Tuesday 24 February 2009

Owners subsidising developers, says council

APARTMENT OWNERS are being forced to subsidise developers who refuse to pay property management fees for their unsold units, Dublin City Council has said.

Management companies were collapsing and individual apartment owners were facing spiralling property management costs because of the failure of developers to pay fees for apartments they have been unable to sell.

The problem was worsening, the council said, because of the increasing numbers of unsold units in new developments, and because of a lack of legislation covering the area.

In some cases, developers had taken advantage of the legislative vacuum to write discriminatory clauses into the legal documents signed by purchasers, exempting the developer from paying management charges on unsold units. In others, the developers were simply refusing to pay, the council said.

One developer of a large complex stopped work at Christmas, leaving three blocks of apartments unfinished. One-quarter of the apartments in the finished blocks remained unsold. The developer is not paying the development charge for the unsold units and the owners of the remaining apartments are expected to pay the full charge while living in an unfinished complex.

“Developers are behaving like feudal lords. The odds are stacked against the owner,” said Evelyn Hanlon, senior executive officer with the council’s housing division.

“The people occupying are having to pay for the whole of the complex. If there are 100 apartments but only 70 occupied, the whole fee remains the same but it’s borne by fewer people,” she said.

In recent years, apartment owners had begun to accept management companies were necessary to ensure repairs took place and common areas were looked after, Ms Hanlon said.

However, the economic downturn made people more reluctant to pay charges, particularly when they were left living in unfinished estates or when they perceived they were being asked to pay more than their fair share.

A further problem was that developers were excluding owners from having a role in management companies through legal contracts stating that control of the management company would not be handed over until the entire estate was finished and sold.

There were cases where owners were refused permission to attend the management company agm by the developer, Ms Hanlon said.

In 2006, the then minister for justice Michael McDowell launched a consultation process on multi-unit development.

Last June, the Law Reform Commission’s report recommending the introduction of legislation for the area was published, but Ms Hanlon said there has been no information on when a Bill will be published.

“There is no legislation supporting apartment dwellers and it is making living in apartments unsustainable,” Councillor Kevin Humphreys (Lab) said.

If the property management companies were allowed to collapse, people would be left without basic services, said Councillor Seán Kenny (Lab).

Irish Times


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