As part of my on going campaign for residents of properties where management companies are involved. I received the following response from Tom Lynch the CEO of the recently established National Property Services Regulatory Authority.

“As you are aware under current law there are no statutory controls on management agents. However, last December the Government published the general scheme of the Property Services Regulatory Authority Bill which will give effect to key recommendations of the Auctioneering/Estate Agency Review Group, including establishment of the Property Services Regulatory Authority, on a statutory basis, to assume responsibility for the licensing and regulation of property service providers, including auctioneers, estate agents and property management agents.

The main functions of the new Authority will be as follows:
• To operate a comprehensive licensing system covering all providers of property service, i.e. auctioneers, estate agents and property management agents. This extended system will replace the current licensing system for auctioneers and house agents, which is operated jointly between the Courts and the Revenue Commissioners, under the Auctioneers and House Agents Acts 1947 to 1973;
• To set and enforce standards for the grant of licences (e.g. educational/training standards; levels of professional indemnity insurance) as well as standards to be observed in the provision of property services by licensees;
• To establish and administer a system of investigation and adjudication of complaints relating to the provision of property services;
• To promote increased consumer protection and public awareness (where appropriate in liaison and cooperation with other statutory bodies and with relevant professional and consumer bodies) of property services in general and the cost to consumers, risks and benefits associated with the provision of those services;
• To establish, maintain and administer the Compensation Fund to compensate parties who lose money as a direct consequence of the dishonesty of a licensee.

The Bill is currently being drafted by the Office of the Parliamentary Counsel and it is expected that it will be published early next year.

Pending enactment of the legislation, the Minister for Justice, Equality and Law Reform set up an Implementation Group to assist and advise on practical matters relating to establishment of the new body and to prepare for the new licensing system and I have been working closely with the group to that end. As part of this process a number of issues, fundamental to the long term functioning of the Authority, have been identified which can be addressed in advance of it being established on a statutory basis. These include the acquisition of accommodation for the Authority in Navan, Co. Meath, the development of a code of practice for the industry, the creation of a National Public Register of Property Services Providers and the development of consumer information packs and considerable progress has been made in these areas.

In so far as the management Agents are concerned we have already met with a number of agents regarding the implications which the new regulatory framework will have for them and a series of further meetings are planned”.

You can currently contact the authority at: Floor 3 Harcourt Centre Harcourt St, Dublin 2. Ph 01 4086120.

Speaking in the Dáil today Joan Burton TD sought answers from the Taoiseach in relation to the regulation Property Management Companies issue. Deputy Burton asked the Taoiseach,”during the last Government the Taoiseach professed himself many times to be committed to regulating and legislating for management companies and agents of apartment blocks and housing developments. We are in a declining property market where many new housing developments and apartment blocks in west Dublin are subject to management companies. Despite the issue being debated here several times we are no closer to regulating management companies. Many young home owners pay up to €2,500 per year to management companies that give bad service. They charge high rates and do little. The Taoiseach has said this area should be regulated. It is one more constraint on a declining property market. The property services regulatory authority legislation is on the list of Bills, but we are getting nowhere with it. What is the Taoiseach’s view at this stage? When is his Government going to address this issue? There is no regulation and young people buying homes are at the mercy of rogue developers who will not put management companies on a proper footing.

The Taoiseach: The Law Reform Commission published a consultation paper on multi-unit developments last December and it drew attention to a broad range of issues relating to the governance and operation of such developments. The issues include the manner in which company law currently applies to property management companies. That paper was very comprehensive and it makes it clear that the action to address these problems will be required across several policy fields. We originally thought we could do it simply through one Act, but that is not the case. The report stated that it would affect company law, consumer protection law and the development of regulatory structures.
Due to the cross-cutting nature of many of the issues identified in the report, I asked that a high level interdepartmental committee be established to assist in the development of a coherent and comprehensive response to the problems. A key task of that committee is to identify the legislative and administrative actions to be taken in response to the definitive recommendations for legislative reforms, and to determine the timeframe for that.
I am asked this question almost every week. I expect that report will be published by the end of the year, and I will then be able to say something else on it.

Deputy Joan Burton: Does that mean that the property services regulatory authority Bill is effectively on ice until this committee has reported? People are being left in limbo regarding property management companies. In a declining property market, we could do without people’s title to their homes being questioned due to the management company relationship to the ownership of common land in the vicinity of the property. It is a difficult legal issue.

The Taoiseach: The property services regulatory authority Bill was to provide for the establishment of a property services regulatory authority to give effect to the report of the auctioneering estate agency review group. I have tried to go far further than that and see if we can deal with property management companies in a comprehensive way.

During the last Dáil and the General Election the Government made a number of detailed promises to introduce legislation to deal with the thorny issue of Management Companies and also management agents.

The Taoiseach himself spoke about how necessary this legislation was given that tens of thousands of people are living in apartments and houses which are subject to Management Companies.

There are thousands of people in Dublin 15, in Blanchardstown, Castleknock and Mulhuddart, whose home is subject to a Management Company, some of which charge very high fees for limited services.

Since the Dáil resumed I have raised the issue continuously with the Taoiseach directly and the Minister for Finance, Brian Cowan, TD and by way of question to the Minister for Justice, Brian Lenihan, TD who has responsibility in Government for the issue.

During the last Dáil the then Minister for Justice, Michael McDowell promised the introduction of a Property Services Regulatory Authority Bill of 2007 which was to reform among other issues auctioneering and property services management, including agents providing services to Management Companies. The Minister promised that this would deal with some of the worst abuses in relation to Management Companies and ensure that residents with Management Companies got at least value for money for the services for which they are being charged.

From the reply which I received just recently from the new Minister for Justice, Brian Lenihan TD it is obvious that little progress has been made. The whole area of regulating Management Companies remains urgent, particularly for many home owners and first time buyers who have bought into new apartments and houses unaware that they came with a hefty management fee charge.

For those of you interested in the management company issue, I attach for your information a copy of my most recent questions in relation to Management Companies and the reply from the Minister:

Dáil Questions by Joan Burton, TD, Dublin West.

* 463. To ask the Minister for Justice, Equality and Law Reform his proposals for legislation in respect of property management companies and property management agents; and if he will make a statement on the matter.

* 510. To ask the Minister for Justice, Equality and Law Reform his proposals for legislation in respect of property management companies and property management agents; the position in respect of the promised legislation on the property service management regulatory authority; the budget for the agency; the staff allocation for the agency; and if the agency is fully established.

Reply from Minister for Justice, Brian Lenihan, TD:

I can inform the Deputy that the Property Services Regulatory Authority Bill 2007, which will give effect to key recommendations of the Auctioneering/Estate Agency Review Group, including establishment of the Property Services Regulatory Authority to control and regulate the provision of property services provided by auctioneers, estate agents and property management agents is currently being drafted by the Office of the Parliamentary Counsel. Details of the proposed legislation are available on my Department’s website at www.justice.ie

The new legislation proposes fundamental changes to the system of licensing for auctioneers and estate agents and introduces, for the first time, a new licensing system for property management agents. In addition the legislation will provide, also for the first time, a new system of control and regulation for all those providing property services.

Pending enactment of the legislation, a Chief Executive designate has been appointed and an Implementation Group established to assist and advise on practical maters relating to the establishment of the new Authority. The Chief Executive designate, in consultation with the Implementation Group, is currently involved in establishing the basic organisational structures, systems and procedures, necessary to enable the Authority to fully discharge its statutory responsibilities once the legislation has been enacted. As part of this process a number of specific issues, fundamental to the long term functioning of the Authority, have been identified which can be addressed in advance of it being established on a statutory basis. These include the acquisition of accommodation for the Authority in Navan, Co. Meath, the development of a code of practice for the industry, the creation of a National Public Register of Property Services Providers and the development of consumer information packs. To date significant progress has been made in each of these areas.

A total of five permanent staff, who will be relocated to Navan to work with the Authority once it has been established on a statutory basis, have been assigned to work with the Chief Executive designate and a budget of over €0.5m has been made available in this financial year.

Deputy Joan Burton, Labour TD for Dublin West has called on the Competition Authority to investigate the practice of developers establishing exclusive deals with individual telecom operators for the provision of telecoms services in apartment complexes and housing estates with management companies.

Deputy Burton commented, “There have been increasing complaints from people living in apartments that they are unable to choose their own cable, phone or broadband package because only a single telecoms provider is allowed to operate in the building. This is taking place because some developers are signing exclusive deals with operators that restricts the choice of service provider to just one in the apartment complex.

“I have been contacted recently by residents in Archers Wood who found that their previous connection had been cut off without their permission and now could not be restored until they paid a premium to the company that had made an agreement with the management company of their estate, without their knowledge.

The community-based website www.neighbours.ie has now also set up an online petition to highlight this practice and hundreds of people have already signed up.

“Exclusive cable deals are denying families and householders the choice of what kind of telecoms package they wish to enjoy in their own home and which operator they wish to subscribe to. It also indicates how the Fianna Fail/PD government continues to allow management companies to act as a law unto themselves in many apartment developments throughout the country. I have written to the Director of Corporate Enforcement about this matter and he has promised to examine the issue from a company law perspective”.

“It is difficult to understand why such anti-competitive practices have not already been investigated by the Competition Authority, especially in the context of its new co-competition powers with the communications regulator ComReg. I would once again urge the head of the Competition Authority Mr. Bill Prasifka and his staff to immediately review this disturbing practice and ensure that householders in developments that are subject to management companies enjoy the benefits of the supposed open and competitive market in the telecoms sector.”

The Tanaiste, Michael McDowell TD, seems to have thrown in the towel on solving the Management Company crisis. When tackled on this issue in the Dail by Deputy Joan Burton TD, the Tanaiste responded with the surprising news that he is considering making the Private Residential Tenancies Board responsible for supervising Management Companies.

Deputy Burton said, “The PRTB have restricted their phone answering service to between the hours of 10am – 12.30pm on weekday mornings because they are so understaffed and are unable to manage their current responsibilities under the Residential Tenancies Act”

“Adding responsibility for management companies to the workload of an agency that is already swamped amounts to a decision by the Tanaiste to do absolutely nothing to help residents who are paying huge fees to Managing Agents without any guarantee of service.”

Deputy Joan Burton, Labour Party TD for Dublin West, has recently made a detailed submission to the Office of the Director of Corporate Enforcement (ODCE) in relation to Management Companies in which she calls for better information from estate agents and solicitors for home buyers at the Pre-Contract and Pre- Deposit stage.

Deputy Burton said, “Better information for purchasers of new homes would help to limit the rip-off that many new homeowners who find themselves to their surprise subject to a management company. “

“At the moment management company arrangements including fees for the first year or two are often wrapped up in the buyers contracts. Buyers are often ignorant of the liabilities that they have signed up to. Management fees may cost them in the case of a traditional house €300 – €700 per year and in the case of apartments typically €1200 to €2000 plus per year. Management companies and managing agents are a new multi-million euro service industry which is totally unregulated.”

“With an estimated 500,000 people in Ireland now living in multi-unit developments, and a constant flow of new mixed housing schemes, there is an urgent need for transparent information on management company fees at the Pre-Contract and Pre-Deposit stage, before potential buyers have committed themselves”.

“In my submission to the ODCE, I am calling for service charge levels to be displayed as a headline figure in sales brochures and website advertising along with the purchase price. In developments that are still under construction, then the developer must disclose at pre-contract and pre-deposit stage, the formula that will be used to calculate service charges over the first five year period.”

The submission also discusses issues regarding the governance of owner/management companies and an end to the use of the “striking off” procedure against failed management companies, mechanisms for tackling non-payment of service charges, a discussion on making apartments better places to live and the need for provisions to be put in place to rescue failed management companies.

The Labour Party has already put forward detailed proposals which would completely limit the operation of management companies in traditional housing estates. The Labour Party has also proposed that where management companies are necessary, as in apartment blocks, they would be subject to regulations enforced by legislation. At the moment, management companies are not subject to regulation, nor are Managing Agents. Labour are also proposing the establishment of a new Regulatory Body and Tribunal to decide on issues of conflict within management companies. In the case of Managing Agents the Minister for Justice has promised legislation.

Full Submission Attached.

Deputy Burton, Labour Party TD for Dublin West has welcomed the publication today of the report of the Law Reform Commission on Management Companies but has said that the fact that the Law Reform Commission will still be involved in a process of consultation is no reason to delay or long finger the regulation of management companies.

Deputy Burton said, “the Law Reform Commission report confirms what the Labour Party has been saying about this issue. The Minister must move to regulate both Management Companies and Management Agencies as a priority before the General Election.”

“With half a million apartments and other housing subject to management companies, delaying regulation is giving a free hand to some rogue developers and management agencies.”

“For the longer term the Law Reform Commission needs to examine the legal system of property ownership in Ireland. In the UK, for example, they have established a new form of legal ownership “commonhold” which has successfully addressed many of the problems being encountered by residents whose homes are subject to Management Companies.”

“Home owners have a right to manage the maintenance of their property without being subject to rip-off fees or having to pay for services that are never delivered and the government must legislate now to protect this basic right.”

The Office of the Director of Corporate Enforcement published a draft guidance booklet for directors and members of property management companies this week.

“I really welcome the publication of this guidance document and the recognition from the Director of Corporate Enforcement of the threat that is posed to resale values of property by the mismanagement of property companies” said Deputy Burton.

“The Fianna Fail PD government refuses to recognise the urgency of the situation and continues to avoid making a commitment to when new legislation on management companies will be enacted, despite widespread evidence of rip-off fees and a real threat to the value of peoples homes.”

“The Government must legislate now to protect residents who find themselves in a legal limbo when problems arise with their management company.”

“This publication is a further step in the increasingly widescale recognition of the scale of this problem from a variety of agencies including the National Consumer Association, the Estate Agency Review Group, and now the ODCE, yet the Government is refusing to listen”

The ODCE have admitted that they have received a stream of complaints over recent years in relation to property management companies and they identify that “directors of management companies who are frequently ill informed of the tasks which must be discharged by an effective management company” are a key cause of these problems.

Deputy Burton said, “In response to complaints from residents living in homes that are subject to management companies and who find themselves paying hefty fees for a non-existent management company service, the Labour Party published a advisory document for residents earlier this year.”

“The Labour Party in government is committed to regulating these companies and will take steps to ensure that all new housing developments are designed, constructed and completed to ‘taking in charge’ standards and to introduce new legislation on management companies to regulate the operation of management companies and give consumer protection to homebuyers.”

“I welcome this formal recognition from the ODCE of the regular failure of management companies to account to residents for how management company fees are being spent, the regular failure of management companies to call Annual General Meetings and the regular failure of management companies to comply with the obligation to file an annual return to the Companies Registration Office.”

The ODCE are seeking feedback on this draft document from all interested parties and will be accepting submissions up until the 30th of March 2007.

The ODCE Draft Guidance document can be downloaded from their website at www.odce.ie/public/press.asp

Residents whose homes are subject to a management company may be interested to read the latest replies from the Minister for the Environment Dick Roche TD and from the Minister for Justice Michael McDowell TD to Parliamentary Questions from Joan about management companies.

The full text of the questions and the replies are attached.

The National Consumer Agency yesterday published a report and advice booklet on property management companies.

“I really welcome the publication of this report and information booklet by the NCA” said Deputy Burton. “I am delighted that the report refers to the advisory booklet on management companies published earlier this year by the Labour party and I welcome the fact that this independent booklet acknowledges the games that developers are willing to play in order to maintain a controlling interest in management companies.”

“Management company charges put an extra financial burden on householders already overstretched by mortgage and childcare payments who now have to pay indefinitely for services that should be provided through the local authority.”

“The NCA have rightly pointed out the current lack of regulation over management companies and made a wide range of recommendations to remedy the legal situation. Unfortunately the government continues to refuse to make a commitment to when new legislation on management companies will be enacted, leaving residents all over the country in a legal limbo when problems arise”

The NCA report and advisory booklet can be downloaded from their website at www.irishconsumer.ie

Despite government promises to take action to regulate management companies, Deputy Burton received the following statement from Minister Roche in response to her urgent request for action to protect residents from unregulated management companies:

“The Department (will) establish a Working Group, representative of local authorities and other interests to look further at these matters, following which it would be intended to issue further guidance (to planning authorities) in the context of the Department’s Housing Policy Framework: Building Sustainable Communities…..It is intended to mobilise the Working Group very shortly”.

Deputy Burton said, “Families buying traditional homes in mixed housing developments are being unfairly forced to pay through the nose for maintenance services on water, sewage, roads, lighting and common open spaces that should be provided by the Local Authority.

“I have called on the Minister to take immediate action to restrict the use of management companies in traditional houses, but he appears to be in no hurry to tackle this difficult issue”.

“Labour are calling for the appointment of a Regulator of Management Companies, to protect residents that are subject to Management Companies, for the restriction of the use of management companies in traditional housing estates and for a new process to facilitate the transfer of responsibility for these public services from the developer to the control of the Local Authority”.

“85,000 new houses were built in Ireland this year, and a similar level of construction is predicted for the coming year. Consequently, this is not an issue that the Minister can afford to put on the long finger. New legislation is required immediately to ensure that no more homeowners are unfairly forced into management company contracts without any recourse to the law”.