Dáil Éireann debate -
Thursday, 8 May 2008

Vol. 653 No. 6

Management Companies (Housing Developments): Motion.

Deputy Phil Hogan

I move:

That Dáil Éireann:

notes—

that more than 500,000 people live in apartment and mixed developments, there are approximately 303,000 apartments in Ireland, including the 60,000 built since 2005, with approximately 4,600 management companies operating in Ireland today;

that multi-unit, apartment and mixed developments will continue to increase as we move towards higher urban densities and more environmentally sustainable living;

the widespread information deficit experienced by current and prospective homeowners relating to their rights and responsibilities with regard to management companies, management agents and management fees;

the lack of urgency and confusion displayed by Government on when the legislation to regulate the provision of property management services will be introduced and also the failure to introduce practical measures to tackle major problems in the organisation and operation of management companies;

that many homeowners suffer from a range of management company related problems such as a lack of transparency in the setting and spending of service charges, no "sinking funds" or properly accounted "sinking funds", and developers refusing to cede control of management companies to the rightful owners;

calls on the Government:

to immediately move to introduce legislation to put the National Property Services Regulatory Authority (NPSRA) on a statutory footing and include in legislation provisions to allow the NPSRA to regulate management companies;

to amend company law to allow a name change from "management company" to "owner's company" as soon as the control of the management company is transferred from the developer to the owners;

to amend company law to require developers to transfer control of a completed development to the owners within a short time after the development has been deemed completed and also to make provisions to restrict voting rights to one vote per unit;

to require that developers set initial service charges in a fair and transparent manner, either by floor area, unit type or as recommended by an independent quantity surveyor with the documented use of service charges to be made available to all applicable owners and to prohibit the charging of management fees by developers to pay for any cost other than the maintenance of the common areas;

to make the provision of "sinking funds" mandatory;

to amend the Planning and Development Act to require that where an Owners Company is established as a consequence of a new development, the extent of the area then will be taken in charge by the council shall be delineated clearly on a site layout drawing, complete with accompanying descriptions, that will form part of the planning application documentation.

I propose to share time with Deputies Terence Flanagan and Mitchell.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Phil Hogan

I thank the Leas-Cheann Comhairle for giving Fine Gael the opportunity of raising on Private Members' time an important issue which is concentrating the minds of many of the 500,000 people who live in apartments and mixed developments in urban areas. There are approximately 303,000 apartments in Ireland, including the 60,000 built since 2005, along with 4,600 management companies. The motion sets out the problem as well as the actions the Government can take to resolve it. I shall describe the background to the issues, while my colleagues will make proposals in regard to the required remedies.

Home owners are experiencing a significant information deficit in regard to their rights and responsibilities, particular in the area of management companies and agents and the varying management fees levied on individuals. On various occasions during the past several years, Deputies have asked the Government its proposals for finding solutions to these issues. Every Deputy has been contacted by home owners regarding the types of charges levied, the responsibilities of management companies and the abuse by some companies of the manner by which they are established under company law and the fees they charge. The information we are putting before the House is not new because the problems associated with management companies and apartment living have long been identified. Organisations such as the National Consumer Agency, the Office of the Director of Corporate Enforcement, Dublin City Council and the Law Reform Commission have produced reports and made recommendations on improving the present situation.

In 2006 the National Consumer Agency published a report on the property management sector entitled Management Fees and Service Charges Levied on Owners of Property in Multi-Unit Dwellings, which examined the sector and made 25 key recommendations on regulation of the industry and protective measures for consumers relating to transfer of control, service charges and sinking funds. The report also recommended the establishment of a professional body and qualifications for those working in the industry. The agency also produced a helpful booklet, Property Management Companies and You, which set out in clear terms the manner in which money was being extorted in the absence of proper accounts. There is extensive evidence to suggest that management companies are extorting money through false pretences.

In December 2006 the Office of the Director of Corporate Enforcement commenced a public consultation process on the governance of property management companies, with a particular focus on apartment developments. The office is currently assessing the responses to its consultation with a view to producing recommendations in the near future.

Dublin City Council has produced two comprehensive reports on apartment living and the problems associated with management companies. The first report examined the strengths and weakness of the existing system, while the second investigated survey charges, design and owners' attitudes in 193 private apartment schemes in Dublin city.

The Law Reform Commission has also been examining this issue for the past year and is due to report on it at the end of May. I look forward to seeing the recommendations it makes because the issue is pertinent to the Department of Justice, Equality and Law Reform as well as the Department of the Environment, Heritage and Local Government. I welcome the new Minister for Justice, Equality and Law Reform to the House and congratulate him on his appointment. The issue gives rise to cross-departmental concerns in the areas of property rights, legal standing of property and, from the perspective of the Department of Enterprise, Trade and Employment, company law in respect of ownership and the type of companies established to manage complexes. I do not wish to minimise the difficulties involved. If the problem was an easy one to solve, the Law Reform Commission would not have to get involved.

In the case of multi-unit developments and gated estates, many complexes include both internal and external common areas accessible to all occupiers. These typically include lobbies, halls, stairwells, lifts, corridors and roofs. Owners collectively share common areas and, as part of a management company, enter into legal arrangements that create certain rights and obligations. The need for a management company arose in the first instance to manage all common areas and services in a complex not belonging to or being the responsibility of an individual. Abuse occurs at present where owners of management companies retain ownership of a certain number of apartments and do not pass responsibility for management of the complex to all apartment owners as a single corporate entity, which would allow the latter to run their own affairs at a reasonable price rather than having figures picked out of the air in the absence of proper accounts and timelines on the establishment of structures.

Members and owners of management companies were supposed to make the key decisions on whether to manage the complex themselves or appoint a professional management agent. Most auctioneer firms in Dublin would consider becoming management or letting agents. I declare an interest in that I pay management fees for a property I inhabit in Dublin when I conduct my parliamentary business. It is difficult to know where exactly the money goes and how it is calculated. The accounts may look very fine at the end of the year but the devil is in the detail for many of these companies.

People from various parts of the country have written to Deputies about this problem. Increasing numbers of people live in mixed apartment units and townhouses. Dwelling patterns in Ireland have become denser, particularly in the centre of urban areas, and people have various options for living as close as possible to their places of work. That is a welcome development but they should not be penalised by the unregulated developments currently taking place. Of the total number of dwellings built in 2005, apartments comprised 53% in Dublin city and county, 25% in Limerick city, 22% in each of counties Kildare and Wicklow and 18% in each of counties Louth, Galway and Cork. These substantial proportions indicate the size of the problem we face. It is expected that the 2006 census will reveal that the current estimate of 303,000 apartments has increased to 500,000. A further 50,000 to 100,000 people who live in traditional townhouse developments are also subject to management charges.

The regulations and primary legislation needed to deal with these issues are lacking but Fine Gael is offering the Government an opportunity to consider with urgency the remedies needed. For the past several years questions have been raised on the matter in this House and commitments have been made in regard to legislation. The former Taoiseach spoke a number of times on the Order of Business about the difficulties of addressing the issues involved. Nevertheless I ask that the Minister for Justice, Equality and Law Reform understand that once the Law Reform Commission report comes to his Department, we should not see it put to one side and not dealt with. It is a massive consumer issue which we feel strongly about.

The new Government has made reform a key priority. There is no more urgent matter in the housing area than the reform of the management company and agency area. An authority was set up on an interim basis in 2005 to bring about some kind of reform in this sector, which indicates that the issue affects many constituents. It cannot be properly brought into focus or effect until such time as we have primary legislation on the Statute Book.

The people who are most affected by these issues are young families and professionals purchasing their first home, as well as many newly-arrived workers. They are facing possible negative equity and the last thing they want is to pay management company fees at a time when mortgage rates have increased nine or ten times in the past couple of years. Every penny counts at this stage for many people, and they wish to know the service charge they have to pay is being spent properly or if it is being spent at all. They wish to receive in a more transparent way the type of information they are entitled to as consumers.

The problem is not exclusive to large urban areas, although it is a major issue there. It is concentrated in such areas and many people living in high-density dwellings feel nobody is looking out for them or their rights. This Government has an obligation to do so but has not indicated, in terms of primary legislation, any urgency on the matter in recent years.

We have had much investment and tax breaks introduced in these major urban areas over the years for property developers. They have achieved higher densities than would normally be expected in the centre of urban areas. That has been laid down through national regulation in the Department of the Environment, Heritage and Local Government. There is no point in allowing developers to get the benefits of tax breaks and management agents and companies to extort money from consumers and people living in those complexes without regulating the type of policy which would be appropriate to a very important consumer issue.

Many apartment blocks have been built around the country without linkage to transport arteries, green spaces, facilities for families or energy efficiency. The lack of planning for properly organised management structures in these developments is a policy failure.

Potential solutions to this will be dealt with by my colleagues, Deputies Terence Flanagan and Mitchell. I ask that under the planning and development Acts, companies Acts and frameworks which can be set up by the Minister for Justice, Equality and Law Reform of the day, amendments be brought forward to treat this matter seriously. A cross-departmental solution is required, as I indicated earlier, and this side of the House will facilitate the Minister in bringing forward proposals at the earliest possible opportunity in order to ensure people understand before buying an apartment or townhouse or entering high-density living that there is transparency in the way their costs are levied. They should understand people are not allowed to get away with the type of unregulated approach to modern urban living in a way that has been the case in so many apartment complexes.

Deputy Terence Flanagan

I take this opportunity to congratulate the Minister, Deputy Dermot Ahern, on his move to the Department of Justice, Equality and Law Reform and wish him well in his new role. I welcome the opportunity to speak on the Fine Gael Private Members' motion before the House this morning and thank my colleague, Deputy Phil Hogan, for helping to bring this motion before the House.

The Fine Gael motion calls on the Government as a matter of urgency to put the office of the regulator — the national property services regulatory authority — on a statutory footing and give it proper powers and adequate resources to regulate both management companies and management agents. We want to see the annual service charge set in a fair and transparent manner, and the provision of a sinking fund to take care of the long-term maintenance issues should be made mandatory for every management company.

Company law should be amended to allow a name change from management company to owners' company as soon as the control of the management company is transferred from the developer to the owners. We are also calling on the Government to have developers transfer more quickly control of a completed development to the owners.

The reason we must bring this motion before the Dáil is simply the inaction of this Government on this issue. In 2002, the programme for Government put together by Fianna Fáil and the Progressive Democrats stated the Government would consider the introduction of legislation to regulate the establishment and operation of property management companies. Yet six years later this legislation has not been introduced and we are still talking about it.

The Government introduced a draft Bill in 2006 and also established the National Property Services Regulatory Authority to regulate management companies in July 2006. A director and staff were appointed then on a non-statutory basis and a budget of €700,000 has been allocated to this office in 2007, with €930,000 in 2008. No legislation has come before this House to regulate management companies. What we currently have is yet another quango where a director and staff have been appointed with a substantial budget but the office has no statutory powers to regulate the industry.

Today, problems continue with management companies because of the Government's slow-footed approach. Apartment owners remain unprotected as they have been neglected by this Government. Approximately 500,000 people live in apartments and mixed-unit developments. They are mainly young people, paying service charges on average of €1,500 per annum to approximately 4,600 management companies. This figure has increased almost threefold in the last six years alone. Multi-unit apartments and mixed developments are a feature of modern living and will continue to increase as we move towards higher urban densities and more environmentally sustainable living.

Property management companies in Ireland must be regulated, which is the basis of the motion before the House. We understand their necessity, as they exist to maintain common areas, as Deputy Hogan noted, such as halls, stairs, lifts and gardens, as well as areas which are accessible to everyone living in the building. They own the freehold of the common areas, which apartment owners are not always aware of. Apartment owners have a leasehold on the apartment they purchase.

In new developments the general practice is that a management company is incorporated by the developer or his solicitor before any units are sold. The vast majority of the management companies deal with apartment blocks, although it is also possible for them to be set up in housing estates. The management company collects a service charge from all owners in the complex and is responsible for providing a sinking fund to cover repairs and long-term expenditure. Management companies may manage the operation of the development themselves or employ a management agent to undertake responsibilities.

Over the past number of years it has become apparent there are many problems in this area with management companies which must be dealt with. In my own constituency of Dublin North-East, apartment owners are contacting my office on a daily basis highlighting the problems they have with management companies. As a result of the huge volume of phone calls and correspondence relating to this matter, it was necessary for me to hold a public meeting recently on the issue. At this meeting, owners of apartments voiced their strong concerns about the fact that the Government has not regulated the sector. They also highlighted that it is a free-for-all with some management companies and management agents ripping off their owners.

Some of the problems associated with management companies include confusion among the public regarding the terms "management company" and "management agent". There is an information deficit among homebuyers as to their rights and responsibilities. Many people feel they were ill-advised by their solicitor or estate agent about management companies and agents when they signed their contract for their new apartment.

There is a lack of transparency with some management companies which do not hold annual general meetings. Some of the ones that hold such meetings do not inform all their members about the meeting. There is a failure of some management companies to provide the members of their management company with financial information. For example, this might relate to the income and expenditure accounts relating to the performance of the company.

There is no transparency on service charges and the calculation of the charge. Management agents charge different rates. Some of these rates are good, while others are extremely bad. There is no value for money and there is a difference in the level of rates. The rate one pays depends on where one's home is located.

Service charges in Dublin ranged between €400 and €4,000 per annum. They are normally set at a low level initially as a method of enticing prospective buyers and higher charges are normally imposed in subsequent years, with no come-back for the homeowner. Service charges have been used to rectify snagging problems with developments, which is wrong. Some management companies have not established sinking funds and this will cause difficulties for apartment complexes in the future.

There is a lack of information regarding the importance of service charges. The law is that people cannot sell their apartments until all outstanding service charges are paid. This is not explained to those who wish to purchase apartments. There is a lack of information for homeowners and, as a result, these individuals blame their management agents for the problems affecting their complexes and do not pay the service charges. Ultimately, this has a knock-on effect on the owners of apartments because the value of their investments deteriorate.

In many instances, the control of management companies is not handed over to owners until the last unit has been sold. Some developers remain on as directors for many years. This prevents owners from electing the directors of their choice. In theory, a developer is supposed to leave the development when all units are sold and hand over charge of the management company. However, this is not happening in practice. In addition, complaints boards, to which residents can voice their grievances about their management companies or agents, are not being established.

Many management agents have no experience of the requirements under company law requirements and they operate in an industry that is unregulated. Some management companies fail to complete annual returns and this may result in their being struck off the companies register and apartment owners being unable to sell their properties.

I recently received an e-mail from a constituent regarding some of the problems she has encountered at the apartment complex in which she lives. It states:

I moved into my apartment in December. Unfortunately, from the moment I moved in, myself and the other residents have been faced with on-going problems. The complex itself is still under construction so there have been many teething problems for example, flooded carpark, lifts not working, lights not working and even a sewage leak. I appreciate that these types of problems are to be expected (with the exception of the sewage leak), as the complex is brand new. However, my main worry is the access to the complex. We can access the complex through the underground carpark or by using the pedestrian walkway. The pedestrian walkway is a long wooden manbuilt tunnel, which I feel is very unsafe — particularly at night. I would never use the walkway at night on my own . . . . it's dark, very long and you have no idea who could be waiting for you at either end. The walkway is also very secluded. I really feel that this walkway is very dangerous — in the day time and especially at night. The other option is to go through the underground carpark.

At the moment, if I do go out in the evenings, I have to stay in my parents or friends houses as I simply can't access my home in a safe way. Taxis can only drop residents off at a side road leading up to the complex. Then residents can either access the carpark using their swipecard and walk across the deserted (and flooded) carpark or worse, risk the pedestrian walkway. As I'm sure you can imagine, neither of these options appeal me. I'm too scared to try either.

My friends came to visit recently and used the pedestrian walkway, which leads to the gates of the complex. When they reached the end of the walkway, they found two young men there and they were drinking. This is exactly my point — this area is completely hidden from the main road. Anybody could be waiting for you and you literally have nowhere to go. Unless you turn back and run the length of the walkway.

I have contacted the builders about this and have asked them what plans they have once the complex is complete but my request for information has been left unanswered. My family, friends and even taxi drivers are in utter shock when they see how we have to access our homes.

There is security on complex but I never see any security guards at night. In fact two cars were stolen from our carpark recently. I also saw three teenagers climbing over the complex wall (they used ladders the builder had left out, so it was very easy for them) and they walked straight to the stairs that leads to the carpark.

The builders are obviously unconcerned about the obvious dangers in the complex.

This is just one example of the problems people are experiencing with their management companies on a daily basis.

Another constituent contacted me by e-mail and outlined the issues in respect of which no one is willing to provide them with assistance. All this person wants is answers but unfortunately these have not been forthcoming from the builder, the management company or the management agent. The e-mail to which I refer states:

I purchased my apartment off the plans in Oct 2006 and finally got my keys in Dec 07, but to be honest I really didn't know what I was buying.

I am very happy with my property however the development itself is in an awful state. Myself and a number of neighbours have been in constant contact with our management company over issues we are having but we have been passed back and forth between the management company and builders each other claiming the other is responsible for dealing with our queries.

There is also NO visitor parking in or around the development.

Our underground car park has also been flooded since we moved in December, every time there is the slighted drop of rain we are flooded, although I think the builders are trying to rectify this. But if you [had] seen the state of the place you would be shocked.

My other major grievance is that the external walls of our apartments these have been left unfinished. When I snagged my property I brought up the state of the external wall and I was told like my neighbours that these would be finished at a later date as there was still building going on around us and this work would be completed when development is finished . . . I have mentioned this to our management company who have now informed me that this is not the case that they think our apartments will be left this way.

I have tried to contact the builders to ask them but have had no luck. When we [saw] the show apartments the external walls had either nice red brick or [were] painted a cream colour while our apartments have [a] rough grey concrete finish. Its really horrible and basically just looks unfinished. If we bought our property based on the show apartments surely our homes should be completed to the same standard.

At the minute we have paid expensive management fees of €1,500 but no one seems to want to help us.

This is one further example of the problems with which a regulator might deal. We are seeking that such a regulator be appointed.

It should be acknowledged that much work has been completed in this area by the Law Reform Commission, which has commissioned reports on the need for the regulation of management companies and agents. Dublin City Council must be commended on taking the lead in this area by producing two reports, namely, Successful Apartment Living, parts 1 and 2. The city council also established an apartment owners forum to discuss the problems people living in apartment complexes experience on a daily basis.

The Director of Corporate Enforcement also produced a report entitled The Governance of Apartment Owners' Management Companies. He is responsible for taking action against directors who do not take their responsibilities seriously and is to be commended on the good work he is doing. In addition to the reports to which I have referred, the National Consumer Agency published a report on the property management sector in 2006.

I welcome the Government amendment to the motion, which commits it to publishing the property services regulatory authority Bill. The latter will provide for the establishment of a licensing system for regulating property management agents. The Government amendment indicates that this long-awaited legislation will be published during the current session. However, actions speak louder than words and we hope that the legislation will be forthcoming.

The Government must get real in respect of this issue. It must appoint a regulator and give him or her statutory powers and adequate resources. Young homeowners are struggling to make their mortgage repayments and are becoming increasingly aware of their outgoings. On average, these people are obliged to pay service charges of €1,500 per annum. That is a bridge too far, particularly because the money is going to an industry that is unregulated.

I hope the Minister will take on board the points I have made. I also hope he will appoint a regulator and provide him or her with statutory powers.

Deputy Olivia Mitchell

I appreciate the opportunity to speak on the motion. I checked my records this morning and saw I had first raised this issue in April 2005. In November of that year, Fine Gael had a Private Members' motion suggesting reforms and regulatory control of property management companies along the lines of Deputy Hogan's proposal. However, here we are in 2008 and nothing has happened despite the promises made on many occasions since that time. Meanwhile, the building boom has come and gone.

In urban Ireland, certainly in my constituency, that boom has consisted almost entirely of apartment building rather than the building of conventional houses. In my constituency, the ratio is 8:1. Any legislation we now pass is too late to help the many new home owners over those years. This drift is causing problems not just for those buying apartments, but for the rest of us who live in urban Ireland. It is now the dominant home form, certainly in Dublin, and if there are problems, this will impact on all of us.

It has been heartbreaking to see the difficulties, the lack of information and sometimes the downright robbery young starter home buyers have been subjected to. Equally worrying is the future impact on the environment if this area is not regulated. Given the value that we place on home ownership in Ireland and the high incidence of home ownership, which is probably the highest in the world, it is inexplicable that we have made absolutely no move to protect the owners of this significant part of the housing stock. We can assume it will continue to be a significant part of the housing stock because urban land will become scarcer and it is inevitable that we will build in a more compact form.

As my colleague said, there are now approximately one third of a million apartments in Ireland. That is not bad in itself. It is good that it gives young people an opportunity to get into the property market, gives older people an opportunity to downsize and facilitates worker mobility. All of these factors are positive but unless we, as legislators, regulate the sector and ensure that owners are protected, what is the biggest investment in their lives for many young people will eventually become an unsaleable asset.

For every urban public representative, the same story is coming from apartment owners — lack of information, lack of transparency, poor planning, lack of control of their own management companies, of which they do not seem to realise they are members, and, in some cases, downright abuse by developers of unsuspecting new, young home purchasers. Not to put a tooth in it, developers write contracts to suit developers. They then collect management fees from the hapless purchasers and in some cases use them to finish apartment blocks which others will buy.

The crucial point is developers are allowed to control the management companies until all of the blocks are completed and until it suits them to move out. Meanwhile, they collect fees from the individual owners but do not themselves pay fees for the residences that remain in their ownership. The hapless purchaser signs the contract. I have seen cases where the fees are then used to clean the windows of the next apartment block, to prettify the development so the developer can sell more houses or even to finish off the development, which the developer is required to do in any case under the planning permission.

Why do owners sign up to these contracts, which are so clearly not in their interest and put them in such an unfavourable and powerless position? One of the reasons is the egregious practice of builders offering to pay the fees of the solicitor of the purchaser. Obviously, the builders do a deal with the solicitors to do a job lot of conveyancing. The young buyer, not realising the implications of this, thinks it is great and signs up for it but the solicitor is not going to look after the interests of the buyer in the way he or she would if the buyer was paying. It is human nature and is inevitable that he who pays the piper calls the tune. They will not upset their paymasters.

I was horrified by the lack of basic advice being given by solicitors to new home owners in some cases. They would not even advise them of basic issues such as to examine their development plan or consider what is perhaps planned for next door. Many young purchasers get a big shock when they eventually find out what is to be built next door.

Reform of this area, along the lines of the Fine Gael motion, must involve mandatory use of standard contracts such as those that now apply in the rental sector. Full information must be made available to purchasers about what they own, what they own in common with other buyers, what their duties and responsibilities are as shareholders, the need for a sinking fund and the reality of escalating annual service charges. As legislators, we have a responsibility to those young purchasers to empower them and to ensure they control and manage their own affairs, and have the information to protect their joint investment.

We must also regulate the property management companies which are springing up. This is a great new area for people with absolutely no training who can set themselves up as property managers. It requires no training or registration, yet they control huge amounts of owners' money. It is outrageous that there is no control in this area. While I do not want to suggest all builders or developers are involved, nevertheless, there is a widespread practice whereby the builder sets up a property management company. He does not pay into it but all the other home owners do and the money is effectively at the disposal of the builder, through his son or some other indirect mechanism through which he controls the property management company. The unfortunate owners cannot sack the property management company because the builder has maintained control of it.

Nonetheless, the one point I want to stress above all is the danger of people not paying management company fees. It should be brought home to people that management fees are inevitable where there are common areas to be maintained and where the exterior of a building is the joint responsibility of the owners. If the fees are not paid, there can be no maintenance. The exterior becomes shabby and values fall. People cannot sell and when they move out, renters move in. The owner has even less interest and fewer fees are paid, and the spiral of degradation is almost inevitable. This will affect the environment of all and is the biggest threat to the value of apartment owners who fail or refuse to pay. It also places a huge burden on those who do pay. It is in everybody's interest that everybody pays and understands when they sign up that they will have to pay in perpetuity. Lack of maintenance and the absence of a sinking fund to cater for large-scale external repairs will produce a spiral of degradation. Rundown or shabby apartment blocks are not in anybody's interest.

Regulatory reform must include a well-publicised certainty that unpaid fees will be recouped by the management company when the apartment is being sold. This is not understood by people who decide it is a mug's game and that they will not bother paying management fees. As a long-term solution there should be a lien on the property and owners should know this. In the short term, there should also be a mandatory "name and shame" option involving mandatory notification to all complex owners of those who fail to pay their management charge. This would help to ensure compliance.

Abuse of controlling positions in management companies by some developers has already led to a resentment and a negative attitude to paying management fees by many apartment owners. This will become a real problem where developers are no longer selling their apartments but are maintaining ownership of them and renting them out. Given that the housing market has weakened and with many developers retaining ownership, it is imperative that they cannot use their extra voting power in the management company to disadvantage individual owners and, crucially, that they are obliged to pay the management fee for every apartment that they retain. Otherwise, the buyer loses, which seems to be the norm in this relationship, which is unfair to young purchasers.

It is essential that we have regulatory reform along the lines suggested in this motion. I ask the Minister to take the motion seriously. It is a vital issue in urban Ireland because this is becoming the way people live. If apartment blocks do not succeed, God help us all because it will destroy urban Ireland.

Acting Chairman (Deputy Charlie O’Connor)

I call the Minister, Deputy Dermot Ahern. I congratulate him on his appointment and wish him well.

Minister for Justice, Equality and Law Reform (Deputy Dermot Ahern)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

recognises the growth of the number of people living in apartments and mixed developments in recent years;

acknowledges that multi-unit apartments and mixed developments will continue to be a feature of residential provision in Ireland;

notes the information needs of current and prospective homeowners relating to their rights and responsibilities with regard to management companies, management agents and management fees;

welcomes the Law Reform Commission's Consultation Paper on Multi-Unit Developments which was prepared and published under the Commission's Second Programme for Law Reform 2000–2007;

welcomes the Government's decision to establish a high-level interdepartmental group with the objective of assisting in the development of a coherent and comprehensive response to problems arising in relation to multi-unit developments and the Cabinet sub-committee to which it reports;

looks forward to publication in the very near future of the Law Reform Commission's Report on Multi-Unit Developments which will, following an extensive consultation process, contain definitive recommendations for reform of the law relating to the structure and governance of property management companies;

welcomes the Government's commitment to publish the Property Services Regulatory Authority Bill which will, inter alia, provide for the establishment of a licensing system for property management agents, during the current Dáil session;

welcomes the Government's decision, pending enactment of this legislation, to establish an implementation group and to appoint a chief executive designate in order to undertake preparatory work relating to establishment of the Property Services Regulatory Authority and implementation of the future licensing system;

draws attention to the Government's policy statement ‘Delivering Homes Sustaining Communities' which emphasises the need to improve the quality of the built form as well as the focus on building sustainable communities;

welcomes publication of ‘Best Practice Housing Guidelines' which provide a practical and valuable tool for local authorities, housing associations and private sector clients when formulating the design requirements for housing;

welcomes publication of ‘Design Standards for New Apartments' which are designed to promote sustainable urban housing by ensuring that the overall design and layout of new apartments will provide satisfactory accommodation for a variety of household types and sizes, including families with children, over the medium to long term; and

draws attention to new policy guidance to local authorities concerning responsibility for the maintenance of common shared facilities in residential estates, in particular public roads and footpaths, public lighting, public water supply and sewerage, public open spaces and unallocated surface parking areas, as well as the completion of estates and the taking in charge process.

I thank the Acting Chairman and the Members opposite for their remarks and I look forward to working with them in a spirit of co-operation.

Having read the file pertaining to this matter late last night and this morning, I do not believe this is an issue on which the House should divide. We are all of the very strong view that action needs to be taken in this area as quickly as possible. I have great sympathy with the content of the Fine Gael motion and believe it has a lot in common with the Government amendment. I suggest that, at the end of this debate, we might adopt a reasonable approach. One aspect of the Government's approach is that it believes the Fine Gael motion is a little too prescriptive given that the issue is much wider than it suggests.

It is important to put the Government's position on record. Recent years have indeed witnessed very rapid and significant growth in the numbers of people living in multi-unit developments. While apartment living is a common feature in many other countries, it is a relatively recent phenomenon here. Some of the difficulties now being experienced by owners of units in multi-unit developments stem from the fact that the current legal framework is ill-suited in many ways to deal with the problems arising in regard to this form of residential accommodation.

I assure the House that the Government is determined to deal with the problems arising in this area urgently and in a very thorough and comprehensive manner. Action is already under way in several areas and necessary legislation is in the course of being drafted. The Law Reform Commission has indicated it will publish, within the next few weeks, its report on multi-unit developments. This report, which follows extensive consultation, will contain definitive reform proposals concerning the regulation and governance of property management companies. The Government has already directed that early action be taken by the relevant Departments to address the commission's recommendations. The types of action to be taken will be dependent on the form the recommendations take.

A high-level interdepartmental committee, under the chairmanship of my Department and comprising representatives of relevant Departments and offices, has already met on a regular basis to review the issues that were raised in the Law Reform Commission's consultation paper. The committee will be examining the commission's final report and a key task of the committee will be to identify the legislative and other actions to be taken and determine a timescale for their implementation. The committee is reporting to a Cabinet committee whose membership comprises the Attorney General and the Ministers for Justice, Equality and Law Reform; Environment, Heritage and Local Government; and Enterprise, Trade and Employment.

The Government is already committed to publishing the Property Services Regulatory Authority Bill in this session to regulate property service providers, including property management agents. The Bill will contain extensive provisions to protect the interests of home owners.

The main functions of the new authority will be to operate a comprehensive licensing system covering all providers of property services, including property management agents; to set and enforce standards for the grant of licences, for example, educational and training standards and levels of professional indemnity insurance, in addition to 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 of property services in general and the cost to consumers, risks and benefits associated with the provision of those services; and to establish, maintain and administer the compensation fund.

The legislation will provide that all property management agents providing services for property management companies will be required to be licensed by the authority before providing such services. Both the company and the staff providing such management services will require a licence to operate. It will be an offence to provide a property management service without such a licence.

The Bill will provide that an application for a licence must be accompanied by references as to the applicant's character and competence as the authority may require; certification by a suitably qualified person that proper financial and control systems are in place for the protection of clients' money; evidence of the availability to the applicant of the required level of professional indemnity insurance; and the prescribed fee.

The authority will refuse to grant a licence if it is satisfied that an applicant is not a fit and proper person to provide a property service, is under 18 years of age, has been adjudicated bankrupt, does not comply with any requirements of the Act or detailed regulations under it, has not furnished the authority with written evidence of there being available to the applicant the prescribed minimum level of professional indemnity insurance, or has not paid the prescribed fee or the prescribed contribution to the compensation fund. Similar provisions will apply to companies and partnerships. Licensees will be required to renew their licences on an annual basis and the authority will keep a register of licensees.

In order to ensure compliance with the legislation, the authority will be empowered to investigate, on the basis of a complaint or on its own initiative, both persons licensed to provide property services and those who may be engaged in providing such services without a licence. In order effectively to discharge this function, the authority will have extensive powers of investigation including powers to enter premises, to require the provision of information and documents and to require persons to attend before it. If satisfied that the licensee has been guilty of misconduct or of a contravention of the Act or regulations made under it, the authority will be empowered to revoke the licence or suspend it for a specified period or to issue a reprimand, warning, caution or advice.

In the case of an investigation into the provision of a property service by a person who does not possess an appropriate licence, the authority may seek an injunction from the High Court requiring the person to cease the activities that the authority reasonably believes to be in contravention of the legislation. A person who is aggrieved by a decision of the authority will be able to lodge an appeal with the property services appeal board that is to be established under the legislation.

Further protections provided for in the Bill include a requirement to provide clients with a letter of engagement setting out details of the service to be provided, costs etc.; strict provisions relating to the keeping of client accounts; and the establishment and maintenance by the authority of the compensation fund, to which licensees will be required to make an annual contribution. The purpose of the fund will be to compensate clients in respect of losses arising from dishonesty on the part of licensees.

The protections of clients of property services providers will also, subject to appropriate modifications, apply in respect of property services provided in the State by persons from other member states.

Pending enactment of the proposed legislation, an implementation group has already been established to assist and advise on practical matters relating to the establishment of the new authority and to prepare for a new licensing system. The implementation group has recently published a code of practice for auctioneers and estate agents. This code identifies the key principles and values that should guide day-to-day practice of the industry and sets minimum standards of professional conduct to be expected of service providers. It also incorporates a complaints system which enables complaints concerning non-compliance with the code to be investigated.

The code has been sent to all licensed auctioneers and estate agents and they have been requested to sign up to it on a voluntary basis. I am informed that, to date, approximately 60% of licensed auctioneers and estate agents have signed up to the code. In addition to those who have already signed up, a number have indicated they are amending their current administrative procedures to enable them to comply fully with the code, at which stage they will agree to be bound by it.

The implementation group is currently drawing up a code of practice for management agents that it hopes to be in a position to launch in the near future. The group has compiled and published a public register of licensed auctioneers and estate agents. This register, which may be viewed on the authority's website, comprises a list of the auctioneers and estate agents licensed by the Revenue Commissioners under the Auctioneers and House Agents Acts 1947 to 1973. It also indicates those licensees who have voluntarily agreed to be bound by the code of practice.

In the area of consumer awareness, the implementation group has been working on a consumer information package to promote consumer awareness of the process involved in property transactions, and the nature and levels of service provided by property services providers. It is hoped this information package will be published shortly.

Another area being addressed by the implementation group is the development of a complaints handling and licensing database. The complaints handling database will facilitate the handling of complaints in accordance with the enforcement provisions of the code of practice. While the authority will have no licensing function prior to the commencement of the legislation, it is important that it be in place well in advance of the authority being established on a statutory basis so as to ensure a smooth transition to the new licensing regime.

The great value of the Law Reform Commission's consultation paper has been the overview it provides and the detailed consideration it gives to the problems associated with ownership of apartments and their service and management as a complex of various interests. The consultation paper stresses the cross-cutting nature of the issues arising in this regard and the need for the Government to address them in a comprehensive and joined-up manner. This already has been acknowledged by Members opposite. Clearly this will require action across a number of important policy areas, including the planning and development code, company law, consumer protection law and the development of regulatory structures.

For this reason, to coincide with publication of the consultation paper, the Government established a high level interdepartmental committee to assist in the development of a coherent and comprehensive Government programme of action on this matter. A key task of this committee will be to ensure that legislative and other actions are taken in response to the commission's reform recommendations and to determine a timescale for their implementation.

Action continues to be taken by Departments and State agencies since publication of the Law Reform Commission's consultation paper. The Department of the Environment, Heritage and Local Government has produced policy and guidance documents in the planning and housing areas with particular reference to sustainability aspects. These initiatives specifically target multi-unit living, while others address the broader issues of sustainability, well designed quality housing, as well as proper social, community and transport networks which, while relevant to all housing forms, also have particular relevance to apartment living. These initiatives address many of the draft recommendations set out in the Law Reform Commission's consultation paper.

Members will be aware that an aspect of multi-unit developments that has come in for much comment in recent years has been the taking in charge of estates by local authorities. Section 180 of the Planning and Development Act 2000 places a legal obligation on planning authorities to take in charge residential developments, finished or unfinished, where certain conditions have been met.

A new policy guidance regarding the issue of responsibility for the maintenance of common shared facilities in residential estates including small open spaces, car parking and playgrounds, as well as the issue of the completion of estates and the taking in charge process, was issued by way of a departmental circular to all planning authorities in February 2008. The new guidance document is based on the outcome of the deliberations of a working group established by that Department in August 2006. The group comprised representatives of the Department, local authorities, architects, planners, the Irish Home Builders Association, IHBA, and the National Consumer Agency, NCA, and its task was to consider issues pertaining to taking in charge and property management companies. This policy advice is based on the outcome of the deliberations of that group. All planning authorities are now required to develop or update, as appropriate, their policy on taking in charge by the end of June 2008 on the basis of the framework and the wider housing and planning policy guidance.

The core principles underpinning the framework for taking in charge, which must be reflected in each local authority policy on this matter, are — a statement of the facilities that will be taken in charge and the maintenance services that will be provided; the issue of taking in charge must be addressed at the pre-planning stage with the approved design facilitating the taking in charge of core facilities; the planning authority's construction and design standards for residential areas will be set out; developers will be required, through the development management process or permission, to complete residential developments to a standard that is in compliance with the planning permission granted; planning authorities must take all necessary measures in this regard in particular through securing adequate bonds, inspection of construction and enforcement action when necessary; and the procedures for taking in charge will begin promptly on foot of a request by the majority of the residents in the development or by the developer, as appropriate.

Protocols, including timeframes, must be set out by planning authorities to respond to requests for taking in charge. In the case of core facilities in existing residential developments that were approved by the planning authority on the basis they would remain private and be maintained by a management company, these must be taken in charge if the majority of residents request it. The guidance document makes it clear that planning authorities must not attach the establishment of property management companies as a condition of planning in respect of traditional housing estates, save in very exceptional circumstances, such as to maintain a specific facility in that estate which is for residents' use only, such as a private playground, or in the case of holiday homes. In addition, planning authorities should only attach planning conditions requiring management arrangements regarding certain shared facilities in the newer type of mixed residential development in limited circumstances. In respect of older estates, priority must continue to be placed on resolving those estates that have been left unfinished or not taken in charge for the longest period.

As for the monitoring and review of the process, a planning authority's policy on taking in charge is to be made available to the public and published on its website and should continue to be reported on to the elected members on a regular basis and at least once annually. As part of the overall review and update of the local government service indicators, a new indicator in respect of taking in charge is being introduced from 2008 onwards. This will provide benchmark data in 2009 for monitoring the taking in charge process and, in particular, the priority being accorded by individual authorities to the taking in charge of unfinished or legacy estates. This information will allow the Department to review the ongoing work of planning authorities in this regard and will help determine whether additional policy advice on this matter is required.

The Government acknowledges that the owners of units in multi-unit developments need to get clear information on their rights and responsibilities as members of property management companies. Improved awareness of their rights and an understanding of the corresponding duties and responsibilities of developers and builders will encourage apartment owners to assert their rights as company members become involved in the management of their company and combat abuses and sharp practices.

There have been developments in another area since the publication of the Law Reform Commission's consultation paper. The National Consumer Agency has published a report entitled, Management Fees and Service Charges Levied on Owners of Property in Multi-Unit Dwellings. The report examined the sector and made some recommendations on the regulation of the sector, service charges and sinking funds, management companies and management agents. Following the publication of this report, the NCA established a stakeholders' forum to examine the possibility of developing non-legislative voluntary processes, which would be of benefit to consumers. A number of outputs from the forum are expected.

The NCA has been working with the Irish Home Builders Association to agree a code of practice in respect of multi-unit developments. Its scope relates to the construction, completion, marketing and sale and purchase of such units and, in particular, to the management and maintenance of common areas and facilities, as well as to the provision of common services. This includes issues such as the calculation of service charges, transfer of the management company from the developer to the owners, agreements with management agents etc. As the NCA does not have a legislative or regulatory function in this regard, the code will operate on a voluntary basis. The NCA will, however, monitor the code of practice and revisit it as appropriate over time. I understand that a preliminary version of the code was approved by IHBA members in March 2008. A final version is before the IHBA at present and a definitive decision on its content and implementation is expected early this month.

The NCA, through the work of the multi-unit developments stakeholder forum, has developed a checklist of proposed standard headings to be considered for inclusion in written contracts between management companies and property management agents. This document has been approved by the forum and will form one of the outputs when the work of the forum is published this month.

The NCA also has been working on the development of education and training material to assist consumers to better understand multi-unit development living from both a legal and practical perspective. In particular, the NCA has furthered the development of an e-learning initiative for prospective apartment purchasers. The initiative will involve training and information on all aspects of the owner-occupiers role in property management companies, building on information previously provided in the NCA booklet, Property Management Companies and You. The NCA is working closely with Dublin City Council, which will be co-funding and piloting the e-learning initiative in early 2008 with its affordable housing purchasers.

The Office of the Director of Corporate Enforcement, ODCE, has published a draft guidance document on apartment owners' management companies. The intention of the document is to support directors and members in the effective running of their management company's affairs and in protecting the valuable assets which comprise most apartment developments. The document seeks to explain the separate roles of the management company, that is, as the owner of a complex's common areas and as the party responsible for its upkeep, and the management agent, who is contracted by the management company to provide the required building maintenance, insurance, security and other services.

Reference is made to the three phases of a management company life cycle, namely, the developer-only, developer and members and members-only phases. Following a period of consultation, it is expected the completed guidance document will be published this year. In 2007, the Government published a policy statement, Delivering Homes, Sustaining Communities, which emphasised the need to improve the quality of the built form and placed a focus on building sustainable communities. In the same year, the Department of the Environment, Heritage and Local Government published best practice housing guidelines to provide a practical and valuable tool for local authorities, housing associations and private sector clients when formulating the design requirements for housing. Last year, the Department published development plan guidelines which were designed to improve the quality and consistency of local authority development plans, strengthen their strategic content and improve the building of consensus in the preparation, implementation and review of such plans. Development management guidelines which address the processing of planning applications from pre-application consultation to the enforcement of planning decisions were also published.

The design standards for new apartments were issued in September 2007. The primary aim of the standards is to promote sustainable urban housing by ensuring that the overall design and layout of new apartments will provide satisfactory accommodation for a variety of household types and sizes, including families with children, over the medium to long term. Recommended minimum standards are set for, inter alia, floor areas, storage spaces, sizes of balconies and patios and room dimensions. The new draft planning guidelines on sustainable residential development in urban areas, which were published in February 2008, will act as a blueprint for future sustainable development of Irish cities, towns and villages. The guidelines, which are accompanied by a best practice urban design manual, focus on more suitable and better accommodation for families, higher quality urban design, high standards of environmental quality and energy efficiency and a focus on locations that capitalise on future transport plans. It is hoped that they will deliver more sustainable communities.

The Department of the Environment, Heritage and Local Government is making progress with the developing areas initiative with the aim of seamlessly delivering infrastructure and services in a coherent manner. The initial focus of the initiative is on quickly growing areas within the national spatial strategy's gateways and hubs. The Department is working in consultation with local authorities to identify and resolve the blockages in respect of infrastructure and service delivery in each of the strategic locations.

The Government has approved the drafting of a companies consolidation and reform Bill along the lines of the general scheme prepared by the Company Law Review Group. The philosophy underpinning the proposals in the general scheme is to simplify company law for the benefit of all stakeholders in company law, including shareholders, members, small privately owned companies, business operators and company law practitioners. The Bill will enhance the competitiveness of the economy by streamlining and simplifying the companies code. Company law provides a choice of models by which companies in general, including property management companies, can be incorporated. This choice is not made by the purchasers of units in the development, but by the developer at an early stage of the development process. Property management companies own the freehold of the common areas and the freehold reversion in each unit acquired under a long lease by an individual owner. They have the responsibilities of landlords in enforcing covenants in the leases. They must manage the complex on an ongoing basis, usually by means of a contract with a separate property management agent.

The general scheme of the proposed Bill contains a number of provisions with the express intention of facilitating the use of the company structure by multi-unit developments. It is proposed that the membership limit of 99 which will ordinarily apply to the most common company type — the private company limited by shares — will not apply in the case of a residential management company. Membership of a residential management company will be deemed to transfer from the vendor to the purchaser upon the sale of the underlying property to which the membership relates.

It is important that proposals to change company law to refer specifically to property management companies reflect the voluntary nature of the role of the director in property management companies. Such proposals should also reflect the fact that owners of units in a multi-unit development who comprise the company, and from whose ranks directors are necessarily drawn, may have little or no experience of running a company or complying with the formal requirements of company law. This has to be taken into account also in developing any new company models for such entities and devising future reporting arrangements. The current strike-off provisions, which are designed to penalise commercial trading companies that do not comply with company law requirements, and which may lead to a company's dissolution and the vesting of its assets in the Minister for Finance, are ill-suited to the operation of property management companies. Having said that, I feel that if the strike-off provisions are discontinued for property management companies, they will need to be replaced with more suitable provisions. This is one of the aspects which needs to be addressed further in the ongoing company law reform process.

I acknowledge that there is a widespread lack of understanding about the calculation and payment of management fees and service charges. Owners of apartments need to be made aware of the purpose of such payments and their responsibilities with regard to the payment of such fees. They should be aware that the maintenance of the common areas and the fabric of the buildings helps to underpin the value of their property. The work of the National Consumer Agency's stakeholder forum on multi-unit developments in respect of education and training resources for prospective purchasers in multi-unit developments should prove particularly beneficial in this regard. The outputs of the stakeholder forum will include sample lists of the costs and services typically covered by a service charge or a sinking fund. This indicative list should help consumers to understand what is the responsibility of the management company and what falls within the remit of individual unit owners.

I am conscious that there appears to be a lack of knowledge among owners of units within multi-unit developments about sinking funds. Pending the final recommendations of the Law Reform Commission, I am leaning towards the view that there is an absolute need to make the establishment and maintenance of sinking funds by property management companies mandatory. Owners need to be aware that non-payment of service fees and the absence of a sinking fund will, over time, reduce the value of their property and investment.

As I said at the outset, the issue of multi-unit developments is a complex one. Those who have read the Law Reform Commission's consultation paper will acknowledge that this is a statement of fact rather than opinion. Issues pertaining to such developments relate to many aspects of legislation, including the planning and development code, company law and consumer protection. The complexity of these problems highlights the requirement for the Government to address them in a comprehensive and joined-up manner. This is the approach which the Government has adopted and will follow. It is not true to say, as was implied in the original motion, that the Government is complacent about this issue. I do not want the House to divide on this matter. The Government is not complacent.

I have outlined in detail the substantial amount of work that has been done in this regard by various Departments and State agencies. Further work will be taken on foot of the Law Reform Commission's recommendations. The commission has made progress with its final deliberations on the basis of intensive consultation and examination of the issues. The Government has never attempted to pre-empt that important process and I would like to think Fine Gael would not like us to do so. We will build on the actions the commission has already taken. We will take on board, as far as possible, the imminent recommendations of the Law Reform Commission. The Government will also take into account the views expressed by Deputies in the House today. While I commend the Government amendment to the House, I do not believe we should divide on it.

Deputy Ciarán Lynch

I wish to share time with Deputies Stagg, Burton, Upton, Tuffy and Ó Snodaigh.

Acting Chairman

Is that agreed? Agreed.

Deputy Ciarán Lynch

I congratulate the Minister, Deputy Dermot Ahern, on his appointment as Minister for Justice, Equality and Law Reform. I thank Deputy Hogan and his Fine Gael colleagues for bringing this motion before the House.

I would like to remind the House of what the former Taoiseach, Deputy Bertie Ahern, said in response to the then Labour Party leader, Deputy Rabbitte, on 14 June 2006:

The only way in which Government can control this situation and set guidelines is to examine the legislative process if local authorities cannot take control of the situation. I do not understand why local authorities give planning permission that permits management companies in residential housing areas. Why should it be a condition of planning permission that a management company looks after 30 or 40 houses? I do not see why that should be a condition of planning permission. Management companies were never regarded as desirable or essential for residential housing estates. Management companies in housing estates represent an unnecessary cost unless residents wish that they are established, and that is a decision to be made when people are living in their houses rather than beforehand.

That was almost two years ago. There is a management company crisis in this country. As the Fine Gael motion clearly states, with almost half a million people living in over 300,000 apartments, there has been a long-standing issue of neglect of this matter by the Government. What is the purpose of management companies and who should be their chief beneficiaries? Management companies are clearly not needed for housing estates and while they do serve a function for apartment owners, the absence of legislation has led to the creation of a rogue's charter with residents being ripped off and finding themselves subject to management company charges indefinitely.

At present, we have a service industry that is totally unregulated and charging almost €1,000 per year for a house and up to €2,000 per year for an apartment. We should have an end to management companies in private housing estates and a strictly regulated situation for apartments. To date, there has been a total dereliction of duty by Government on this matter and a clear absence of legislation.

The current cosy arrangement allows both the Government and local authorities to wash their hands of their responsibilities while at the same time placing wads of cash in the hands of management companies from households that are already overstretched by mortgage and child care payments. Such costs are set to continue indefinitely into the future.

We hear much about local government reform. If one thing needs to be reformed in this area, however, it is the notion that county and city managers can wash their hands of responsibility for the people who live in their local authority areas by using this clause to introduce rates by the back door. Local authorities should not be allowed to renege on such responsibilities.

For some time, Labour has been proposing a policy directive under section 9 of the Planning and Development Act 2000 requiring planning authorities to insist that all new housing developments are designed, constructed and completed to taking-in-charge standards. Such a policy directive would also require local authorities to issue new planning guidelines for management companies specifying the limited circumstances where such companies may be permitted in the case of apartments. In respect of such permission, services should be set down, including, where possible, all roads, public open spaces, public lighting and water and sewerage services, which should be completed prior to the taking-in-charge standards.

The Minister indicated earlier that he may support such a move, which is welcome. Up to now, however, the Government has been inactive on the issue. It has an appalling record in this regard. As other speakers have said, the Labour Party introduced a Private Members' motion on this matter in November 2005. The previous Taoiseach referred to it in 2006.

We have an issue of governance whereby people are paying fees without getting a service. The Minister may make worthy statements but there is a lack of action. We need to hear something by which we can measure the action the Government proposes to take.

Deputy Emmet Stagg

A similar motion on the regulation and control of management companies was tabled by the Labour Party in November 2005. It was debated and defeated by the Fianna Fáil-Progressive Democrats Government. The Government's 2005 amendment, which was passed, was almost identical to the one tabled today. At that time, we had the full support of the Green Party. Now, however, the leader of that party, having been assumed body and soul into the Fianna Fáil Party and its ethos on the building industry, is shamelessly supporting a carbon copy of the amendment he opposed so strongly before he joined Fianna Fáil in all but name.

Since that Labour Party motion was debated some two and a half years ago, no promised legislation, instructions or guidelines have seen the light of day. Government Ministers have been sitting on their hands regarding this issue because Fianna Fáil, the Progressive Democrats and the Greens, who accept everything, do not want to upset their friends in the building industry. They never upset their paymasters who have made a fat killing on the backs of young families to whom they sold houses at inflated prices. Their greed knows no bounds and the magic management companies provided the icing on the cake for them.

However, the rot did not start in 2005 at the time of the Labour Party's motion, but with the Fianna Fáil-Progressive Democrats Planning and Development Act 2000. That legislation enabled county managers to impose a planning condition that a management company be established and that it be registered as a lien on the title of each property. That literally gave developers a blank cheque that they drew down from the accounts of young families struggling with already massive mortgage repayments. Management companies sprang up like mushrooms not just for apartment blocks or mixed housing estates, but also for standard housing. They did so without regulation or control. They became a new milch cow for already fat cat developers. Without regulation or control, they could force householders to pick up the tab for services that were clearly the developer's legal responsibility.

In my constituency, some 4,000 housing units are now covered by management companies. They are paid on average €1,200 per year, effectively to the developer. The vast majority of these, some 3,200, are standard houses with absolutely no need for a management company. The only benefit they gain from this developer's bonanza is that the grass is cut, but they are also picking up the tab for the ongoing liability of the developer for water, sewerage, roads, paths, lights and open space. In my constituency alone, I calculate that homeowners and tenants are paying some €4.6 million per year into the already well-lined pockets of developers. These families live in houses in Kill, Celbridge, Leixlip, Maynooth, Sallins, Kilcock and Straffan.

The Labour Party demands that action be taken to end this rip off of young families. Where management systems are required in apartment blocks, they should be controlled by legally binding regulations. They should also be organised on a co-operative basis. In all cases affecting standard houses, these rip-off companies should be abolished and clear title restored to the home owners concerned.

Deputy Joan Burton

Like my colleagues, I welcome the Fine Gael Private Members' motion, which is similar to a previous motion on this issue tabled by the Labour Party. There is a political issue at the core of the Government's refusal to legislate for management companies. Thousands of young home owners and a smaller number of older home owners who downsize to apartment complexes face frustrations by being charged — certainly in Dublin West — an average of €2,000 to €3,000 per year for very poor services.

The political issue arises from the fact that Fianna Fáil is in hock to vested interests in the building industry, including developers. Those vested interests constitute a permanent stain on the character of the Government, which was previously led by Deputy Bertie Ahern. The refreshed Government, formed by the new Taoiseach, Deputy Cowen, seems unwilling to address the matter.

I wish the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, well in his new portfolio. As I am sure he is aware, in the Drogheda area of his own constituency, many thousands of people are caught up in this management company trap. In my own constituency — in Castleknock, Mulhuddart, Clonsilla and Blanchardstown — management companies have spread like a rash among new developments. This is the case both in apartment blocks, where management companies are essential to manage common areas, but also in ordinary housing developments where people are essentially being charged up to €600 per year to have a small lawn and three shrubs at the front of their house cut by a developer. Many people living in large developments do not object if the location is kept clean and tidy and they receive value for money from such services. The residents may be busy commuters. From the places Deputy Emmet Stagg and I represent, it is often a commute of an hour and a half to work in Dublin. For good services, therefore, people might be prepared to pay fees. However, many young couples who have just got started on the housing ladder are being fleeced by the management companies and management agents. There is no proper invoicing and no indication of what services are being paid for by the management company. In some cases, the local authority is also providing some of the services for free, such as public lighting, yet residents are paying on the double.

The Government apparently established an interdepartmental committee on this issue but nothing has emerged from it. I am glad that the Minister for the Environment, Heritage and Local Government, Deputy Gormley, has arrived in the Chamber. The Green Party has many good objectives in Government, which I share, but if that party is unwilling to address the vested interests that have Fianna Fáil tied hand in glove to developers and builders, who have made tens of millions of euro in speculation on the backs of young people buying into management companies, it is difficult to understand why it is in Government other than to enjoy the vicarious pleasure of holding office. The previous Taoiseach told me no fewer than five times in this House that he considered it scandalous that young people were being ripped off in this way by management companies. However, that was all talk. There is now a new Taoiseach and the Minister, Deputy Gormley, is restored to his old Department but there has not even been a mouse-like roar from the parties indicating that they will take action.

Deputy Mary Upton

I welcome the opportunity to speak in this debate. Indeed, I am one of the Deputies mentioned by my colleagues who spoke on this issue in 2005. The situation has not moved forward by even a centimetre in the meantime. Deputy Burton is correct that the people who are suffering as a result of the failure to provide adequate legislation in this area are young people.

I wish to focus on apartment blocks. My constituency of Dublin South-Central is awash with apartments, from Park West through Drimnagh, Crumlin and Walkinstown and into Cork Street and the inner city. All one sees in the constituency are patches of land for which planning permission is being sought or high rise apartments. To confuse matters further, there are new proposals for maximising the city's potential from Dublin City Council which envisage further high rise blocks. We might need more development but the proposals mean more high rise apartments, more management agents and companies and more ripping off of the unfortunate owners of those apartments. There is a great deal of fudge and lack of clarity surrounding the issue of management agents and management companies. The owner of an apartment is often at a complete loss as to who has responsibility for what.

One issue that will become important, and Deputy Ciarán Lynch has mentioned it on a number of occasions, is where local government will allow tenants to purchase their flats. In due course the issue of overall management will have to be addressed. Who will address the issue in that case? Who has responsibility? What management agency and management company will be in place? Will there be more of the same, whereby the fat cats that were mentioned earlier will avail of the system?

When I last spoke in the House on this issue, I put forward a number of proposals that could be addressed and that could bring clarity to the situation. I proposed, for example, that a condition be imposed on developers to complete the apartment complex satisfactorily within a specified period. That condition exists when a development consists of two or more houses so why should it not apply to apartments as well? I also proposed that as soon as an apartment development is completed satisfactorily, ownership of the common parts must be handed over immediately to a management company. A number of speakers have mentioned the problem of those areas staying, in effect, under the control of the developer, effectively disenfranchising the owners of the apartments.

Developers should not be allowed to maintain prolonged control of apartment complex management companies. In Britain, where there is a longer history of the management of apartments, there is a relatively straightforward simple solution in place. It is a solution that could be put in place here.

Deputy Joanna Tuffy

I will briefly outline the situation of one of my constituents, who is a member of a management company and lives in an apartment. It is indicative of the problem faced by many other people when there is no legislation in place to regulate this area and they cannot go the National Property Services Regulatory Authority to advise it or mediate the issue on their behalf.

My constituent has lived in a small apartment in west Dublin for over two years and has been sent numerous bills by the managing agent. It appears that after two years the constituent owes approximately €6,500. He has raised numerous problems with the service being provided by the managing agent. The lifts were out of order for six months, carpets that were ripped were not repaired, broken light fittings have not been fixed and rubbish such as refrigerators dumped in the stairwells has not been removed. He took photographs to show me and to bring to court. The state of the common areas was appalling.

He was eventually summonsed to go to court by the management company. He initially brought a solicitor with him to court, at a cost of €600. However, the legal team for the management company did not turn up and the case was struck out. He was then summonsed again for the same amount. On that occasion he tried to defend himself. He brought the photographs and listed the services that had not been provided but, unfortunately, the judge found against him. He intends to appeal the case. He subsequently received another summons for almost €5,000. If there is another judgment against him, he will owe approximately €7,000 and will possibly have to pay legal costs as well.

My constituent is trying to defend himself as best he can but he does not have the ability to do so. He did not have the ability to persuade the judge. I practised as a solicitor and I knew when I looked at the photographs and material he showed me that he had not received the service for which he is being charged. That should have been taken into account in the court decision. The problem is that he is not experienced and he is up against the big legal team of the management company or management agent — they are more or less the same. He is unable to defend himself. I believe many people will not even try to defend themselves and will have judgments registered against them. Some people will pay the charges even though they are being charged unfair amounts and are not receiving the services. Those who do not pay will have judgments and judgment mortgages registered against them for amounts of approximately €7,000.

Many of the people concerned bought so-called affordable housing units, which turned out to be apartments or houses in managed complexes. They are not well off and can barely pay their mortgages, let alone the exorbitant management fees. They cannot afford legal costs and have nowhere to turn. They approach their local representatives but we cannot help them either because the situation is a mess. I have been in contact with the National Property Services Regulatory Authority and I suggested to another constituent that he write to the authority to see if it could help him, but the authority replied that it could not because there is no legal basis for it to deal with people who are members of management companies.

We do not need large complicated reports; there are plenty of them. The Minister need only copy the Private Residential Tenancies Board legislation and substitute the National Property Services Regulatory Authority for the board. This will give the authority the legal standing to meet with clients and mediate on their behalf. The Minister can put other legislation in place afterwards. It is not a complicated matter. If there was a means whereby people could negotiate and mediate, they would at least not get fleeced and there might be a possibility of compromise, with reasonable management fees and a better service.

Deputy Aengus Ó Snodaigh

I welcome the Private Members' motion put forward by Fine Gael. I wish to comment on the Government's proposed amendment to the motion. This is an area which requires legislation. We should be critical of developers, speculators and the private management companies that are ripping off people living in apartment blocks. None of that is reflected in the amendment. I urge Deputies to vote in favour of the Sinn Féin amendment.

The amendment includes much of what the Fine Gael motion contained and adds to it. Good housing is one of the most important elements of a healthy society. It is crucial to have proper regulated housing and in particular regulated management companies. Such regulation should be part of a robust tenant protection regime. We have long advocated the introduction of this legislation, which would provide that. Irish republicans have always believed the ability to rent one's home under fair conditions, with fixity of tenure or outright ownership to be a social good and part of the birthright of Irish people. From the just demands of the 19th century Land League and the 20th century civil rights movement, housing rights have been the touchstone of our struggle for generations, and will remain so into the 21st century. Combating the scourge of management companies is an extension of this struggle.

We recognise it is necessary to have management bodies in blocks of flats and apartments. However, Sinn Féin is opposed to the involvement of private for-profit management companies in the maintenance of roads and common open space, which in traditional housing estates have normally been the responsibility of local government. Such services should be paid for through direct progressive taxation. The main problem with private management companies is that they impose a form of double taxation through the imposition of fees and therefore are a stealth tax. It is fundamentally inequitable that some residents pay for a service, while their neighbours receive it free of charge. For-profit management companies should not be allowed to extort thousands of euro from people in housing estates towards the upkeep of an area and the provision of essential services when these should be the responsibility of local authorities. All public areas should be in the care of local authorities and never outsourced to private management.

At present, although they are subject to company law, such private estate management companies are unregulated and company law does not adequately serve to prevent the unethical practices they are engaged in. Many specific problems are associated with their proliferation in the Twenty-six Counties, in particular the virtual entire lack of accountability to the residents who pay for their services, as well as the fact that the fees charged are often exorbitant and subject to enormous increases. I have heard of increases of up to 300% in a single year, without any corresponding improvement in service, which is nothing short of a licence to print money. This cannot be allowed to continue. Tenants should be able to participate directly in the running of not-for-profit management companies, co-operatives or whatever — there are many models to follow. Local authority funding should be provided to foster community engagement projects in the running and co-operation of estate management. The current situation leaves no room for tenant participation, when management or landlords control the voting procedures. It is disgracefully unfair that a company can increase its fees and ensure grave hardship for those who have to pay them. Furthermore, it is disgracefully unfair when a management company can charge exorbitant fees and not even provide the services for which tenants are paying. We saw an example in Tyrellstown, Dublin 15, when tenants were left for years without a suitable water tower as the service was being run by a private management company. To add insult to injury, while the supply was inadequately managed, the water became contaminated with e.coli.

A form of management company is unavoidable for some apartment blocks, but in the event, such companies should be run on a not-for-profit basis and cover only structural insurance, internal communal areas and walled gardens. The Government must implement legislation to ensure that these fees are not then foisted upon the tenant when the development is incomplete. He or she should not have to shoulder the construction costs for the developers, as has been the case in some instances. It is imperative that legislation is introduced to regulate such companies as company law is clearly not enough. They are unregulated entities to which tenants are forced to buy into since they have no other legal option. In the Bructailt estate, in Nenagh, County Tipperary, residents who had no part of the management company, were faced with solicitors' letters when they tried to take action to extract themselves from their present situation. In Castlecurragh, Blanchardstown, in 2006 a management company was established by Fingal County Council in which both of its directors were employees of the company. This company then proceeded to charge a legal fee of €25 per household for the sole purpose of prosecuting local residents. This came about after one resident had successfully won a case against the management company. As the company wished to appeal the decision to a higher court, it proceeded to charge the legal costs to the residents. That is a disgrace and meant the residents were effectively paying the company to sue themselves. This is a farcical scenario, but just one of many such examples. The onus is on the Government to urgently introduce legislation that will combat all such unjust situations, not just some. Builders and developers regularly fail to complete the work on housing developments — mainly footpaths, road surfacing, road markings, drainage, landscaping, builders' rubble and waste disposal. There are quite a number of other examples of where such companies and developers have neglected to complete the work, as they should have. The money given in service and management charges is often unaccounted for — this is the biggest disgrace — in terms of how it is spent. Tenants frequently ask questions such as whether the gates were fixed, why the lift was inoperable for months on end, if the wall was painted and the rubble collected. Many residents ask such questions but do not get the answers from the management companies. Costs need to be more transparent so that the already cash-strapped home owner knows that he or she is not being ripped off. That is a reasonable demand for anybody to make.

Housing policy in Ireland has, for a very long time, been fundamentally inequitable and unbalanced in a number of respects, and that needs to change. This is one of the ways in which that change can be brought about. The number of elements contained in the Sinn Féin amendment improve on the Fine Gael motion, and I welcome that. There has been an overemphasis on the financial gains to be made from housing at the expense of social housing, which is central to the well-being of the nation. The private property speculator, the developer and the rental sectors are being enormously subsidised by the State at taxpayers' expense. More people are being driven into the hands of management companies and the people behind them, many of whom are developers who see this as another way to extract more money from those trying to buy their own homes. The decrease in social and affordable housing is pushing people into the private rental sector where they lack security of tenure or forcing them to dangerously overmortgage or into crowded accommodation with their extended families. They are then forced to pay astronomical fees to private management companies which sometimes do not even provide the basic services. The big business management companies, private property speculators and developers once again line their pockets at taxpayers' expense. The legislation is long overdue and must contain all the elements I have included in the amendment I have proposed to the Government's amendment.

Minister for the Environment, Heritage and Local Government (Deputy John Gormley)

The Government is determined to ensure that the public concerns relating to multi-unit developments and property management companies are urgently addressed. This issue is broad and touches on a wide range of legislative and policy areas and legal documentation, leases and other legal agreements between buyers, sellers and management companies, as well as consumer protection and company law issues. A targeted study and consultation process has been undertaken by the Law Reform Commission in relation to multi-unit developments and is nearing completion. An interdepartmental committee chaired by the Department of Justice, Equality and Law Reform was established after the publication of the initial Law Reform Commission consultation paper and includes representation from my Department. This committee will help to identify the legislative and administrative actions to be taken in response to the recommendations for legislative reforms. I understand that the Minister for Justice, Equality and Law Reform, with input from relevant Departments, will progress whatever legislation may be necessary in response to the Law Reform Commission report.

My Department does not have a central role in the management and maintenance of private apartment schemes or other private accommodation, or the operation or governance of property management companies in private developments. Our role in this area mainly arises in terms of planning and sustainable housing and a number of significant initiatives are already under way in these areas, providing an overall framework within which the creation of sustainable communities can be achieved. While these documents are generally relevant to housing in all forms, the underlying theme of sustainability, well designed quality housing, proper social community and transport networks are even more pertinent to modern apartment living.

A new policy statement of housing policy, Delivering Homes, Sustaining Communities, was launched in February 2007. The policy statement strongly endorses the vision of better quality housing in sustainable communities, as set out in Towards 2016. The statement sets out a vision to guide the transformation of the Irish housing sector over the next ten years by delivering more and better quality housing responses and by doing this in a more strategic way. It sets out a range of actions geared at building sustainable communities and responding to housing need in a way that improves choice and encourages individual responsibility within communities. There is a clear emphasis on a services approach, one which tailors supports to households taking account of their position in the lifecycle, effectively delivering housing programmes to get better outcomes for the households supported and better value for money for the taxpayer. The emphasis following publication has been on implementation of the reform agenda set out in the statement. This has involved consultation with stakeholders, developing the detail of schemes and progressing the drafting of legislation to reflect the social housing reform agenda set out in the policy statement.

In March 2007, my Department launched new design guidelines on housing delivery entitled Quality Housing for Sustainable Communities. This was followed in September 2007 by new design standards for apartments, which aim to promote good living environments which can support successful apartment living, particularly in terms of better internal space standards, including storage space. These documents form part of a suite of guidance documents which my Department is developing to promote quality in housing and neighbourhoods. I welcome this focus on sustainable communities that meets the diverse needs of existing and future residences that are sensitive to the environment and contribute to a high quality of life. This is particularly timely and relevant in the context of multi-unit developments where issues of interdependence and the complexities of high density living arise in a more pronounced way.

In February, I published for public consultation new draft planning guidelines on sustainable residential development in urban areas which update and expand the 1999 residential density guidelines. The public consultation period on the draft guidelines closed earlier this week and the comments and submissions received will now be fully considered with a view to finalising the guidelines later this year. The new guidelines are accompanied by a best practice urban design manual. The proposals involve setting high standards in terms of space and facilities, which will help achieve the most efficient use of urban land through housing densities that are appropriate to the location involved and the availability of supporting services and infrastructure, particularly transport services.

Intrinsically linked to the strategic planning of sustainable communities is the co-ordinated delivery of the necessary infrastructure and services in those strategic locations currently under development pressure. New developments need to be more than just the provision of houses. It is essential that schools, community facilities, employment, transport and amenities are integrated with the housing development process in a timely, cost-effective and sustainable manner. Key infrastructure such as roads, water and wastewater services should anticipate rather than follow the delivery of new housing.

A Minister of State in my Department, Deputy Batt O'Keeffe, was mandated to take responsibility for driving this developing areas initiative. A dedicated unit has been established in my Department to work with the local authorities and delivery agencies in resolving blockages and providing a coherent approach to servicing and releasing these lands for development. I congratulate Deputy Batt O'Keeffe on his elevation to higher office as Minister for Education and Science.

Last December, as a further step in improving quality in housing, I introduced building regulations for new dwellings, including new multi-unit developments. The regulations, which meet in full the 2007 commitment in the programme for Government in this area, are intended to achieve a 40% reduction in energy consumption and a 40% reduction in related CO2 emissions from 1 July next. These new measures were the start of a whole new dynamic which I intend to bring to bear on the energy efficiency of our dwellings over time. My proposals are as follows. I will review the building regulations again in 2010 with a view to a 60% improvement over the 2005 standards for new dwellings. As a natural evolution of this process and as stated in the recently published Statement of Strategy 2008-2010 of my Department, my aim is to achieve zero carbon emissions associated with the development of dwellings and buildings in general at the earliest date practicable. As part of this process, I will invite local authorities, building on the experiences of the House of Tomorrow initiative, to submit proposals for a number of targeted and focused demonstration projects within their housing programmes, aiming towards zero carbon housing and based on criteria to be issued by my Department. I will work closely with the Minister for Communications, Energy and Natural Resources in the roll-out of the building energy rating system for all dwellings and in developing strategies for the retrofitting of existing dwellings. In my direct area of responsibility, I intend to reinforce a strong energy efficiency component in ongoing programmes of refurbishment and upgrading works of local authorities.

The energy area is also directly connected to the issue of the management of multi-unit development as greater efficiencies are available both in capital and operational terms when energy services are managed on a shared or collective basis. Group heating systems can be matched with combined heat and power and with renewable energy to bring about major energy savings in energy costs for residents and greenhouse gas emissions. The recommendations being developed by the interdepartmental committee I referred to earlier will take account of the need to ensure that the legal framework for management of multi-unit developments facilitates and encourages energy efficiency and renewable energy.

I wish to refer to the matter of responsibility for shared facilities in residential estates, including high density estates comprising a mix of houses and apartments. In February last my Department issued policy guidance to planning authorities asking them to adopt or update policies on the taking in charge of estates, which will include the following essential elements. Certain core facilities, namely, public roads and footpaths, public lighting, public water supply and sewerage, public open spaces and unallocated surface parking areas will generally be taken in charge and then maintained by the planning authority. The issue of taking in charge must be addressed at the pre-planning stage and the developer must identify clearly on the planning drawings the areas that will be taken in charge. Developers will be required, through the development management process permission, to complete residential developments to a standard that is in compliance with the planning permission granted. Planning authorities must take all necessary measures in this regard, in particular through securing adequate bonds, inspection of construction and enforcement action when necessary. The procedures for taking in charge must begin promptly on foot of a request by the majority of the residents in the development or by the developer, as appropriate. Protocols, including timeframes, must be set out by planning authorities to respond to requests for taking in charge.

Where there are core facilities in existing residential developments which were approved by the planning authority on the basis that they would remain private and be maintained by a management company, these must be taken in charge if the majority of residents request it. Planning authorities must not include management companies as a condition of planning in respect of traditional housing estates, save in very exceptional circumstances. Planning authorities should only attach planning conditions requiring management arrangements in high density estates in limited circumstances. Such cases would include requiring management to maintain the exterior and shared internal areas of multi-unit structures, as has traditionally been the case. Also, management arrangements might be considered necessary to maintain certain shared external facilities that will not be taken in charge, for example, highly landscaped open spaces or allocated car-parking. As these facilities have effectively replaced what were the owners' private gardens in the traditional housing estate, it is considered reasonable that the residents should maintain them.

Implementation of this policy will, effectively, mean that residents in high-density estates that include multi-unit structures will be on the same footing as residents in traditional housing estates regarding the facilities that will be taken in charge by the planning authority.

These guidelines and strategies make a valuable and relevant contribution to the creation of sustainable communities, where people can and want to live and work. I will ensure that my Department will continue to deliver on its remit in this area.

Deputy Charlie O’Connor

I welcome the opportunity to make a brief contribution to this important debate. I welcome the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, and wish him well in the new Government. I am glad to note the Minister's interest in this subject. I spoke to him a couple of weeks ago on it and I sensed his particular interest. As other colleagues have said, he knows this is an issue that affects us all across the political scene.

I also wish the new Government well and congratulate the Taoiseach, Deputy Brian Cowen. I make particular reference to Deputies Tom Kitt and Séamus Brennan because they share a constituency boundary with me and previously represented parts of Dublin South-West that I represent along with Deputies Brian Hayes, Pat Rabbitte and Conor Lenihan. I pay tribute to both Deputies and wish them well. I will continue, along with other colleagues, to represent their former constituents in what is now Dublin South-West.

I applaud the appointment of Deputy Dermot Ahern as Minister for Justice, Equality and Law Reform and I wish him well. I listened carefully from the Chair to his speech this morning and was impressed by his grasp of the issue, as were my colleagues in the House, including, I think, those on the Fine Gael side. It is important that this is an issue for all of us, not just those on the Opposition benches. I represent Dublin South-West and this is an issue throughout my constituency.

In recent years Dublin South-West, particularly the Tallaght region, has changed as far as units of accommodation are concerned. There are far more apartments now than there were five or six years ago throughout Tallaght, Firhouse, Templeogue and Greenhills and this has presented particular challenges. Even politicians cannot get access anymore. If Deputy Hayes has cracked how to gain entry to apartments he might share the information with me. I will be happy to co-operate.

Deputy Brian Hayes

I will take that information with me to the grave.

Deputy Charlie O’Connor

This is an issue but of greater gravity are the challenges facing those living in apartment blocks. We in Tallaght have received much contact from Marlfield, Deerpark and around the Belgard Square area. We recently objected to more apartments being built in Tallaght and South Dublin County Council's planning application for the old Esso site in Tallaght village. Like other colleagues, I am disappointed there are to be more apartments in Tallaght village because this presents a particular challenge for my community.

I am not copying Deputy Terence Flanagan but I wish to refer to a cutting from the Tallaght Echo, which I read every week. There is a great picture of Deputy Hayes in it this week, in case anyone would like to see it. The Deputy is getting good publicity. “Residents refuse to pay hiked management fees”, screamed a headline last week. This illustrates that this an issue throughout all constituencies, as my colleagues have said.

A group of residents in an apartment block in Tallaght are refusing to pay management fees because of what they see as an unacceptable increase in last year's bill. The Echo spoke to several residents from the Loftus Hall apartment block in Belgard Square who say they cannot afford to pay the management fees, which, they claim, have gone up by over €1,000.

This highlights the issue that is being presented to us all and I hope Ministers, particularly the Minister for Justice, Equality and Law Reform, will understand the need for proper, effective legislation in this regard as this is something we would all support. We must put out a positive message that what is happening is not right.

Deputy Chris Andrews

I take this opportunity to congratulate Deputy Dermot Ahern on his appointment — he will make a fine Minister for Justice, Equality and Law Reform. I also congratulate the former Minister for Justice, Equality and Law Reform, Deputy Brian Lenihan, on his new role as I feel he will make an exceptional Minister for Finance. My constituency colleague, Deputy John Gormley, retains his role as Minister for the Environment, Heritage and Local Government and I wish him well in the new Government.

Deputy Charlie O’Connor

Hear, hear.

Deputy Chris Andrews

The new Government is working hard and constructively on delivering the programme for Government.

Not far from here, around Grand Canal Dock in Dublin's docklands area, there are many apartments and the area has been transformed. This has been a good thing and it has transformed people's lives because it has brought about much needed accommodation and housing stock. There are difficulties associated with living in apartment blocks and they are particularly isolated, in many ways. They can be separate communities from the wider community, which can lead to tension. As a public representative, I believe these challenges are not healthy for either political bodies or apartment communities. This is something we will have to deal with and the Government will address it.

There is clearly a problem. I spoke to a resident in the docklands area who pays over €2,000 in management charges every year; there are 120 apartments in his block which means a significant amount of money is involved. Management agents are making big money from all of this and in the case I refer to almost a quarter of a million euro to manage a block of apartments seems excessive. Many agents have neither bonds nor security and there is clearly a problem because often the agent is appointed by the developer and acts on his or her behalf, rather than on behalf of the residents. When a developer finishes the last apartment, he or she can high tail it away, leaving the place unfinished. It can be particularly difficult to get them to come back to complete the job.

Residents are suffering, something needs to be done and the Government is addressing this issue. The legislative programme published in early April indicates that the issue of multi-dwelling buildings is being prioritised. The publication of legislation that will establish the National Property Services Regulatory Authority, NPSRA, in this Dáil session is a good thing. There is no doubt that this issue will be dealt with as it is a matter of urgency. As Deputy O'Connor suggested, people face severe financial difficulties as a result of management agents charging huge amounts of money. The NPSRA already has a website that is very informative, helpful and consumer-friendly.

It is ironic that Fine Gael is calling for a statutory footing for the NPSRA when it has already been agreed that this will happen in this Dáil session and when that party has already expressed concerns at the number of quangos. Does Fine Gael favour fewer regulatory bodies or more of them? In my view, the success of the Private Residential Tenancies Board and the need for the NPSRA shows that certain agencies can be effective in dealing with management charges. This will make a substantial difference.

Deputy Thomas Byrne

It is no coincidence Members present represent mainly urban constituencies. Management companies are a problem for new urban areas. I live in a housing estate which comprises more houses than apartments but has a management company. It charges €200 a year to essentially cut the grass and insure common areas. To many this might sound like good value but it is a housing estate where there are no insurance issues and the apartments are treated separately. There is a serious issue in several apartment developments in my constituency and Drogheda where management fees are very high.

The difficulty for many residents is when they attend their management company's AGM they have little power and cannot get information on tendering processes or how, say, an insurance quote was obtained. Answers are very often oblique. I have also noted many AGMs are held deliberately at times that do not suit residents. For example, in one estate with many young couples an AGM was held on Valentine's night. In other cases management agents do not want to be hassled to give information on fees. The proposed property services regulator will play a large role in property management charges, which will be a welcome development.

Residents have responsibilities themselves. I have attended several management companies AGMs and noted attendance was poor. While there are injustices in the system, residents have a duty to get involved as much as possible.

The strike-off provisions in company law are presenting difficulties for people buying apartments. I know of one individual who was about to close a deal when he found out the management company for the apartment had been struck off, making it difficult to complete the transaction. All solicitors acting for purchasers should research management companies on the Companies Registration Office website before contracts are signed.

We do not want a system of privatised taxation which is what management companies are. Where I live, we pay to have the greens cut while in a nearby estate they are cut by the county council. Insurance is not a matter for residents but for the council. I accept different estates have different rules, not always depending on when they were built. Newer housing estates have been exempted from the condition for management companies.

Residents must know the duties and responsibilities of their management company. Constituents often contact me about not being able to get through to their management company on, say, moving an abandoned car. In many cases I cannot tell them if it is their management company's responsibility.

The title deeds on apartments are very complicated and contain extraordinary rules as to what residents can do in their apartments. Most times they are designed for the overall betterment of an estate. However, some rules serve no purpose and are not known by residents. Often a management company will enforce them to residents' annoyance.

Deputy Michael Kennedy

The Dublin North constituency has a large number of apartment block developments. It is essential that in existing developments roads, lights, public open spaces, etc. come under the immediate control of local authorities. The main problem with management companies is that people feel they are paying charges for services that fall under the remit of local authorities.

There must be a clear delineation of the rights and duties of management companies, developers and local authorities. Often areas are part completed and handed over to a management company. In one estate I know, confusion exists over which body has responsibility for a playground. It was a condition of the planning permission for the developer. However, is it still his responsibility or that of the management company or the local authority?

I welcome the Government's commitment to publish the property services regulatory authority Bill. The sooner proper licensing of management agents is introduced, the better. As in any other profession, proper standards are needed and the cowboys that exist in property services need to be routed out.

I hope the interdepartmental group on property services will complete its report at an early date, allowing the House to consider its recommendations when dealing with legislation on management companies. The sooner a chief executive officer designate of the proposed property services regulatory authority is appointed, the better. It will allow us to give clear direction to developers and management companies in the future.

There is an onus on solicitors to point out to potential apartment purchasers the rules and regulations of management companies. Often people are not aware they have signed into a management company and its responsibilities. This must be set out clearly in the proposed legislation.

I also suggest that a separate client bank account for management companies be provided for, similar to those used in other professions. While I am not suggesting management companies are doing anything improper with the fees charged, no one knows where the fees go. The legislation must provide that the money is locked into a client account. This is a cross-party issue with no need for point-scoring.

Trying to compile a proper electoral register in apartment blocks is impossible. Many residents are foreign nationals who may not want to be on the electoral register. Apart from the difficultly of politicians trying to canvass apartments——

Deputy Tom Hayes

Does the Deputy want the keys?

Deputy Michael Kennedy

Deputy Brian Hayes claimed he has the secret. He might pass it over to this side of the House.

Deputy Brian Hayes

I will give it to Deputy Kennedy but not to Deputy O'Connor.

Deputy Michael Kennedy

In my experience it is difficult for politicians to access apartment blocks to canvass.

Deputy Alan Shatter

I wish to share time with Deputies Brian Hayes, Catherine Byrne, Tom Hayes, O'Donnell and Varadkar.

Acting Chairman (Deputy Johnny Brady)

Is that agreed? Agreed.

Deputy Alan Shatter

That the Government has enacted no legislation in this regard is extraordinary. For 15 years, large apartment blocks have been built in cities. They spread throughout Dublin city and county. Limerick, Galway and Cork have experienced this phenomenon, as have other cities and towns to a lesser extent. They have one factor in common, namely, management companies meant to take care of apartment blocks and to deal with services. The manner in which this matter has been dealt is disgraceful.

Too frequently and for too long, management companies have been controlled by apartment developers. They view the companies not as providing a service to those to whom apartments have been sold, but as a means to rip them off. They fail to provide essential services and when management companies controlled by developers get around to holding annual general meetings, they try to hold them at times and locations that render attendance impossible for 95% or 100% of apartment owners. The management company of an apartment block called Parkview in Stepaside in my constituency decided to hold its AGM at 7 p.m. on a weekday in a hotel in the city centre, knowing full well that it would be impossible for working residents to attend. I do not know how many appeared, but I would be surprised if it was more than six.

That there has been no legislation to date is scandalous. I have listened to other speakers' comments. Every Deputy has been the recipient of complaints from people who found themselves helpless when confronted by management companies. Agents appointed by developers to run management companies become the developers' playthings. If the developer is involved in a variety of developments, the agent knows he or she will get further fees from running management companies if he or she does what the developer wants. If the developer does not like what the agent is doing, the agent will be sacked.

With the exception of those controlled by apartment purchasers, management companies comprise the new feudal landlords of the 21st century and regard themselves as lording it over those who have had the misfortune to purchase apartments without an understanding of how the companies operate. This past week saw the extraordinary event of a developer advertising new apartments for sale and, to ensure visitors purchased new apartments rather than second-hand apartments, arranging through a management company for notices advertising apartments for resale to be taken down. The company regarded itself as free to remove the "for sale" signs. According to the lease terms, the permission of the management company was necessary to erect signs. On the basis that no one was aware of this requirement, the company sent in a crane and men climbed up it to remove the "for sale" notices. It is a disgrace.

The other matter of concern for which management companies and local authorities bear significant responsibility is that of visitor parking. I wish to sound a note of caution to anyone intending to buy an apartment anywhere. The first question should not be about what parking is available to owners, the answer to which will probably be a single parking space. Rather, the first question should be about visitor parking. A development of more than 650 apartments in my constituency has only 24 visitor parking spaces. Local authorities should be conditioning apartment developments to provide sufficient parking to facilitate visiting families and friends. Some are not doing so on an ideological basis of which the Minister for Communications, Energy and Natural Resources might approve, namely, to encourage the use of public transport over private transport. It is a fantastic theory, but it does not work with a lousy public transport system, which might not even exist in some of the areas in question. Before we adopt an ideological theory in which people will be forced Soviet-style to use public transport, we need a public transport system that will take people to where they want to go. For example, if one lives in Dundrum, Stillorgan or Rathfarnham, one may not have regular access to a bus service to visit friends or relatives in Stepaside. The Dublin local authorities — I single out the authority with which I am familiar, Dún Laoghaire-Rathdown County Council — have much to answer for in allowing large apartment developments without requiring that parking spaces be put in place.

There is an arrogance on the part of developers who do not tell purchasers about available visitor parking and pretend it will be adequate. When people buy apartments, they tend to consider the general road infrastructure in the vicinity and presume the availability of a reasonable amount of visitor parking. The developer does not inform them that, once all the apartments have been sold, double yellow lines will be painted along the road sections not specifically set aside for parking spaces. This was done by a developer in the Stepaside area. A passing garda who did not know better gave everyone parked on the double yellow lines tickets. It took my intervention to discover that the local authority and Garda had not sanctioned the lines — it was a unilateral act on behalf of the developer or management company — and to communicate with the Garda, not just to cancel tickets, but to refund those who had paid. It is not good enough that people find themselves living in these circumstances.

Having watched the debate on television in my office and read the Ministers' scripts, I am not happy. The Government has made a series of promises to the effect that it may legislate after the Law Reform Commission publishes its final report. I know what happens to those reports. Approximately 50 LRC reports are gathering dust in various departmental offices. If the drafting of the required legislation has not commenced, the likelihood of the LRC report producing legislation this year or next year is between zero and minus 1,000. Will the Government explain why no Bills have been drafted and published despite the original consultation paper? The matter might be complex, but it is not rocket science. The lives of tens of thousands of people are being diminished. They paid too much for poorly constructed apartments and local authorities failed to ensure proper conditions were imposed in terms of noise pollution and visitor parking. The least the Government could do is to provide protection against cowboy management companies controlled by developers diminishing further the value and enjoyment people get from their properties.

Deputy Brian Hayes

In the past five years, I have held five public meetings on this issue in my constituency. Most of the ordinary people who attended asked the most pertinent question, namely, why is it that their Government, this Dáil and the people they elected to do their bidding have not devised a legislative scheme to place a framework around this legal and political mess. I could not answer the question because the Government does not know what it is doing.

It has no plan to deal with this issue. There is no road map to a solution even though the issue first arose on the political agenda about six years ago.

Complaints are often made about the appalling situation that pertains to ground rent. People living in parts of my constituency are supposed to pay an annual rent to absentee landlords who have titles of ownership dating back several hundred years, although many refuse. Management companies are the modern equivalent of ground rent. Shame on the Government for allowing this issue to develop under our noses over the past ten years without any political or legal response.

Why do local authorities make it a condition of every application for residential developments that a management company is put in place? They are continually withdrawing essential basic services from householders. This problem particularly affects my constituency, where 10% of all households have to pay substantial sums of money to management companies in the complete absence of a legislative framework. It is a scam from start to finish. Often, the only way young couples can get a mortgage is over a 30-year term. Many are faced with negative equity and now they discover they have no control over this new tax levied on them by an unaccountable management company.

Some colleagues have suggested that a way to resolve this is by giving more power to residents to attend meetings and take responsibility. At a recent public meeting which I organised in an estate in Ballycullen in my constituency, the success of one resident in reducing charges for the year by taking control of the local management company was discussed, but everyone else at the meeting came to the conclusion that they did not want to undergo the hardships involved. These were working people, with better things to do with their lives than organise management companies or take responsibility for the maintenance of estates. Those who believe a huge body of ordinary people want to take control of these matters should be warned that a lot of work is involved in rooting out bad companies and replacing them with agents. Therefore, I caution people about suggesting that the political support exists for such a change.

Much of the responsibility lies with local authorities. Councillors should demand to know why new applications carry conditions of subservience to management companies. The issue has to be addressed through legislation. The Government's response has been pathetic and the new framework announced by the Minister for the Environment, Heritage and Local Government, Deputy Gormley, gives little confidence to the people who are left in this situation. Action was needed five years ago and even if new legislation is put in place quickly, it may not have a retrospective effect on existing housing stock.

Deputy Catherine Byrne

I support this Fine Gael motion because it highlights the unacceptable situation whereby many people living in apartments and housing developments are burdened with spiralling management fees and receive little in return. The lack of accountability among property management companies and agents needs to be urgently addressed, particularly in light of the current economic climate.

In my constituency of Dublin South-Central, apartment complexes have become part of the skyline in recent years. These apartments have afforded many young people the opportunity to get their feet on the property ladder. The affordable housing scheme has also enabled young people to purchase apartments in the city which they might otherwise not have been able to afford. At present, 8,500 people are on Dublin City Council's affordable housing list. However, the council has suspended this list because demand exceeds supply and people who have managed to buy under the scheme are faced with rapidly increasing management fees. In that context, I would like to know what is affordable about this scheme.

In many cases, management companies are controlled by developers and residents have little or no say, despite the fact that the overall aim of such companies is that property owners run them. This area is filled with confusion and there is a real need for clarity, especially in regard to issues such as maintenance, upkeep and waste management. Although management fees often start at approximately €1,000, they vary widely and can increase from year to year. I recently met a young couple who bought into an affordable housing scheme but are now being billed €3,000 for this year's management fees without any justification for the increase. Residents of apartment complexes feel they are being held to ransom because they are legally obliged to pay management fees even though there is no obligation on management agents to account for the money they collect. In some cases, residents have come together to agree affordable increases with management agents and have even reduced their fees, which represents a step in the right direction.

I recently met a young man who had been awarded a service contract in an apartment complex, but unfortunately he has had to pull out of the contract after waiting three years for payment. This is another example of the lack of accountability in this area.

The absence of legislation to properly regulate management companies only makes matters worse. The Government established the National Property Services Regulatory Authority in 2005, a director was appointed in 2006 and staff of the authority occupy offices in Navan. It was allocated a budget of €700,000 for 2007 and €930,000 for 2008 but the director and staff are sitting idle because the legislation which will give it the power to operate has not yet been brought before the Dail. It is time to enact this legislation to give people an opportunity to have their say in where they live and what they do.

Sinking funds are needed to address issues as they arise. In one such issue in my area, young people who had just moved into an apartment complex had to pay €2,500 for repairs after a series of break-ins. Residents have described serious deficiencies in personal security provisions such as CCTV, poor security at entrance points and even a lack of adequate fire escapes.

Reforms are urgently needed and I call on the Government to regulate management companies without further delay. Apartment owners have been left at the mercy of management agencies for too long.

Deputy Tom Hayes

I commend Deputy Hogan on moving this Private Members' motion. Legislation is urgently needed on the issue of management companies. While the problems are particularly serious in Dublin, they have also affected bigger towns throughout the country in recent years. In many villages, expanding housing estates give rise to management committee issues. A debate is needed in this House on legislation that will adequately alleviate the problems experienced by owners when they purchase apartments and houses. Some of these are first-time buyers and some are in rented accommodation. These people need the protection of legislation, which must be put in place.

Management committees or personnel are put in place who know nothing about the particular area of which they are in charge. I know of one instance in my constituency where there are very expensive payments to the committee but people are not getting work done simply because the people in charge have no local knowledge. That is a most important factor. It should be laid down in legislation that people in these positions should have local knowledge of the whole community. I urge the Government to wake up to the fact that there is a real problem out there for people. There is a concern and fear in this regard because people have commitments, including financial commitments. We must debate the matter. The local authority should be listened to and members of the local authority should make it accountable. That is another significant factor. We need debate followed by legislation. It is a real fear and the Government has hidden from the issue while doing nothing. This Private Members' motion may do nothing but ensure we pass relevant legislation in the near future, and I hope that happens.

Deputy Kieran O’Donnell

I support this Private Members' motion brought before the House by Deputies Phil Hogan and Terence Flanagan. This issue is nothing new and has been going on for the past ten or 15 years. My colleagues have dealt with the position on the ground. I recommend that a few practical measures be put in place. The type of structured company which needs to be put in place is a company limited by guarantee without having a share capital. Many management companies are being established as companies with share capital. A simple structure would be a company limited by guarantee without share capital, which would ensure an equal vote.

It is absolutely critical for legislation to be brought before the House to put in place structures that would ensure a smooth transition to owners of the apartment blocks within a short period after the development is completed. The current process will probably be a feature in future whereby some developments take a long time to complete and it could be a number of years before responsibility is handed over to the owners of the apartments.

There must be a clear undertaking from developers that they will explain to people who own apartments their duties when they take over management of the company. A few practical measures should also be put in place. For example, the annual general meeting should be set for a specific date and management meetings should be held at regular intervals so people within developments are aware of the funding involved and how much it costs. In addition, service charges should be explained so people know exactly what they are getting into.

Sinking funds are nothing new but they have never been enforced. The purpose of a sinking fund is to ensure provision is made for the upkeep of communal areas. In many cases, the option was not taken up and the areas run into disrepair. This must be explained.

The key element is proper legislation, which should be brought forward. I heard the Minister, Deputy Dermot Ahern, speaking earlier about changing the rules in terms of filing returns with the Companies Office. This should be considered carefully as currently lay people are taking over the running of management companies. They spend their time chasing down the developer to take over the running of the company. The requirements with regard to the Companies Office are not explained, and when they find themselves as directors, they are not able to meet their deadlines. I welcome the measure outlined by the Minister but the system must operate practically.

We need legislation as a matter of urgency and it must be debated. A key element is for people to be made aware by developers of exactly the type of apartment being bought and their duties. A series of practical measures should be introduced to let owners know what they are paying for. If people were aware of the work being done based on the contribution to management companies, the majority would agree with it. Currently, nobody is being held accountable.

Deputy Leo Varadkar

I support the motion and compliment Deputies Phil Hogan and Terence Flanagan on bringing it forward. I also thank my colleagues for allowing me to eat into their time. This is a very important issue, much more so than most of the political establishment believes. It affects 500,000 people, both homeowners and landlords. Some 4,000 units in my constituency of Dublin West are controlled by management companies and probably inhabited by approximately 12,000 people. Another 3,000 such units are planned.

I am affected by this in that I am a member of a management company and I pay a management fee. Thankfully, I am in a position where the owners control the management company, although it was not easy to take it over. I am happy to pay the fee — approximately €1,200 per year — for the service I get but that is only because I am a member of the group which controls it and decides what the money is spent on. If we want more, we pay more and if want less, we pay less.

We all accept there must be management companies in apartment buildings, although the concept is not confined to them. For houses and mixed developments the idea is more complicated. I heard the comments of Deputy Ciarán Lynch of the Labour Party, which I almost entirely agreed with, except for the proposal that management companies be banned from housing estates. I do not agree with that as some people want management companies in housing developments.

There are two examples in my constituency, Hollystown and Summerton, which the Minister will be familiar with and which are controlled by management companies. The people there very much want to have their landscaped lawns, gates and so on, and they should be allowed to have them. This is not a communist country and people should not be prohibited from having a management company should they so wish. That is not the case for the vast majority of people who are subject to management companies.

There are a few major problems and it is important we address them. It is not the case that most management companies are controlled by owners. In my constituency, for example, Menolly Homes, and Mr. Seamus Ross in particular, are developers well known to the party opposite. It writes into its memorandum and articles of association that the developer has 1,000 votes, with others having one vote per apartment. Another developer well known to the party opposite writes into the——

Deputy Brian Lenihan

Is there an insinuation in the Deputy's statement?

Deputy Leo Varadkar

I will get to that. The developer writes into the provisions that there cannot be an annual general meeting until all units are sold, and then holds on to one unit. As another example, the developers Kimpton Vale, which gave a €2,500 political donation to a Member opposite, aside from knocking down a listed building in another constituency, has——

Deputy Brian Lenihan

Is the Deputy suggesting that was an improper payment?

Deputy Leo Varadkar

I am not, I am suggesting it is declared but there is an improper relationship between the party opposite and some of these development interests. With that particular donation——

Deputy Brian Lenihan

In that regard, what exactly is the Deputy alleging?

Deputy Leo Varadkar

The Minister should ask his colleague to return the donation.

Deputy Brian Lenihan

I am not aware of who he is.

Deputy Leo Varadkar

It was published in The Irish Times.

Deputy Brian Lenihan

I am not aware of who he is.

Deputy Leo Varadkar

It is wrong of the Minister's colleague to accept a €2,500 donation from a company like Kimpton Vale. It is absolutely wrong. If the Minister had any decency, he would ask his colleague to return the donation.

Deputy Brian Lenihan

I suggest the Deputy raise it with the appropriate Member.

Deputy Leo Varadkar

I will. To move on, there is an issue of the areas taken in charge. There are cases in some instances where maintenance of parts of a development which will be taken in charge is paid for by the management company in the meantime. With another well known development company, even though the management company is up and running, the title of the common areas has not been transferred to the management company. In effect, the management company is looking after land it does not own and people are paying for that.

I am very disappointed with what I have heard from the Government to date. Everything I heard today from the Minister, Deputy Dermot Ahern, I heard before by way of parliamentary questions from the Minister opposite or in previous debates. We saw the report of the Office of Corporate Enforcement, as well as a report from the National Consumer Agency and an interim report from the Law Reform Commission. This has been ongoing for six years and I do not have confidence that the Government takes the issue seriously or will introduce legislation.

I guarantee the parties opposite, including the Green Party and Fianna Fáil, that this will be a significant campaign issue in the run-up to the local elections. If legislation is not in place and implemented by then, the parties will pay for it.

Minister for Finance (Deputy Brian Lenihan)

The Government is well aware of this extremely serious problem, which affects many individuals who live in multi-unit developments or the more traditional mixed developments to which Deputy Varadkar referred. The Government is very concerned about this matter.

I welcome the tabling of this motion by Fine Gael because this debate has placed a focus on an issue that was of great concern to me during my time at the Department of Justice, Equality and Law Reform. The original motion outlines various specific issues, all of which are dealt with in the consultation paper published by the Law Reform Commission. It was envisaged at the time of the publication of this paper that a final report, in which detailed proposals for the Government in respect of this matter would be contained, would be prepared by the Law Reform Commission. I am sorry that this report has not yet been received. I understand that it will be forthcoming in a number of weeks.

The Government decided to establish a high level Cabinet sub-committee, the membership of which comprises the relevant Ministers with responsibility in this area, to commence work on this subject prior to the publication of the Law Reform Commission's final report. The Law Society put forward an extremely detailed submission to the Law Reform Commission in recent weeks and the latter has delayed its final consideration of this matter pending its examination of the views of the former.

Anyone who examines this area will discover that it is an extremely difficult one in respect of which to legislate. The core difficulty is that the purchasers of these units, regardless of whether they are located in multi-unit, single or mixed developments, entered into binding contractual commitments in respect of the management of their estates. These people are, therefore, locked into arrangements as a matter of private law. It is always difficult to legislate in such circumstances.

Many of the abuses in this area have been outlined by previous speakers. I do not intend to add to the record save to say that I have witnessed and have experience of many of those abuses.

One of the major difficulties in this area is that when a purchaser is put in possession of property, he or she is not placed in an immediate position to exercise his or her rights in respect of their management company. The effective control of these properties rests with the developers long after it should be passed on to the purchasers. The Law Reform Commission intends to bring forward proposals in respect of this matter.

One of the reasons an interministerial committee is required to investigate this matter is that the changes relate not just to property law, but also to company law. In such circumstances, interlocking legislation will be required to deal with the company and property law implications attaching to these developments.

In the context of company law, a specific type of company will be required in respect of the developments to which we are referring. We cannot continue to operate the traditional bells-and-whistles company law model with regard to this type of arrangement. A specific type of company will, therefore, have to be devised.

I look forward to the publication of the final report of the Law Reform Commission because it will provide a template upon which the Government can take urgent action in respect of this matter. There is no doubt that such action is required. We will, however, encounter difficulties regarding those purchasers who have locked themselves into binding legal arrangements. We are not merely discussing a practice that can be varied; we are referring to legal rights and entitlements that have been arrived at by the vendors and purchasers of properties.

As Deputy Varadkar quite fairly acknowledged, there are instances where management is desirable and not just in the context of multi-unit developments. There are some purchasers who want gated developments and who are themselves happy to provide services. If they are so minded, I have no objection to their doing so and the State should facilitate their wishes. There are, however, many people who have experienced difficulties with management companies. In that context, we must consider the issue of corporate compliance and the level of such compliance to date.

The legislation relating to property management agents, which is with the Parliamentary Counsel, is overdue. I decided to proceed in any event with the establishment of the interim board. I accept the fact that it does not have legal powers but it is better that it is commencing its work now rather than being obliged to wait until after the establishment of the authority. The classic model is that the House establishes an authority and then implements it a few years later. At least the regulatory authority for property services is starting to operate in Navan. In time, legislative provision will be made that will allow it to make more effective decisions.

Deputy Pádraic McCormack

I wish to share time with Deputies Clune and Hogan.

The problem relating to management companies is ongoing. I raised it with various Ministers in the past three years and matters have not moved on in that time. I tabled a parliamentary question to the former Minister for the Environment, Heritage and Local Government, Deputy Roche, on Tuesday, 27 June 2006 and I received a reply which stated: "In late 2005 I requested that a survey be carried out of planning authorities regarding their policy on attaching planning conditions relating to management companies." The then Minister indicated that he received replies from 90% of local authorities. I made further inquiries a year later and discovered that, much to my embarrassment, the Department had not received replies from Galway City Council and Galway County Council.

Members on all sides have referred to the difficulties experienced in respect of management companies running apartment complexes. In Galway, many such companies have been appointed to run conventional housing developments. For example, I am aware of a development of four detached houses in a particular area of Galway and another of 38 houses at Clybaun Court, Knocknacarra — 34 of which are semi-detached and four of which are detached — in respect of which the city council stipulated that management companies would have to be established. Despite the fact that some of the residents of the latter estate obtained more favourable quotes in respect of maintaining grass verges or whatever it is management companies do, it was not possible to replace the management company that had been set up. Some of the directors of that company are employees or have connections to the construction company that built the estate. Everything is nicely tied up and it does not seem possible for the residents to extricate themselves from this arrangement.

I also raised this matter on the Adjournment on a previous occasion and the Minister stated: "On 25 January 2006, my Department issued circular letter PD 1/06 reminding local authorities of their obligations under section 180 of the Planning and Development Act 2000 regarding taking in charge of estates." However, nothing has been done in the interim. Commitments were made in respect of this matter in the programme for Government agreed in 2002. Again, however, action has not been taken.

I welcome the fact that the Ministers for Justice, Equality and Law Reform, the Environment, Heritage and Local Government and Finance have contributed to this debate. Fine Gael is honoured that three such prominent Ministers have come before the House to address the motion. I cannot recall a previous occasion on which three of the most senior Ministers in Cabinet addressed a Fine Gael Private Members' motion. Perhaps an advance of sorts, under which greater responsibility will be placed on Ministers, is being made at the behest of the new Taoiseach. Usually a Minister of State or someone who has no connection to the relevant Department is sent to the House to deal with matters of this nature.

An Leas-Cheann Comhairle

Ministers of State are in scarce supply at present.

Deputy Brian Lenihan

There is a shortage of them.

Deputy Pádraic McCormack

Management companies set up by developers are charging apartment owners anything from €450 to €2,000 per year in fees. The Minister for Finance stated that such owners have entered into binding legal arrangements. I am aware of instances where management fees were imposed in apartment complexes and where now, three to five years later, such fees are also being imposed in respect of car parking facilities. I do not know how it is possible to charge tenants who purchased car parking spaces €70 to €90 in management fees. These people were not told that such fees would be imposed when they originally purchased their apartments.

I am delighted the Minister is taking this matter seriously, particularly in light of the upcoming local elections. From previous experience, however, I am sceptical that the legislation necessary to deal with this matter will be introduced. I could not discover from Galway City Council, despite making four or five phone calls between 9 a.m. and 1 p.m. today, whether it is continuing to impose planning conditions which stipulate that management companies must be established in respect of conventional housing estates. I suspect, however, that the practice is continuing.

Deputy Deirdre Clune

I thank Deputy Phil Hogan and Deputy Terence Flanagan for putting down this motion, which concerns a very relevant and real issue in terms of how people in modern Ireland are living. I notice the new Taoiseach referred yesterday to young people and how he wants to make politics relevant to them. If the Taoiseach could ensure that the items outlined in the motion were implemented, this would certainly make politics relevant to young people.

It is estimated that 500,000 people live in apartments or mixed complexes, whether of duplexes or townhouses. Many of them face difficulties in the areas in which they live. In many cases they purchased during the property boom, with units being bought off the plans as they queued up to put down a deposit. They never really thought of the consequences regarding the management of the open spaces, lifts, car parks and gates within the complex. For many residents, the situation has become a living nightmare. They have seen the appearance of their homes and neighbourhoods deteriorate. Nobody is in charge and people who have contributed to management fees or service charges do not feel they are getting fair representation. Some people opt out of a payments scheme and do not pay so the burden falls on others. The situation is a complete mess and a nightmare for these people. It is important for all of us living in urban areas to ensure that complexes are well looked after and maintained. They could be a blot on the landscape for us all.

Anyone who has served on a local authority, as I have, will know of the changes to density guidelines that were issued through the Department of the Environment, Heritage and Local Government, particularly for urban areas, which have seen a huge increase in apartment-type complexes and apartment living for individuals. When transport links were established, such as the Luas in Dublin, there was a proliferation of high density accommodation near those links. In Cork, the Cork to Midleton railway line is under construction and will attract high density living due to the proximity of the transport link.

If we want to ensure this type of high density living works for people, we need to introduce legislation and structures which will ensure that residents who buy into these complexes have assurances they will be managed and that the management structures will work. The National Property Services Regulatory Authority was established in 2005 but, three years later, it still has not been put on a statutory footing. The minimum we need at this stage is that it would be given the powers to do what is necessary.

Many of us have constituents who contact us about the frustrations they are experiencing in their areas. Management companies are not finishing off estates or complexes, or are holding onto one final unit in the hope that they will then be able to expand into an adjoining field. In such cases, the management structures can fall apart because of a loophole or because the last piece of the jigsaw has not been put in place.

The problems have been highlighted not only in the House, but by the National Consumer Agency, the Director of Corporate Enforcement, Dublin City Council and the Law Reform Commission. People are screaming out for support and a legislative process to which they can turn. I appeal to the Minister and the Government to adopt the policies proposed in this motion and give those young people an opportunity to live in comfort. More importantly for all of us, as we are developing urban landscapes, we must ensure it is done properly. This is about the future of our cities.

Deputy Phil Hogan

I thank the speakers who took part in the debate. Many Deputies gave their constituency experiences with regard to how major an issue this is, particularly in large urban centres. As some speakers noted, it is a growing phenomenon throughout the country, particularly with recent large-scale urban developments in the commuter belt and further afield.

I thank the Labour Party for supporting the Bill. I cannot support the Sinn Féin amendment because I have no confidence in the local authority system to deal with this issue at present. My experience is that local authorities have great difficulty taking estates in charge, in spite of the legislation. They do not want to take them in charge because it will cost them money. While that is not an excuse for local authorities not doing their business properly under the Act, it is the reality and the way things work in the local government system. People should be entitled to organise their own affairs and take responsibility for their own complex, but to do so in a way that is properly regulated and underpinned by a base of primary legislation.

I acknowledge what the Minister for Finance, Deputy Brian Lenihan, has said in this regard. I also congratulate him on his appointment.

Deputy Brian Lenihan

I thank the Deputy.

Deputy Phil Hogan

I acknowledge that there is a legal quagmire but we need to resolve this issue. Cross-departmental requirements that are in place are well understood but what is frustrating people, and what motivated Fine Gael to put down the motion, is that it has taken so long to try to resolve the issue. It was in the 2002 programme for Government. Things work slowly in this country at times but I hope they would not work that slowly for all things. Six years is long enough. It is the frustration at the lack of action that motivated this motion.

I acknowledge that the Government has done its best to try to come to some kind of universal view in its amendment. Nevertheless, regrettably, we feel we must divide the House on what is an important issue for many people because we want to create more urgency about the situation.

A couple of Law Reform Commission reports considered the issues. I hope the information from the commission, which the Minister made available to us, will not provide another excuse for dragging matters out and that the commission will come up with recommendations and publish them at the end of May, which was the indicative date given to us. While that date might be optimistic, we would like to see the legislation published, certainly before the summer. If the Government could tell the House the legislation will be published before the summer recess, it would be a move in the right direction but I feel it is not such a position considering what the Minister, Deputy Brian Lenihan, had to say today.

In some cases people have suffered a degree of extortion from irresponsible developments and management companies that were established on a willy-nilly basis, without being underpinned by law. This is part of the reason many of our constituents contact us about this problem. We have waited long enough. The genesis of the issue was an allowance in the Planning and Development Acts that management companies were to be established without the basis of law, including company law.

Many people are left in a legal limbo. When they engaged in such an important financial transaction, they should have been properly advised by their legal advisers and mortgage providers about the cumbersome nature of dealing with these issues. The National Consumer Agency has a booklet about their obligations which should be made available to every purchaser by the legal profession or mortgage provider. In many instances they need to have their eyes opened to some of the difficulties that may emerge in the context of organising a management company.

I thank all speakers for their contributions to this important debate. I hope it will give a sense of urgency to the Government to move more quickly than it has in the six years to date. Accordingly, I put the motion to the House.

Amendment put.

The Dáil divided: Tá, 73; Níl, 58.

Tá

• Ahern, Dermot.
• Ahern, Michael.
• Ahern, Noel.
• Andrews, Chris.
• Ardagh, Seán.
• Aylward, Bobby.
• Behan, Joe.
• Blaney, Niall.
• Brady, Áine.
• Brady, Cyprian.
• Brady, Johnny.
• Browne, John.
• Byrne, Thomas.
• Calleary, Dara.
• Carey, Pat.
• Collins, Niall.
• Conlon, Margaret.
• Connick, Seán.
• Coughlan, Mary.
• Cregan, John.
• Cullen, Martin.
• Curran, John.
• Devins, Jimmy.
• Dooley, Timmy.
• Fahey, Frank.
• Fitzpatrick, Michael.
• Fleming, Seán.
• Flynn, Beverley.
• Gogarty, Paul.
• Gormley, John.
• Grealish, Noel.
• Hanafin, Mary.
• Harney, Mary.
• Haughey, Seán.
• Hoctor, Máire.
• Kelleher, Billy.
• Kelly, Peter.
• Kenneally, Brendan.
• Kennedy, Michael.
• Killeen, Tony.
• Kirk, Seamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lenihan, Brian.
• Lenihan, Conor.
• McEllistrim, Thomas.
• McGrath, Finian.
• McGrath, Mattie.
• McGrath, Michael.
• McGuinness, John.
• Moloney, John.
• Moynihan, Michael.
• Mulcahy, Michael.
• Nolan, M. J.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O’Brien, Darragh.
• O’Connor, Charlie.
• O’Dea, Willie.
• O’Hanlon, Rory.
• O’Keeffe, Batt.
• O’Keeffe, Edward.
• O’Rourke, Mary.
• O’Sullivan, Christy.
• Power, Peter.
• Power, Seán.
• Roche, Dick.
• Ryan, Eamon.
• Scanlon, Eamon.
• Smith, Brendan.
• Treacy, Noel.
• Wallace, Mary.
• Woods, Michael.

Níl

• Breen, Pat.
• Broughan, Thomas P.
• Bruton, Richard.
• Burke, Ulick.
• Burton, Joan.
• Byrne, Catherine.
• Carey, Joe.
• Clune, Deirdre.
• Connaughton, Paul.
• Coonan, Noel J.
• Costello, Joe.
• Creed, Michael.
• Creighton, Lucinda.
• D’Arcy, Michael.
• Deasy, John.
• Deenihan, Jimmy.
• Durkan, Bernard J.
• English, Damien.
• Enright, Olwyn.
• Feighan, Frank.
• Flanagan, Charles.
• Flanagan, Terence.
• Hayes, Brian.
• Hayes, Tom.
• Higgins, Michael D.
• Hogan, Phil.
• Kehoe, Paul.
• Kenny, Enda.
• Lynch, Ciarán.
• McCormack, Pádraic.
• McEntee, Shane.
• McHugh, Joe.
• Mitchell, Olivia.
• Naughten, Denis.
• Neville, Dan.
• Noonan, Michael.
• Ó Caoláin, Caoimhghín.
• Ó Snodaigh, Aengus.
• O’Donnell, Kieran.
• O’Dowd, Fergus.
• O’Mahony, John.
• O’Shea, Brian.
• O’Sullivan, Jan.
• Penrose, Willie.
• Perry, John.
• Quinn, Ruairí.
• Reilly, James.
• Ring, Michael.
• Shatter, Alan.
• Sheahan, Tom.
• Sheehan, P. J.
• Stagg, Emmet.
• Stanton, David.
• Timmins, Billy.
• Tuffy, Joanna.
• Upton, Mary.
• Varadkar, Leo.
• Wall, Jack.

Tellers: Tá, Deputies Pat Carey and John Curran; Níl, Deputies Paul Kehoe and Emmet Stagg.

Amendment declared carried.

Motion, as amended, put and declared carried.