has been shown to fail to provide a sufficiently tight definition to achieve its objective properly. Simply put, multi-unit developments are apartment complexes, commercial developments or a combination of both, with retail units on the ground floor and residences on the upper floors. They have become common across the urban landscape, from small towns to cities.

A multi-development unit is defined in the Act as a development on which stands a building or buildings comprising a unit or units, which has amenities, facilities or services for sharing the development and contains no fewer than five residential units. While this definition appears to be sufficient, it has since been deemed to have been too broad and vague and has been applied to conventional housing, including semi-detached and terraced homes and duplex complexes, on the same site. The outworking of this is that there is a legal requirement for a management company to be established in a large number of cases where this is not necessary or practical and has been unworkable.

On first reading, I did not identify this problem in the original Act. It is for this reason that legal experts are required to oversee legislation at all stages to consider unintended consequences. While I cannot be certain that the Bill before us would not also have unintended consequences, I am certain that an amendment to the Act is needed. The Government should take the opportunity to allow the Bill to advance, before subjecting it to expert scrutiny. It should use it as a starting point for a new Act that will deal with a problem the Government has not yet addressed.

We could also take this opportunity to examine other issues that arise from the Act and its failings. Under the 2011 Act, tenants have no right to representation on the boards of their management companies, despite the important responsibilities and powers these companies have in respect of developments. This failing must be addressed by empowering tenants and providing them with a voice on management companies and elsewhere in the housing market. As a group, tenants are voiceless and, unlike landlords and developers, they do not have a lobby group to represent them. While charities and community bodies play a role in this area, tenants do not have a group that works exclusively to protect their rights. The Government includes 24 Fine Gael Party Deputies who are landlords, although the number may fall to 23 as Deputy Barry has decided he cannot hack being unable to raise the rent on his properties for two years. The Cabinet and Government benches include few, if any, tenants and while there are a small number of tenants in the House, they are outnumbered by home owners, landlords and developers.

The State must support the establishment of a tenants union to which tenants would have a right to affiliate and from which they could seek help. Given the new measures announced by the Government this week, the supports available to the Private Residential Tenancies Board must be enhanced to enable it to do its job properly.

I have personal experience of problems with management companies, including issues with common areas, buildings insurance, health and safety and parking. Their powers to clamp vehicles in parking spaces on developments is particularly contentious. Ba mhaith liom tacaíocht a thabairt don Bhille seo.

10:40 am

Photo of Eamonn MaloneyEamonn Maloney (Dublin South West, Labour)
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I will try to avoid repeating some of the legitimate arguments made by previous speakers. This debate focuses on one of the legacy issues of the building boom during the Celtic tiger. Deputy Catherine Murphy very ably argued that the Bill addresses one of many flaws in the legislation on multi-unit developments. This problem requires to be rectified. Terminology such as "taking in charge", "management companies", etc., are part of a new language that developed as a result of the boom in the Celtic tiger years. Many shortcomings arose during that period because new and different types of buildings and accommodation developed for individuals and families. Many mistakes were made, not only in terms of building design but also in respect of legal issues pertaining to how buildings would be managed. This resulted in the coming into existence of management companies. I am sure this will not be the last debate the House will have on problems with planning and buildings that were part of the fall-out from the building boom.

It is the prerogative of the Government to oppose the Bill and I do not blame the Minister of State, Deputy English, for the Government's approach to the legislation. He acknowledged the arguments Deputy Catherine Murphy made and the facts relating to multi-unit developments that she presented. No one would argue that the 2011 Act is perfect and none of the previous speakers argued in favour of diluting it in any way. Deputy Catherine Murphy and others seek to strengthen the legislation and rectify a flaw in its provisions. It is regrettable, therefore, that, on the one hand, the Government parties acknowledge the shortcomings in the existing law while, on the other hand, opposing the Bill without providing a solution or resolution that would address the important point Deputy Catherine Murphy made. Incidentally, the problem the Deputy raised in her example may not be identical to the problems other Deputies will have encountered as members of a local authority. Nevertheless, it is not a million miles away from some of the complications some Deputies will have dealt with, especially those among us who represent constituencies in which large-scale developments were built. The legacy of these developments has been a series of problems that have caused great distress for families and individuals who bought properties in them.

I take in good faith the Minister of State's undertaking to raise the issue with the Minister of State at the Department of the Environment, Community and Local Government, Deputy Coffey. Surely the Department has a sufficient number of people with the ability to analyse the case presented by Deputy Catherine Murphy and supported by other speakers and produce some resolution to the issues raised. In fairness to Deputy Murphy, she argued that it is up to the Government to address any flaws in the Bill. Some of us may not be as reasonable as she is on this matter. Surely it is possible to draft a provision that would rectify what is a real problem.

Photo of John HalliganJohn Halligan (Waterford, Independent)
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With respect to Government Deputies, it disturbs and upsets me in debates in this Chamber when the Government refuses to accept legislation proposed by Opposition Deputies who have invested a great deal of effort and thought in producing their Bills. It takes a similar position on Opposition amendments to Government Bills and I am tired of this approach. It calls to mind the debate on recognising Travellers as an ethnic group when Government Deputies made passionate speeches in favour of recognition before voting against the proposal. What is that about? Where is the principle in it? I do not understand that approach.

According to the Minister of State, the "primary purpose of the 2011 Act was to reform the law relating to the ownership and management of common areas of multi-unit developments". As Deputy Catherine Murphy stated, the problem with the Act is the way in which the definition of multi-unit developments is being interpreted. It appears to include conventional housing such as semi-detached homes, terraced housing and duplex complexes.

I note briefly regarding management companies an article in a newspaper some weeks ago on the very grave difficulties approximately 12,000 people were having with management companies, including poor communication, bad tenant screening, cutting corners rather than costs and unclear accounting. I am taken aback. Everything that can possibly be said has been said by Deputy Catherine Murphy and I do not understand why the Minister of State cannot take the Bill back to have someone look at where the fault appears to be.

10:50 am

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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Did the Deputy not hear what I said? Let us be clear. Was he not here?

Photo of John HalliganJohn Halligan (Waterford, Independent)
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I will take it at face value that the Minister of State will do it, but the history of that being done is that the Government comes back and votes against it. He has to accept-----

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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That is not what I said I will do. I have given my word that I will have this discussed.

Photo of John HalliganJohn Halligan (Waterford, Independent)
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I know the Minister of State and I hope he will. I can only emphasise that at times some of us here do what we think is right not for ourselves or the Opposition but for the country. If one looks at what Deputy Catherine Murphy has done and the intricate detail she has gone into, there are areas that are faulty. It is obvious and legal views support that. I appeal to the Minister of State to allow this to be debated further as he has said he will. Let us put table some amendments and listen to what has to be said. This is not a question of the Government accepting amendments from us and that being one up for the Opposition. That is not what we are about here. Some of us are here to do what we think is right and good. At times, if we think the Government is right, we will support it. We must look at that.

We must look at management companies. There are grave difficulties with management companies and how they are structured and organised and continue to operate. I gave examples. I was looking at something on the Internet before I came to the Chamber. I searched for "problems with management companies" and found that thousands of people are saying they have them. There are problems of poor communications and bad screening of tenants. The worry is that so much power will be taken away from the individual living in some of these areas. They are not sure any more based on the history of management companies how it will affect their lives.

I take on board what the Minister of State says. Deputy Murphy's Bill is brilliant. She has put a lot of effort, thought and cost into it and further debate would be worthwhile. I trust the Minister of State will do what he says. Let it be debated and if the Minister of State then feels it is unacceptable, that will be fine. At least listen to what we have to say and take that on board.

Photo of Ruth CoppingerRuth Coppinger (Dublin West, Socialist Party)
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The issue of multi-unit developments and private management companies is a very serious one for many of us here. In relation to the Bill, there is the anomaly Deputy Catherine Murphy has pointed out. The idea that a group of five houses could be considered a multi-unit development and then have a management company applied is ludicrous. The idea that the Minister of State is not accepting the Bill but will look into it has raised scepticism because the issue has been going on for ten years. I have had a management company inflicted on my house since 2003. For ten to 12 years, the ridiculous carry on of these management companies has been known about. Not only do we need to accept the Bill, we need even more reform.

Private management companies have been a scourge in Dublin West and many newly developed areas of the country for quite some time. Next to nothing has been done by the political parties who oversaw the establishment of these companies in the first place to correct the grave errors that have been visited on residents by them. Ordinary houses with front and back doors are being charged extortionate fees by private management companies. Management companies were never intended for houses. They were always designed for collective structures of apartment blocks, usually with internal corridors, lifts and common areas. They were imposed on houses during the Celtic tiger when multi-unit developments were being established and they have never been lifted off them since. We also have issues with management companies in apartments. While apartments may need management companies or collective structures for insurance, there is no accountability or democracy in many cases while the fees rise to massive levels.

I want to show the Minister of State the bill from my management company. It is a management company I do not need. I have front and back gardens which I mow myself. I pay my own insurance but this is what I will be faced with at a meeting on Monday, 23 November. On this occasion it is Fine Gael and the Labour Party, but Fianna Fáil and the Green Party had a chance to deal with this issue and did not. The common expenses I face include the directors' and officers' indemnity insurance. The Minister of State does not have to pay that. I assume he lives in a house. I have to pay for graffiti removal. The Minister of State does not have to pay for that either. Also included is non-domestic waste management. Obviously, we have had the bin charges enforced and this is an extra waste management expense which has nothing to do with me. The sundry expenses are listed as €6,650 and I will be interested to find out what that is about. There are bank charges. I have my own bank accounts and pay charges on them but now I have to pay extra ones. I have to pay audit fees for a company I do not want as well as secretarial, legal and agent's fees. How long is this going to go on? Not only has the Minister of State not accepted a very minor anomaly that Deputy Catherine Murphy has pointed out, but also there have been public meetings throughout the country that Fine Gael members have attended.

This is a live issue. Residents are being summonsed to court for refusing to pay for something for which they should not have to pay. The reason is that the Government has failed to deal with this in the four and a half years it has been in office. Deputies Joan Burton and Leo Varadkar and the other Ministers who live in constituencies where this is a major problem have done nothing to correct it. This all started because during the Celtic tiger when developers ruled the land, they decided it would be a great idea while waiting for local authorities to take estates in charge to impose fees on the residents for providing all the services the developers should have been providing in the interim. They put houses into these management companies for that reason as well. We have a situation in Tyrrelstown, an area bereft of facilities, a matter which I will not go into, where there are eight management companies on an estate. In respect of seven of them, the developer was the director as were his sons and other family members. They were divided up like Africa after the colonial wars by way of straight lines. Some people are in different management companies from their next door neighbours or the people across the road. This lunacy has been well flagged. We have had public meetings attended by 100 and 200 people but nothing has been done. The main gainers out of this were the property management companies set up and related to the developers in most cases.

Something happened in 2008. There was a recession and people lost their jobs. They cannot afford these Celtic tiger follies any longer. Residents are finding that they cannot afford to pay and are now refusing to pay. They are right to refuse. Why should they pay for something from which they get no benefit? Residents are suffering because they are being summonsed to court. Residents from Tyrrelstown and other areas will be up in court shortly. While no bankers or developers have been brought to court, the residents who had management companies inflicted on their houses are. It has been pointed out in the context of many other Bills that these residents are also being clamped. Management companies decide they run the whole area and can create their own laws. They can decide that a resident in arrears may not get a parking tag and will have his or her car clamped outside his or her own house, as will any relatives when they call. This was pointed out to the Government in the context of the clamping Bill brought forward a number of months ago but nothing was done. The Government would not even exclude management companies from being empowered to clamp people. As such, I am sorry but I do not take at face value the Minister of State's promise to deal with this and neither do the people of Tyrrelstown, Ongar, Castlecurragh or my own estate.

Deputy Higgins first raised this issue in the Chamber ten years ago when Bertie Ahern sat where the Minister of State is sitting. In 2006, recognising that it was a major issue, Bertie Ahern sent a circular to the environment Department to the effect that houses should not be subject to management companies, and he defined a house as something that had a front entrance and a back entrance. The problem is that those of us who bought houses between 2002 and 2006 are still stuck with management companies.

I have been proactive in trying to assist residents with resolving this issue. We have held many public meetings, meetings with the council, etc. The late Brian Lenihan told residents that they could not dissolve a management company contract. It was as if a contract was set in stone. Of course, he was wrong. We have found and moved on a legal mechanism for releasing our houses from the management company. Unfortunately, and despite a resounding vote of apartment and house owners, we cannot get them released because only 55% of residents have returned the form given that absentee landlords do not care.

The Government needs to introduce legislation to allow houses to be released. People who were pressured into signing contracts to get houses were led to believe they would have the right to dissolve management companies as soon as their developments were taken in charge by a council. The council has taken over all of the services of the estates in question. It is erroneous of Fianna Fáil to mention the property tax because that has nothing to do with management companies. Councils do not get the benefit of management company fees. That erroneous argument only complicates matters.

Householders must be able to be released from the contracts they signed and management companies must be accountable and democratic. Residents snared in these contracts should form action groups and hold meetings to discuss what they would like to do. What is important is that there should be no division between apartment owners and house owners because we are all victims. People should lobby their local Deputies to press for legislation that should have been introduced at the start of this Government. They should make this an election issue and punish parties that have had 12 years to do something about it but have left people with unaffordable bills of hundreds of euro per year. I am referring to Fine Gael, the Labour Party, Fianna Fáil and the Green Party. They had ten years in government to change the situation. Now, close to an election, they tell Deputy Catherine Murphy on a Friday that they will not address something that could ensnare houses. That is not good enough and we need action now.

11:00 am

Photo of Damien EnglishDamien English (Meath West, Fine Gael)
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I appreciate that not all of the Deputies opposite were present when I spoke, but I will add to what I said. I know Deputy Catherine Murphy's intention. The detail of the Bill is specific to taking in charge, but other issues have been raised in this debate and I will discuss them with the Department of the Environment, Community and Local Government and my two ministerial colleagues in question. The Deputy's speech differed a little from what is contained in the Bill, which she accepted, but she stated that she would be happy for the Bill to be used to serve the purpose of achieving her aim. We will see whether we can progress the issue. The result might be slightly different than the Deputy's wording, but I understand the main issue that she is trying to raise.

Other Deputies have raised a number of issues that also need to be addressed in different forms. If we can, we will bring clarity to them.

Photo of Ruth CoppingerRuth Coppinger (Dublin West, Socialist Party)
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Will the Government do something about the bill that householders are getting every month?

Photo of Catherine MurphyCatherine Murphy (Kildare North, Social Democrats)
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I thank the contributors to this debate. I agree with much of what has been stated about the residual issues in the Multi-Unit Developments Act 2011. I deal with them routinely. I know of examples in various estates. Every management company is set up differently. A part of the problem is that there is no universal response, but that is also a reason not to make the situation worse, which is what I was trying to address in this Bill. The solution should not just be for people in the future but for what has already happened, nor should it compound the problem further.

People are having difficulties trying to get their estates taken in charge, to sell their homes and so on because management companies are impediments. When considering this matter, I gathered information and met a solicitor for a legal opinion. He stated that the definition was vague and conceivably included every housing estate and residential street in the country. However, he presumed that it meant that amenities, facilities and services were to be shared only between the residential units and not the wider public. In this sense, he stated that it was arguable that where the roads and services in an estate had been taken in charge, the estate was not a multi-unit development and where roads and services or any part thereof had not been taken in charge, it was such a development. I am not making this up. The solicitor in question is good on property law.

I also asked him to give me an opinion on another matter that had been cropping up and for which I wanted a solution. Winding down management companies is complex because they are not all the same. Getting every owner to sign a deed is difficult, as Deputy Coppinger mentioned, when there is a mixture of people in an estate. Some renters cannot get in contact with their landlords and some owners do not want to sign the deed and apply to a Circuit Court pursuant to section 24(5)(g) of the 2011 Act. These are not the kinds of actions people expect when winding up companies either voluntarily or by way of an order. A voluntary liquidation is expensive and a court-ordered liquidation is also to be avoided, given the expense of court applications and liquidators' fees. Striking a company off the register of companies would also be expensive. None of the solutions I considered was clear cut and residual problems had to be considered. This one small issue is about people not being snared by bills like those to which Deputy Coppinger referred. I know of people who are charged for lifts in buildings where there are no lifts.

Developers were delighted with the management company arrangement in the early part of the previous decade and took full advantage of it during the crash. Often, people in housing estates were paying for the maintenance of areas that used to be the responsibility of developers until those estates were taken in charge. Where we have managed to get a council to take an estate in charge, the management company is normally shrunk down to just the area around the apartment block while the rest of the estate - roads, water, etc. - is taken in charge. That one must even do this proves my point. By ignoring this problem, the Government is creating a legacy in the same way that people were ensnared.

I am shocked by the response of the Department and the Minister of State. I take his commitment to speak to the Minister at face value, but this is my fourth Bill. Only one, a planning Bill, has not been opposed so far. It was sent to the committee on which I sit. I met departmental officials who stated that they would include many of its measures in planning legislation which was forthcoming at the time, but nothing was included.

If that effort was made for something that was not opposed and where it was seen to have merit, what chance have I got in arguing here for something the Government totally opposes, despite seeing merits in it? That is the absolutely outrageous aspect of the response. I am inferring that this is intended but it should not and cannot be intended. People will arrive to a solicitor's office and do exactly the same thing as happened ten and 12 years ago. They will be told that unless they sign the document, they will not get the keys to the house. They will discover that there is a residual charge every year and it will be so legally complicated, it will be difficult to get out of it. This could cause problems when they seek to sell the property as even if the estate is taken in charge and the management company exists but is not functioning, there may be problems with title.

The Department does not get this but I hope the Minister of State does. I do not want to see people put to the pin of their collars trying to pay their mortgages and live their lives being asked to pay a bill that is unnecessary and with a legal arrangement that will cause all sorts of problems. It creates work for the legal sector in trying to unpick the issue. The Department does not seem really to understand what I was trying to say in putting forward this Bill, although I outlined when I introduced it on First Stage what it intended to do. To a great degree, this Friday session is just about fobbing us off. That is my experience, having put forward and debated four different Bills since the initiative's introduction. Nothing from those sessions has made it to the point of being enacted into law. It is all very well that this is outlined as an initiative in Dáil reform but it is not reform if there is no meaningful outcome.

I will take the Minister of State at face value and I hope he will revert with a proposed solution. This is a very real problem and it will affect people who do not even know it is a problem. This Bill cannot be allowed to gather dust and the issue should be dealt with in a timely way. I am not precious about my name being on anything, as long as the issue is resolved. It would not take much to do that if there is an acceptance that this matter needs resolution. Does the Department believe the matter needs such resolution?

Question put.

11:10 am

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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In accordance with Standing Order 117(1A), the division is postponed until immediately after the Order of Business on Tuesday, 17 November 2015.