I propose to share time with Deputy Pat Breen.
It was necessary for Fine Gael to introduce this Bill as, quite obviously, the Government has no intention of introducing such legislation. In its 2002 programme for Government, the Government indicated it would introduce such legislation but four years later nothing has happened. Is the Government again afraid of offending developers and management companies, which in most cases are the same people? I acknowledge that this matter applies to housing estates as well as to apartment complexes. In my experience, developers appoint the management companies sometimes with the same directors. On 22 November 2005, I raised this matter by tabling Parliamentary Question No. 585 and in his reply the Minister for the Environment, Heritage and Local Government, Deputy Roche, stated:
Once housing developments are taken in charge, it is the local authority's responsibility to maintain public infrastructure such as roads, footpaths, sewers, water mains and public lighting. The existence of a management company should not override the legal obligation on developers to complete estates, and, where required by the planning permission, to maintain estates until they are taken in charge. Section 34 of the Planning and Development Act 2000 introduced a number of provisions designed to ensure that all housing estates were finished as soon as possible, maintained to a satisfactory standard for the benefit of the people living in them and taken in charge by local authorities. In addition, section 34 recognised the common practice of establishing management companies, control of which is transferred to the owners of the housing units, to maintain or manage residential developments.
In practice, however, that is not the case. It is not what happens because, first, management companies are not in control of house owners. When one purchases a house, a condition in the planning application is that a management company be established. The developer sets up the management company so the purchaser of the house has no say in it whatsoever at that stage.
I raised the matter of management charges in housing estates with the Minister, Deputy Roche, some time ago and he said he would make it clear to local authorities that where a housing estate is satisfactorily completed and an application is made to take that estate in charge, the local authority should do so. My experience has been quite different. I wrote to the director of services at Galway City Council on 14 February and again on 28 February concerning the Roscaoin estate in the Roscam area of Galway city. While I received an acknowledgement to my letter, I never got an answer to my question. I queried the matter again today with Galway City Council and I am informed that where it was a condition in the planning permission that there should be a managing company, the estate might not be taken in charge by the local authority. Will the Minister of State clarify whether that is the position?
Following my inquiries to Galway City Council's planning section, I was told it can insert, and still is inserting, conditions in planning application grants that management companies be established. In November, however, the Minister assured me that he would put a stop to that. Obviously he has not done it in the case of Galway city or anywhere else. He will refer to the commission he established but it has not reported back.
Developers establish management companies but the house purchaser is not aware of it. It is not included in advertisements for the house or the auctioneer's literature. The purchaser becomes aware of it when he or she signs the contract and it is pointed out that it is subject to management fees. Often the commitment is already made at that stage. Perhaps the previous house the purchaser either rented or owned has been disposed of and he or she has no option but to go ahead with the purchase.
The purchaser is not told he or she has purchased what is a burden for life in some cases. It will continue for life unless it is eliminated and local authorities take over estates. My local authority does not indicate to me it has any intention of taking over estates with management companies. The burden of the charge is on the householder for life, without control over what it may cost each year. There is no justification for the trend developing in Galway city and county whereby large housing estates are not taken in charge by the city or county council but the responsibility is taken over by management companies, which pass it on to the house purchaser.
In many apartment developments in Galway, the charge is €1,200 per year and in many private semi-detached estates the charge is €450 increasing to €520 in some cases this year. On east side of Galway city, including Doughiska and Roscam, approximately 1,150 houses are now under management companies with an average charge of almost €500 per year. That amounts to more than €500,000 in management charges. Where does that money go? How much goes into the administration of the management company? The policy of this Government is that no matter what charge is added in stealth tax, whether it is VAT or development charges, it is all passed on to the buyer of the house. This Government has added approximately 50% of the cost to a first-time buyer of a house. All these stealth taxes put an unacceptable burden on the purchasers of new houses.
Development charges last year amounted to €400 million, an increase from a total of €57 million in 1997. In Galway city up to €10 million was collected in development charges, unrelated to management companies. This is paid by the householder in addition to management company charges. The Government directly collects that money. Some people resist paying management charges. However, it only adds to the burden on their houses. If, in five or ten years time, that person wants to move or his or her job changes, that burden will have to be cleared before the house can be sold. There is no way out of this.
It is time the Private Residential Tenancies Board had the power to investigate management charges and the management companies being established. The householder is trapped after moving into a new estate. He or she cannot move for the foreseeable future. If it becomes the norm, as it has in Galway where I have most experience, that management charges are included as a condition on most planning applications granted, the only person who will pay in the long run is the house purchaser and that should not be the case.