Rónán Mullen (Independent)

Cuirim fáilte roimh an Aire. I welcome the Multi-Unit Developments Bill to the Seanad. Unfortunately, it is long overdue for many young people who had to suffer the exorbitant costs of apartments over the past six years and who also had to suffer further at the hands of certain unscrupulous developers even after they bought them.

Buying a unit in a multi-unit development raises complex legal issues given that the developments feature common areas essential for the enjoyment of the development by all unit owners, especially young children. This gives rise to the need for a body to take responsibility for these areas of common usage. Such a body, known as the management company, owns the entire development. While unit owners enjoy a leasehold estate on the apartment they purchased, they cannot hold the freehold. This contrasts with buying a house, so beloved of Irish people, where the property is owned outright.

The expansion of the number of multi-unit developments has been a major feature of the property market, especially in the Dublin region. There has been a dramatic trend towards apartment living, with more than half the new housing units built in Dublin in 2005 being apartments. In 2006, apartment building made up 59% of all housing units built in the Dublin region when it only comprised 21% nationally.

With this expansion of multi-unit developments has come numerous problems. Great credit is due to the Law Reform Commission for carrying out a review of multi-unit developments in two stages comprising a consultation paper and report.

It is worth noting the provisional recommendations made by the Law Reform Commission in December 2006 as well as its final report published in June 2008 and to recall the problems it identified. These included the general and widespread lack of transparency and a deficit in understanding regarding the appropriate roles of those involved in apartment developments, including developers, units owners as members of owners' management companies, and property management agencies. Moreover, it observed that developers sometimes held on to effective control of apartment owners' management companies, even after virtually all apartments had been sold. I have dealt with people in a legal capacity on this issue. A further problem was that property management agencies sometimes had too much administrative control over some owners' management companies, which caused confusion over their different functions. Moreover, annual general meetings of owners' management companies sometimes were organised at short notice and at inconvenient times and locations. In addition, increases in annual service charges were sometimes not properly explained which therefore led to unit owners not paying them and consequently to the running down of some apartment complexes. Another problem was the absence of a long-term building investment fund, sometimes referred to as the sinking fund, for some apartment complexes. Some appointment developments were not taken in charge by local authorities and there could be a lack of clear arrangements for rescuing apartment complexes that were in trouble.

The consultation paper recognised the difficulties relating to multi-unit living as arising from two main factors, namely, poor governance, including the retention by some developers of inappropriate control over the developments, and a deficit in understanding among apartment purchasers, who seem to be unaware of the consequences of buying an apartment in such a development. The reason this Bill is needed is abundantly clear.

As other Members have done, I welcome the various provisions of this Bill and, in particular, section 14 and its provisions on service charges. The current injustices will be tackled by compulsory vesting of common areas, automatic ownership of owners' management companies, the clear presentation of the rights and duties of the owners' management companies, proper control over service charges as well as fairness regarding sinking funds. Regulation in this area is long overdue and this constitutes a disappointing example of how Government policy has failed to keep track of unjust profiteering. This failure has placed a heavy burden on young people in general and on young families in particular.

While this Bill is welcome, its impact will be diluted greatly unless the Government commits itself to ensuring the housing market becomes less developer-centred and more family-centred. The cost of housing over the past ten years has greatly undermined family life as both parents have been obliged to work extensively to pay off exorbitant mortgages. Consequently, children have missed out on family life because the Government has failed to regulate adequately the avarice of developers and banks.

I wish to highlight an element of the Bill that is missing. An old ethical adage states that two wrongs do not make a right. It would constitute a further injustice were management fees which were reasonable and which were owed not paid at all. I question whether this Bill addresses adequately this issue and whether the appropriate mechanism exists to extract outstanding fees from unit owners. Perhaps clarification is available in this regard. I will examine the Bill more closely and while Members have Committee Stage to look forward to, they should not lose sight of this issue.