Multi-Unit Developments Bill

McSpud

Irish Times

Home owners who live in apartment blocks or in small housing estates will gain substantial improvements in their legal protection as a result of new legislation that has been published today.

The Multi-Unit Developments Bill was announced at a press conference by the Minister for Justice Dermot Ahern and the Minister for Environment John Gormley at Government Buildings this afternoon.

The legislation will primarily tackle the situation where developers have dragged their heels in handing over common areas of the complexes to the owners collectively. And in some cases, owners have had limited, or no proper, say in the property management companies that manage apartment blocks or estates.

Another new requirement will be a minimum contribution of €200 per unit for a sinking fund to meet any large and non-regular costs. The sinking fund makes the financial aspects of maintaining an estate smoother and easier, said Mr Ahern yesterday.

While I agree with the general tone of that legislation as someone who used to sit on the board of a Management Company the E200 per unit sinking legal requirement is unecessary & will tie the hands of the boards. Once the residents have control of the board they should be entitled to make their own decisions about sinking fund charges..

Borzoi

McSpud wrote:

While I agree with the general tone of that legislation as someone who used to sit on the board of a Management Company the E200 per unit sinking legal requirement is unecessary & will tie the hands of the boards. Once the residents have control of the board they should be entitled to make their own decisions about sinking fund charges..

Hardly, most established developments would have larger sinking funds anyway to deal with painting, renewing gates, etc.

I think at the early days this would be good because while the developers are in charge the sinking funds tend to be miniscule

McSpud

Borzoi wrote: »

Hardly, most established developments would have larger sinking funds anyway to deal with painting, renewing gates, etc.

The problem is they are setting a minimum for all developments including small ones. If the annual fee is E800 then E200 at 25% is excessive.

Our complex has approx E1500 annual fees for apartments & even at E200 a year per unit would mean over E300k sinking fund for the apartments alone since the complex was built. There is no chance could ever use that money as it E1500 a year ensures very good maintenance. Painting will be required soon but would make very small dent in the fund.

Developers will have to hand over control from the start now so no chance of small contributions to the fund.

antoinolachtnai

I don't know. 200 euros/year for 40 years is only 8000 euros per apartment. (Let's assume that the interest generated is only equal to the inflation in the meantime.)

A block in Rathmines that was about 40 years old recently required upgrading of the heating system, lifts, windows and other minor works. It cost around 40k/apartment. There was no sinking fund. There was war, as you can imagine.

There is an apartment development in the Sandymount area where it was proposed to build an extra storey and use the proceeds from the new apartments to refurbish the rest of the building. Again, some people weren't that happy about the idea, but there were very few funding options available.

300k doesn't go that far on a multi-unit refurb project.

The_Conductor

McSpud- EUR800 a year for a management charge is set at far below the going market rate- its impossible that sufficient provision is being made for the sinking fund- and ultimately it could be argued that the directors are trading in a reckless manner (even if they are owner volunteers), and there could be considerable legal consequences for them.

Setting a min 200 a year for the sinking fund is prudent- however good financial practice would dictate a significantly higher contribution necessary.

I support this provision of the bill- however there are other aspects that require further study.

markpb

Don't forget there are lots of management companies who's only members are houses so there'll be little or no service charge other than grass cutting. Adding €200 per year to their sinking fund won't achieve much.

However, this is a niggly point - the rest of the legislation is fantastic and goes much further than I ever expected!

antoinolachtnai

Hey, I wouldn't go too hard on MrSpud. As well as being masters of fiscal rectitude, his directors may have a relatively small amount of common area to deal with, and it may be the situation that a lot of the cleaning, etc. outside of units is required to be taken care of by residents themselves.

bobbysands81

This should be useful to some on here.

It seems that it has only gone through the first stage of the Seanad, so it still has other stages (Second, Committee) to go before it goes through the Dail. Changes can still be made before the "law" becomes enacted so if you see things in the Bill that you completely disagree with then get in touch with your local senator/TD and see can you get changes made to it whilst going through the various stages of the Seanad/Dail.

http://www.oireachtas.ie/documents/bills28/bills/2009/3209/b3209s.pdf

RATM

bobbysands81 wrote: »

Changes can still be made before the "law" becomes enacted so if you see things in the Bill that you completely disagree with then get in touch with your local senator/TD and see can you get changes made to it whilst going through the various stages of the Seanad/Dail.

http://www.oireachtas.ie/documents/bills28/bills/2009/3209/b3209s.pdf

Very good point because you can be sure that developers are going to be lobbying like hell to get the bits that don't suit them dumped out of this bill.

It'll be interesting to see how watered down it becomes before it makes it onto the statute books.

Paulw

Looks like a very strong and very good bill. I hope very little is changed. Maybe the manditory €200 per unit sinking fund can be a bit much, but I can live with it if necessary.

The_Conductor

Paulw wrote: »

Looks like a very strong and very good bill. I hope very little is changed. Maybe the manditory €200 per unit sinking fund can be a bit much, but I can live with it if necessary.

To be perfectly honest- based on good financial practices, it is in most instances far too low. Its good as a starting point- but insufficient long term.

Paulw

smccarrick wrote: »

To be perfectly honest- based on good financial practices, it is in most instances far too low. Its good as a starting point- but insufficient long term.

Our development have a decent sinking fund. We always make sure to put money in to it. I think it currently works out near €60 per unit, but we have been able to not use that yet, so we've got 3-4 years worth of it there.

€200 per unit a year will mean that we have 22k per year added to the fund, and I would be very surprised if any major work would cost more than 22k alone.

But, I know many developments have little/no sinking fund, so for them it is vital to build a strong sinking fund.

antoinolachtnai

I doubt you could repair/replace the guttering on 110 units for 22k, never mind a job like fixing the roof. It wouldn't make much of a contribution towards replacing a lift.

If your development is quite new, it doesn't need much work. As it gets older, the amount of work required will rapidly increase.

Paulw

No lifts to deal with. Guttering is cleaned and checked annually.

Roof issues would also be covered under block insurance.

The development is only 4 years old.

We try to budget/plan for as much as possible each year, without having to increase fees.

The_Conductor

Paulw wrote: »

No lifts to deal with. Guttering is cleaned and checked annually.

Fine re: the lifts.
Re: guttering- it has a finite lifespan- depending on the guttering type- this could be typically 12-14 years.

Paulw wrote: »

Roof issues would also be covered under block insurance.

Regular and periodic maintenance of roofing and the structures is *not* covered under any block insurance policy that I have ever seen. Rebuilding costs would typically have to be provided for in whole from sinking funds- on a 40-50 year basis.

Paulw wrote: »

The development is only 4 years old.

Service and maintenance charges in a young development are always going to be considerably less than in older developments. From year 6-7 onwards- the buildings will have to be painted- and then the other periodic maintenance necessary begins to kick in (replacing wood moldings, cornicing, gates etc wearing out- things do have a finite lifespan......

Paulw wrote: »

We try to budget/plan for as much as possible each year, without having to increase fees.

You can plan and budget for as much as possible on an annual basis. The purpose of a sink fund is to provide for unforeseen events- or events of a significant nature that periodically occur (such as painting the buildings on a 5 year rolling basis, replacing the guttering every 10-12 years, replacing firealarm wiring and recharageable battery dumps every 4 years- etc etc etc......

Its all well and good to try to keep your annual charges as low as possible- however by scrimping and saving rather than making sizeable ongoing contributions to your sink fund- you leave yourself open to very large unforeseen bills coming in (possibly when you can least afford them).

antoinolachtnai

Everything in a building wears out! The core structure might be fine, but the core structure is less than half the cost of building anything. All the fittings have to be replaced over a period.

The wearing out may not happen soon, but it will eventually. The problem is that everything will wear out at more or less the same time. That's why you need the sinking fund.

Paulw

While I understand all you're saying, we are well aware of the needs and what has to be planned for.

Regular maintenance very much helps to negate the large costs.

We had always budgeted that painting would happen on a 5 year cycle, but that may last longer.

I do agree that a sinking fund is needed for unforseen events. Everything else should be budgeted on a year to year basis. We've already had to replace our gate system twice (due to vandalism), so that will hopefully not need to be done again for many years. We've certainly not scrimped on things, far from it. We've actually used our funds well, to improve the place and plan for the future.

In reality, you shouldn't be dipping in to a sinking fund at regular intervals. In fact, it shouldn't be touched more than once every 5 years or so, if you plan properly. You should always plan as best you can, and invest where possible.

antoinolachtnai

The thing is - you might not touch your sinking fund at all for the first 10 or 15 years. If things are as well organized as you have them, it might be 20 or 25 years. But eventually, you will have to do some type of major renewals, and it's a matter of being ready for that.

If you put away 22k/year, that will be 264k/decade. This should give you enough to do some pretty substantial refurb after 20 or 30 years. But I really don't think it's excessive.

Do you know what the insured rebuild value of your buildings are?

cls

This fails to address the issue of houses who are subjected to management fees. House owners should take care of their own and should not have to pay a management fee. Nothing less than total abolition of fees for houses will do. Roadways, footpaths and public lighting are the responsibity of the county council. Gardens, driveways and any kind of exterior maintenance are the resposibility of the house owner. There is nothing to pay here, this is a blatant rip off!! :mad:

antoinolachtnai

What is the money actually being used for in these cases?

cls

antoinolachtnai wrote: »

What is the money actually being used for in these cases?

Front garden maintenance for all houses (they trim our shrubs every 6 months or so)
Street lighting ESB bills
Street light repairs
Common area maintenance
Sinking fund
Public liability insurance for the estate (for which we have had a number of claims. sniff sniff I smell a scam)

antoinolachtnai

But the common area isn't owned by the council and they aren't going to take it in charge?

bobbysands81

antoinolachtnai wrote: »

But the common area isn't owned by the council and they aren't going to take it in charge?

As long as your complex is not gated it has to be taken in charge - It might take a few years to do so but it has to happen.

cls

antoinolachtnai wrote: »

But the common area isn't owned by the council and they aren't going to take it in charge?

No as far as I'm aware it will not be taken in charge.

cls

bobbysands81 wrote: »

As long as your complex is not gated it has to be taken in charge - It might take a few years to do so but it has to happen.

It is not gated and is 6 years old.

bobbysands81

cls wrote: »

It is not gated and is 6 years old.

Is the Management Company in the hands of the residents or is it still with the builders?

If it is with the residents you should just be able to request the Local Authority to take the estate/complex in charge.

If it is still with the developers you may require a majority of unit owners who are on the electoral register to vote in favour of the Local Authority taking it in charge. For instance say there's 100 units but only 60 of those unit owners are on the electoral register then you only need 31 of them to compel the Local Authority to take in charge.

cls

bobbysands81 wrote: »

Is the Management Company in the hands of the residents or is it still with the builders?

If it is with the residents you should just be able to request the Local Authority to take the estate/complex in charge.

If it is still with the developers you may require a majority of unit owners who are on the electoral register to vote in favour of the Local Authority taking it in charge. For instance say there's 100 units but only 60 of those unit owners are on the electoral register then you only need 31 of them to compel the Local Authority to take in charge.

The council will not take it in charge. There is a local park which apparently is part of our estate (but it is outside the estate walls) which they have taken charge of and the rest is up to us. The same selective process has happened to an estate down the road. Based on hearsay, the reasons for this is that it is too small an area for them to deal with. I totally agree with them that there really is nothing to maintain, which compounds my frustration of having to pay a management fee. Even if they just took the public liability and ESB bills I would be happy to refuse to pay for the rest without the risk of being uninsured or without electricity.

The_Conductor

One thing to be aware of- the law of unintended consequences. There is one development currently up in arms. They petitioned to be taken in charge by SDCC, and about a year later became infuriated when the council decided it was an opportune place for additional on-street parking- with the result that a once quiet cul-de-sac is no more......

bobbysands81

cls wrote: »

The council will not take it in charge. There is a local park which apparently is part of our estate (but it is outside the estate walls) which they have taken charge of and the rest is up to us. The same selective process has happened to an estate down the road. Based on hearsay, the reasons for this is that it is too small an area for them to deal with. I totally agree with them that there really is nothing to maintain, which compounds my frustration of having to pay a management fee. Even if they just took the public liability and ESB bills I would be happy to refuse to pay for the rest without the risk of being uninsured or without electricity.

I reckon the Local Authority are just trying to chance their arm here. Fire off a quick e-mail to them asking why they won't take it in charge as they are obliged to. Send same e-mail to all your local representatives asking why it isn't being taken in charge when as far as you are aware it should be.

As far as I know the Council cannot refuse to take in charge. They can refuse to cut the grass in shared areas but they must look after outdoor common area electricity, roads, pathways etc...

According to the Dept of the Environment:

The Department of the Environment, Heritage and Local Government issue planning guidance on the taking in charge of residential estates by local authorities.

The guidelines state that local authorities must set out their procedures for prompt taking in charge on foot of a request by the majority of the residents in the development or by the developer, as appropriate.

Protocols, including time frames, must be set out by to respond to requests for taking in charge.

The most recent policy guidance issued by the Department in February 2008, provides for the taking in charge of the core facilities of public roads and footpaths, public lighting, public water supply, foul and storm water drainage, public open spaces and unallocated surface parking areas etc. by the local authority.

http://www.consumerproperty.ie/downloads/guide_page7.html

Here is the relevant info direct from the Depts website:

Gormley Issues Comprehensive Planning Guidance Concerning the Taking in Charge of Residential Estates
26/02/08


The Minister for the Environment, Heritage and Local Government, Mr. John Gormley today (26th February 2008) announced that his Department has issued new policy guidance to planning authorities in relation to the taking in charge of residential estates.

The guidance is being issued as a companion to the expanded and updated Residential Density Guidelines – Sustainable Residential Development in Urban Areas - which issued as a consultation draft on 10 February.

The guidance is based on the deliberations of a Working Group which included representatives of the Minister’s Department, local authorities, architects, planners, home builders and consumer interests, to consider the issue of the maintenance of infrastructure and facilities in the newer type of high-density residential estates and other issues relating to the taking in charge of residential developments. The main principles now set out in the overall framework for taking in charge are:

A statement of the facilities that will be taken in charge and the maintenance services that will be provided must be set out and 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;
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 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 time frames, must be set out by planning authorities to respond to requests for taking in charge;
In general, planning authorities must not attach management companies as a condition of planning in respect of traditional housing estates;
In relation to older estates, priority must continue to be placed on resolving those estates that have been left unfinished /not taken in charge for the longest period.
“I am now asking each planning authority to develop or update, as appropriate, its policy on taking in charge by the end of June 2008, on the basis of these principles, and wider housing and planning guidance, as set out in my Department’s circular letter” said the Minister.

The Minister said that the new policy guidance is clearly focused on proactively addressing the issue of taking in charge at the pre-planning stage. This approach coupled with the extensive powers already available to planning authorities to deal with non compliance will ensure that the legacy of unfinished estates is consigned to the past.

The implementation of the new policy in this area will require the commitment of additional resources by planning authorities, particularly in terms of pre-application consultations and inspection of construction.

As part of the overall review and update of the local government service indicators a new indicator in relation to taking in charge is also 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. The information will allow the Department to review the ongoing work of planning authorities in this area.

The main elements of the new policy guidance on taking in charge will be incorporated in the new Sustainable Residential Development Guidelines, which will be issued as Ministerial Guidelines under section 28 of the Planning and Development Act later this year.

In conclusion the Minister said ”I believe that this guidance when implemented will make a valuable contribution to the creation of sustainable communities, where people want to live and work, now and in the future”.

http://www.environ.ie/en/DevelopmentandHousing/PlanningDevelopment/Planning/News/MainBody,16789,en.htm

johnnyskeleton

bobbysands81 wrote: »

This should be useful to some on here.

It seems that it has only gone through the first stage of the Seanad, so it still has other stages (Second, Committee) to go before it goes through the Dail. Changes can still be made before the "law" becomes enacted so if you see things in the Bill that you completely disagree with then get in touch with your local senator/TD and see can you get changes made to it whilst going through the various stages of the Seanad/Dail.

http://www.oireachtas.ie/documents/bills28/bills/2009/3209/b3209s.pdf

It's a private members bill in the seanad. So the chances of it passing into law are small anyway. Most likely, this bill will be shelved and the government might bring in a different version.

That's how our system seems to work, especially now with the government under massive pressure on the economy.

bobbysands81

johnnyskeleton wrote: »

It's a private members bill in the seanad. So the chances of it passing into law are small anyway. Most likely, this bill will be shelved and the government might bring in a different version.

That's how our system seems to work, especially now with the government under massive pressure on the economy.

This Bill has been worked on in a few Govt Depts over the last few years - I am 100% confident it will be passed into law.

It may change a bit before it's enacted as it goes through its various stages (as ALL Bills do), but as legislation is badly needed in this area and as this Bill was "proposed" (for want of a better word) by the Law Reform Commission I have absolutely no doubt this Bill will be signed into law within the next 12 months.

Even if there's a change of Govt this Bill will survive.