James Bannon (Fine Gael)

I am surprised by a Government party tabling this motion. Housing has been one of its greatest failures as typified by the unwelcome appearance of many management companies leaping on the back of human need. The Fianna Fáil-Progressive Democrats Government's attitude to the housing market has resulted in large increases in house prices and a scarcity of social and affordable housing, despite repeated promises. Young people now find it almost impossible to get onto the property ladder without mortgaging themselves to the hilt, if they can get a mortgage. Parents who could expect to be off the hook with regard to housing, are being asked to stump up deposits for their adult children. Those lucky enough to get a house must move further away from our towns and cities.

The motion offers the House an opportunity to look at one aspect of the housing crisis, namely, the imposition of management fees that affects home owners and apartment dwellers. I hope it will be the beginning of a debate on how local government is financed and not over-burdened. The motion also plays into the hands of the Opposition which is more used to having to highlight the inadequacies of the Government parties with regard to housing issues. This time they are doing it themselves. It is also the reason we have not tabled an amendment to the motion.

Apartment living has become a way of life for people in recent years. As the Celtic tiger roared into life and demographic changes put pressure on the existing housing stock, high-density apartment blocks allowed for cheaper, high-quality housing that allowed many young people onto the property ladder. Census 2002 shows that 110,458 households, approximately 9% of the total, live in apartments. This translates as 210,056 people, highlighting the fact that it is often single people and couples without children who reside in such housing. Since then, evidence suggests this trend is continuing. From 2002 to 2004, over 42,500 fiats and apartments were completed, comprising a fifth of new housing.

Evidence suggests there are serious problems regarding apartment complexes which many residents feel powerless to address. These problems relate primarily to common areas and the failure of builders and managing agents to maintain them. Simultaneously they charge high management fees that increase each year, often with little or no provision for a sinking fund that is necessary to cover the high costs that occur every few years when major refurbishment is necessary. These fees can often be higher than two months' mortgage payments. Residents are often at a total loss as to what they are paying for. Non-payment is not an option. Such a choice would lead to a debt being placed on the property that would have to be cleared before it can be sold. Residents have no State agency to which to complain. With an increasing number of non-resident investors in the apartment sector, it is often difficult to spur the necessary number of residents into action.

Politicians, both local and national, have no shortage of horror stories regarding apartment blocks. Unlandscaped gardens, unpainted walls, broken lifts, crumbling brickwork, unreliable refuse collection and broken fixtures and fittings are becoming common complaints. The Government failed to recognise the need for action during its first term. In 2002, the programme for Government stated, "We will consider the introduction of legislation to regulate the establishment and operation of apartment complex management companies".

In response to a parliamentary question in May 2003, the then Minister for the Environment, Heritage and Local Government stated the regulation of apartment complex management companies was still under consideration and that he had no immediate plans to set guidelines on fees. By December 2004, the issue had hardly moved on. Responding to another parliamentary question, the Minister stated a Law Reform Commission working group was examining the law on these types of developments and it was hoped it would respond early in 2006.

Earlier this year in the Dáil, the Fine Gael Party brought forward a Private Members' Bill to legislate for apartment complex management companies, in the absence of any State regulation, despite a Government commitment to do so. Ten years of the current Government has done nothing for those seeking an equitable and fair deal. Despite a commitment in the programme for Government, apartment dwellers are still left without proper State protection against their management companies and agents. The Fine Gael Private Members' Bill sought to amend the Residential Tenancies Act 2004 by widening the role of the Private Residential Tenancies Board. If passed, the PRTB would become the regulator in this area, imposing a pro-consumer code of practice on managing agents.

The code would protect residents in several ways. Developers would be obliged to set the same management fee for the first three years of a new complex at a level which ensured managing agents could meet the established minimum standards for that period. This way, there would be no sudden rise in management fees several years after an apartment has been purchased. The management fee would not be fully payable until managing agents were in place and the various services provided. Currently many builders demand payment of the first year management fee before the keys are handed over to the new owners. This is despite the fact that the new owners may be moving into what is essentially a building site and few of the services that the fee is paid for, such as cleaning, are provided. Owners should also be allowed to withhold a portion of the fee until all services are available.

Provision for an adequate sink fund should be made from day one. It has emerged that many managing agents set the annual fee without any provision for large-scale refurbishments that must be carried out every few years. This leaves residents with a shortfall and a choice of paying several thousand euro at once or else living within a decaying physical environment. Neither scenario is tolerable.

There are other areas in the apartment sector that need urgent attention. Fees should be set for the first three years of a new complex at a level which ensures managing agents can meet the established minimum standards for that period. The management fee should not be fully payable until managing agents are in place and the various services can be provided. At present, many builders demand payment of the first year's management fee before the keys are handed over to the new owners. This is despite the fact that the new owners may be moving into a building site.

As a start, the Government should publish a Green Paper on this issue that we could all debate in the future.