Déirdre de Búrca (Green Party)

Like other Members of the House, I welcome the opportunity to debate this appropriate legislation. Some Senators have said it is long overdue. There has certainly been a crying need for it. The legislation sets out to regulate new and existing multi-unit developments. That might sound like gobbledygook to most people but it refers generally to apartment living. We all recognise that apartment living has some special features. There is a need for a certain amount of interdependency. Reliable funding streams are needed to provide for the ongoing upkeep and management of common areas. Apartment owners need to participate in appropriate arrangements.

Other Senators have referred to the number of apartment units that have been created over recent years. In 2006, apartment building accounted for 56% of all housing units built in the Dublin area, and 21% nationally. In 2007, apartment building accounted for 62% of all dwellings completed in the Dublin area, which is a phenomenal number, and 24% nationally. In 2008, apartment building represented 66% of all housing completions in the Dublin area, and almost 25% nationally. It is obvious, therefore, that this legislation is badly needed.

The purpose of this Bill is to regulate the entire property management sector and to protect the owners of units in new and existing multi-unit developments. The Law Reform Commission has said that the current system of licensing property service providers is outdated, inappropriate and inadequate. In its 2008 report on multi-unit developments, the commission published a series of valuable recommendations. The National Consumer Agency is also to be congratulated on the work it has done in this area, which has contributed hugely to the quality of the legislation we are debating at the moment.

The statutory framework that is proposed within the Multi-Unit Developments Bill 2009 provides for the obligatory establishment of an owners' management company and the transfer of common areas to that company prior to the sale of any units, or within six months of the section coming into force in the case of existing completed or uncompleted developments. This legislation also provides for regulation of the internal governance of the owners' management company. It provides for one vote of equal value per unit. It also obliges each company to hold an annual general meeting and to furnish each member of the company with an annual report which will include details of, inter alia, the assets and liabilities of the company, the statements relating to service charges, sinking funds and insurance details. The legislation also contains an obligation to establish and maintain a scheme of annual service charges, to be calculated on a fair and transparent basis, along with a scheme of sinking funds for spending on maintenance or improvements of a non-recurring nature. It also provides for the making of house rules by agreement of the members of the owners' management company and in furtherance of the effective operation, maintenance and enjoyment of the development. It provides for a court-based system of dispute resolution which promotes mediation. That is a welcome measure in the Bill as a means of resolving disputes. The Bill also provides an extended period from one to six years during which an owners' management company can be struck off the companies register for the non-filing of annual reports.

The Bill addresses a major problem which has existed and has been described by the Law Reform Commission as a defective state of the law. The problems associated with conveying the freehold ownership of individual units was insurmountable as the law stood. The standard approach was to confine ownership of such a unit in multi-unit developments to a leasehold interest with the freehold of the entire building, including both units and common areas, being vested in a landlord, who was usually the developer, and subsequently often being transferred to a management body. In that way positive obligations could be enforced against successors in title.

Other problems that existed were the disparate legal relationships and obligations that arose from ownership and management of multi-unit developments which meant that many different areas of law were applicable. They included areas of law such as the Companies Act, the Taxes Consolidation Act, various Waste Management Acts, the Litter Pollution Act, the Occupiers' Liability Act, the Fire Services Act, the Local Government Acts, the Roads Acts, the Data Protection Acts, the Residential Tenancies Act and so on. There was no statutory regulation of property management companies per se with the exception of provisions contained in the Residential Tenancies Act 2004.

Many practical problems arose for people who purchased units in these multi-unit developments and the Law Reform Commission defined those very succinctly, one being the general and widespread lack of transparency and a comprehension deficit about the appropriate roles of those involved in apartment developments, especially of developers but also of unit owners as members of owners' management companies and of property management agents. It was clear that many of those who were purchasing apartments in these developments were unaware of the consequences, particularly the financial consequences, of buying apartments in such developments.

Other problems that arose were that developers sometimes held on to effective control of apartment owners' management companies even after virtually all the apartments had been sold; property management agents had too much administrative control over some owners' management companies, which caused confusion about their different functions; the annual general meeting of owners' management companies, to which others have referred, were organised at short notice or at inconvenient times and locations; increasing annual service charges, an important point, not being properly explained and therefore not paid by unit owners which led to the running down of some apartment complexes; no long-term building investment fund or sinking fund for some apartment complexes; some apartment complexes not being taken in charge by local authorities; and a lack of clear arrangements for rescuing apartment complexes in trouble.

Other contributors have spoken about the role of the developer. We are aware that some developers attempted to keep control of the property management companies even after the development had been completed and there was no time limit as to when the development was to be handed over to residents. The developer, on many occasions, chose to keep the title to the lands because they hoped to get planning permission for more houses or apartments. This point was made by the National Consumer Agency.

The Law Reform Commission also identified problems related to the developer's failure to vest the freehold title of a development in the management company. That resulted in unit owners being unable to sell their apartments, which was a serious problem.

Developers were also accused of trying to maintain control through voting procedures at the annual general meeting and the National Consumer Agency emphasised the importance of the wording of the memorandum and articles of association on how AGM votes were distributed, especially in cases where people were buying or considering buying off the plans. The issue of voting rights is important and determines how the management company would operate and be controlled and what rights the members would have.

I welcome the Bill. It has dealt with the important areas, the compulsory vesting of common areas and the role of the developer, the rights and obligations of the owners' management company, the issue of service charges and sinking funds, the resolution of disputes and the application of the Bill to smaller developments. I join other speakers in asking whether the intention is to allow this legislation also to cover small residential estates or residential developments that are not apartment developments or multi-unit developments. It seems the legislation would apply equally well to them.