Dessie Ellis (Dublin North West, Sinn Fein)
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There has been a significant growth in recent years of managed estates. The Multi-Unit Developments Act 2011, known as the MUD Act, specifies all new developments must have an owners' management company, OMC, in place. The Act provides the legal framework for their operation in managed estates. The OMC is established for three main reasons, namely, to manage and maintain common areas in MUDs, to be the legal owner of the common areas on behalf of the owners of the units and to be the legal owner of the beneficial or reversionary interest of each unit. The first two reasons concern the maintenance and management of the common areas. The third reason is the OMC is the legal owner of the beneficial or reversionary interest of each unit. Basically, the owners’ management company owns the freehold reversion of the entire development. The owners’ management company owns the common areas of the development on behalf of the owners of the units. It also means the owners’ management company owns a share of each individual property in the development. The members of the OMC are obliged to pay management fees, which would include service charges on a contribution to a sinking fund. Residents are also paying the property tax on top of these charges. Members are also bound by house rules.

An example is Cedarview, which is in Northwood in Santry, where we are seeing a number of concerns relating to the way the estate is managed, particularly in relation to private houses in the estate. For example, if someone wanted to put on a barbecue, put a house name on the property or put up a gazebo, he or she must ask permission to do so. There are similar examples that should not really be contentious but are being refused because of existing rules. The rules seem to be too rigidly interpreted. While an OMC has the right to alter, amend or add to the house rules of a development, I have found the rules do not always conform to being fair or reasonable for someone who has invested so much in a property and has paid sums of up to €500,000 for it. Some residents feel that they do not have full or proper ownership of their own homes. There is also a concern new estates being built adjacent to the existing estate, which is currently being managed by an OMC, would be grouped in with the same OMC. Residents have a concern they will lose their voice in managing their estate if the OMC is expanded to a point that they are overwhelmed by greater numbers. When it comes to an AGM their voice and concerns are diminished, especially if their concerns do not reflect those of the majority, thereby lessening their influence on their own area. There should be a constraint on how far an OMC can expand from the original established OMC.

The MUD Act was put in place to facilitate the fair, efficient and effective management of OMCs but it needs to be reviewed as the way OMCs currently operate needs to be better regulated and members should receive support and training to operate more efficiently.

A dispute resolution process for members should also be established.

Separately, management agencies, the private companies paid by OMCs to run the developments, need to be better regulated. Clúid Housing and the Housing Agency have put forward a number of recommendations which would give more structure to OMCs and the legislation should reflect that. This will benefit the OMCs and their members, and will give people a greater sense of ownership of their properties.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank Deputy Ellis for raising this important matter. As he may be aware, the Multi-Unit Developments Act 2011 was enacted with the primary purposes of reforming the law relating to the ownership and management of common areas of multi-unit developments and facilitating the fair, efficient and effective management of owners' management companies. These are companies registered under the Companies Acts, the members of which are the owners of residential units within the development, which are established for the purposes of ownership and management of such common areas.

A number of obligations are set out in the Act which include, but are not limited to, the following. An OMC must hold annual meetings and set annual service charges to cover the costs of maintenance, insurance and repair of common areas under its control and of the provision of common services to unit owners. An OMC must establish a sinking fund and it can also develop house rules for the operation and maintenance of the multi-unit development. This is not something that people can do on their own. The OMC develops the rules, to be agreed. The formulation of rules for private estates by management companies is governed by section 23 of the Multi-Unit Developments Act 2011. The OMC has ultimate responsibility for setting and enforcing house rules.

Section 23 allows an OMC to make house rules relating to the effective operation and maintenance of the development as respects the development or part of the development. These house rules are binding on unit owners, tenants of unit owners, and servants, agents and licensees of those tenants or unit owners. The rules are required to be consistent with the objective of advancing the quiet and peaceful enjoyment of the property by the unit owners and the occupiers, and the objective of the fair and equitable balancing of the rights and obligations of the occupiers and the unit owners.

Apart from the rules made by the OMC before the completion of the sale of the first unit in the relevant part of the development, house rules shall not be made or amended unless the rules have first been considered and approved by a meeting of the unit owners in the part of the development concerned. The Act requires notice of that meeting to be given to each unit owner not less than 21 days prior to the meeting and that the notice should be accompanied by a draft of the proposed rules. Once approved, the rules must be furnished to each unit, and each unit owner, by the OMC. The Act also provides that observance of the house rules by all those occupying the property, including their licensees, servants or agents, shall be a term in every letting of a unit in a multi-unit development.

The Minister would like to point out that there is also robust legislation providing for regulation of companies that provide property managementservices. Such companies are subject to a detailed legislative framework of licensing, regulation, monitoring and enforcement under the Property Services (Regulation) Act 2011. That Act also established the Property Services Regulatory Authority, PSRA, a statutory regulatory body specifically tasked with responsibility for licensing and regulating property services providers including auctioneers, estate agents, letting agents and property management agents.

The PSRA is empowered to investigate complaints of improper conduct made against licensed property services providers and to launch investigations on its own initiative for the purpose of ensuring compliance by property services providers with their statutory obligations. Where the PSRA makes a finding of improper conduct by a property service provider, it can impose a range of sanctions from issuing a reprimand, warning, caution or advice, to suspending or revoking a licence or directing the licensee to pay a financial penalty.

In most circumstances, a property management company is normally acting as an agent for the owner of the property or, in the case of a multi-unit development, as an agent for the OMC.

Dessie Ellis (Dublin North West, Sinn Fein)
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I thank the Minister of State for the reply. Most new estates have management companies. In many such estates houses are built with large numbers of apartments around them. In the past, local authorities were able to take private estates in charge but that is fairly difficult to do now. As far as I can see, that is not going to happen with most new estates.

I am trying to draw attention to the fact that people who own their own homes, who have paid anything from €200,000 to €500,000 for those homes, have to seek permission for virtually everything. If they want to erect a sign or install a disability bay, they have to ask. They are begging for permission for things related to their own properties, having spent a fortune on them. This really needs to be looked at. It is not fair that people cannot have a barbecue or put an alarm on their house unless they get permission. If the Minister of State bought a house in the morning, he would not expect to be told he cannot do X or Y in it or that he needs permission to do it. That is the problem. It really needs to be looked at because it is not fair on the people concerned.

As I said, there are three main areas of responsibility for management companies and the first two are reasonable, in terms of maintaining public areas and so on. The third area is the contentious one because it involves interference in the properties and control over private homes. OMCs can go into people's home. They have to seek permission to do so but the owners have to give them permission. I am talking here about private houses for which people have paid a fortune. There is something seriously wrong in that situation.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I wish to point out, based on my earlier contribution, that there is extensive legislation in place to regulate the formulation of rules by management companies that cover multi-unit developments. The Deputy is suggesting there are issues of over-regulation by some management companies in how they implement the rules but as I said, the rules have to be agreed at specially convened meetings of the property owners or their agents. People should always be aware of that. They must also be given 21 days notice of meetings at which any changes to the rules will be proposed.

In addition, section 24 of the Multi-Unit Developments Act contains provisions for the resolution of disputes regarding multi-unit developments. It provides that a person, including a member of an OMC, may apply to the Circuit Court for an order to enforce any rights conferred or obligations imposed by the Act. If the court is satisfied that a right has been infringed or an obligation has not been discharged, it may make such remedial order as it deems appropriate in the circumstances with a view to ensuring the effective enforcement of the right or the effective discharge of the obligation. The Act also contains provisions which encourage the resolution of disputes which may arise between parties by means of mediation rather than recourse to court proceedings.

The programme for Government commits to conducting a review of the existing management company legislation. The Department will engage with all relevant Departments in relation to advancing this commitment.