Thursday 18 September 2008

Apartment owners face huge long-term costs created by council's design demands

'A service charge time-bomb' awaits apartment owners because of a requirement to minimise the number of units per floor served by each lift

APARTMENT DWELLERS in Ireland are being "burdened with horrific long-term costs" because of the way buildings are designed and built here, according to Miles Byrne, of Boston-based property company Corcoran Jennison Inc.

In particular, he singles out a requirement to minimise the number of units per floor being served by each lift as "planting a service charge time-bomb that's going to explode in 20 years time" when all of the lifts would need to be replaced with new ones.

"We estimate that lift-related expenses add €9.23 per sq m (85 cent per sq ft) to the annual service charges for each owner. In total, the average 70sq m (753sq ft) two-bedroom apartment owner will be required to pay €646.27 per year for the proper maintenance and upkeep of the lift," he said.

This would cover the "bare minimum" of quarterly inspection by a qualified technician, insurance cover to protect against mechanical failure, a sinking fund to cover motor and cab replacement and a monthly service contract providing "on-call emergency services 24/7".

In a detailed critique of Dublin City Council's "sustainable" apartment design standards, submitted to senior council officials last May, Mike Corcoran (son of company founder Tom Corcoran) is scathing about the way in which many apartment schemes are managed and maintained.

"Broken hallway light fixtures, graffiti-tagged and damaged lift cabs, stained walls and entrance floors, broken fire alarm panels, vandalised mailboxes and the accumulation of uncollected trash - all of which draw compelling attention to a decline in the quality of life in these properties."

Corcoran's critique claims that Dublin's "profit-driven approach pre-destined the capital asset to precipitous decline the very day the management company is handed over to the resident committee and the developer redeploys all manpower resources to pursue the next business opportunity".

It blames planners and architects for failing to provide "rudimentary infrastructure" for sustainable housing.

"How, for example, would a planner expect a property to be managed without first providing a management office or a maintenance supply and repair room? Most new developments have neither."

Saying design and estate management must go hand-in-hand, Corcoran wrote: "Far too much emphasis is placed on fine distinctions such as units per lift, dual aspect and minimum sq metres per unit size. Virtually nothing is written about how these complex properties are to be managed once they are built and occupied.

"DCC would do well to publish the percentage of units built in the last six years that are owner-occupied versus investor-owned and rented," he suggested. "It is our experience that newly-built market units are predominantly investor-owned and, as such, are in fact 'rental' properties require more day-to-day attention.

"One unintended consequence of Section 23 incentives has been the very high number of investor absentee landlords that, in actuality, are destabilising their investments by removing themselves from the day-to-day concerns of the property.

"Most are serial investors who never come to know their tenants by name."

Typically, three-bedroom "family-type" apartments were being bought by investors. These were more likely to contribute to high footfall traffic in the building, have more frequent complaints of noise and "a higher degree of transients caused by multiple roommate configurations driven by cost considerations instead of lifestyle".

The Corcoran Jennison document argued that limiting the amount of one-bedroom units in an apartment scheme to 20 per cent of the mix, as laid down in the latest design guidelines, was "unfounded and irrational. This policy is contrary and unsupported by any demographic study done in Ireland in the last decade."

The company is already involved in managing a number of schemes in Dublin, including Longboat Quay in Docklands and Santry Cross near Ballymun. In each case, its policy has been "totally open and transparent", producing a detailed annual budget "showing where every cent is spent", as Miles Byrne put it.

The Irish Times

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