Deputy Joan Burton today launched an information booklet on Management Companies for local homeowners with Labour Party Leader Pat Rabbitte TD and Deputy Eamon Gilmore, Labour Party Spokesperson on Housing and the Environment. Speaking at the launch, Deputy Burton said:

The Celtic Tiger has brought lots of change, not least the affordability or houses for young people and first time buyers. Many buyers are surprised to find that along with their expensive dream first home comes a new phenomenon – a Management Company.

“In Dublin West I calculate” said Deputy Joan Burton “that some 7,500 homes, houses, duplexes and apartments have been built in recent years subject to this new regime of a management company. Almost all new developments in Dublin West and on the west side of the city in general, such as Ongar, Tyrellstown, Castlecurragh and the Phoenix Park Racecourse, have a management company included in the basic home purchase contract.”

“New homeowners are left very often in limbo as the Management Company demands fees ranging from a modest €250 to €1,500 to over €2,000 per annum. The quality of service provided for these fees varies. Some managing agents carry out their duties quite diligently. Many however are making a very fast big buck on the back of new homeowners already struggling to meet mortgage repayments.

“These management companies and the managing agents are entirely unregulated and it’s the luck of the draw whether you get a fair service or get totally ripped off” said Deputy Burton.

“Labour in government will introduce legislation to regulate this whole area, including the process of the traditional “taking in charge” of estates by Local Authorities.”

“There is an unholy alliance between Government and the construction sector to foist extremely expensive management company regimes on poorly advised homebuyers. It suits government because Local Authorities can avoid providing traditional services, such as looking after roads, lighting, green spaces and pass the buck to the Management Company”.

“There is no doubt that where there are traditional apartment blocks with common corridors, hallways, and other shared services there needs to be a management company to regulate the common spaces. But this should be done in a fully transparent way with owners entitled to know exactly what their management charges are paying for. They should be free to shop around if they can get better services at a cheaper price.”

“The launch of this booklet and information leaflet today will I hope redress the balance in favour of the homeowner. Also, I hope that legal advisors such as solicitors and mortgage agencies and financial institutions will launch an information campaign to let new homebuyers know just exactly what they are committing to when they sign up for a home purchase contract that carries a management company condition in the small print.”

In a new twist to the ongoing debate over management companies in new housing estates, the government has stated that only houses with their own front and back gardens qualify as traditional housing estates.

The statement came in response to parliamentary questions put down by Deputy Joan Burton, Labour Party TD for Dublin West.

Once housing estates are completed and “taken in charge”, Local Authority’s have a duty to provide basic services such as maintenance of roads and open spaces, water, sewage, lighting etc.

Local Authority’s do not take responsibility for the maintenance of common areas within gated developments, apartment buildings and in some mixed housing developments.

However, this new position indicates that the government intends to expand the number of housing estates that will not qualify to be taken in charge by Local Authorities.

If an estate cannot be taken in charge by the Council, residents are forced to pay management company fees on an ongoing basis for services that are provided for free to other housing estates.

Deputy Burton said, “It seems that overnight, residents with a front OR back garden no longer qualify as a traditional housing estate.”

“The question of management companies is a very difficult and technical issue that needs to be addressed through the introduction of new legislation to regulate management companies in all types of housing developments. The government cannot just disqualify huge numbers of householders from access to the taking in charge process, without putting in place any measure to protect them from excessive fees from private management companies.”

The Dáil will this week debate a Labour Party motion calling for an end to the establishment and operation of management companies for private housing estatesthat are now imposing often penal charges on householders for a range of services that would normally have been provided by a local authority. The motion will be debated in the Dáil on this Tuesday and Wednesday.

Dublin West Deputy Joan Burton said Fingal County Council has been foremost among County Councils in imposing management companies and charges in new developments in Dublin 15, such as Tyrrellstown and Castlecurragh. It is now time for the government to act to stop this practice which was costing young couples over €500 per year.

“This is, in effect, yet another stealth tax being imposed on householders.”

“The imposition of these charges is an insidious development that adds hugely to the burden of thousands of young householders who are already struggling to meet crippling mortgage payments.

“What has been happening is that when local authority managers are granting permission for housing developments, they are including a condition that key public services, such as roads, open spaces, lighting, water and sewage services be provided for a specified period by private management companies, rather than the local authority itself as would traditionally have been the case.

“Last year when there were problems with the water supply in Tyrrellstown, it emerged that the water supply was under the effective control of the Developer and Management Company. This is not acceptable.

“When signing contracts for the purchase of a house in these areas, couples are effectively being given an ultimatum to sign up to the management companies and to accept the charges they impose. There may be a role for private management companies, run on co-operative basis by residents, in regard to apartment blocks, but there is none in regard to traditional housing developments.

“Our motion calls on the Minister for the Environment to use the powers available to him to require planning authorities to insist that new housing developments are designed, constructed and completed to ‘taking in charge’ standards and to specify that planning permissions should not require or allow for the establishment of management companies.

“The motion also calls on the Minister to introduce new legislation which would:
a) regulate the operation of management companies;
b) give consumer protection to homebuyers, including the regulation of management charges;
c) reinforce Section 180 of the Planning and Development Act, 2000, to the effect that a development which is or has been the subject of a ‘management company’ condition, may be taken in charge by a local authority where a majority of the qualified electors who own or occupy the houses in question, so consent and
d) provide for the winding up of management companies.

“I know that Deputies from all parties have received strong representations from householders who are being penalised by these charges. I hope, therefore, that the government will recognise the validity of our motion, accept its terms and act on the suggestions it makes.”