Massive increase in Management Fee

Johnnio13

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

ted1

Johnnio13 wrote: »

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

Did you go to the AGM? Have you seen the books? Is there a sinking fund?

The_Morrigan

Johnnio13 wrote: »

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

Your chance would have been at the agm when finances are discussed with all the owners. Was an AGM held?

MarkAnthony

Simply underscoring the above. You are the management co. If you couldn't be arsed to turn up at the AGM it was rightly assumed you were abdicating your decision to the people that did.

If there was no AGM held or you believe there was impropriety get on to a solicitor and get an EGM called.

I'm sorry to be harsh but there is no one to blame for crappy management in apartment complexes but unit owners.

Drop the Ball

Sounds like a very excessive increase in management fees, request a copy of the AGM minutes from the Management Agent and see if they were voted in...assuming there was an AGM which from my understanding is a legal requirement.

Johnnio13

ted1 wrote: »

Did you go to the AGM? Have you seen the books? Is there a sinking fund?

My bad I didn't attend AGM. It was held just before Christmas 23rd I think.
I have seen the books. There is a healthy sinking fund.
There was no major expenses last year - previous year all reserves were used fixing burst pipes etc.

MarkAnthony wrote: »

I'm sorry to be harsh but there is no one to blame for crappy management in apartment complexes but unit owners.

You are dead right Mark, not harsh at all. My question was just if there was anything that could be done now. As the decision has been made by those that turned up we will have to suffer it and attend next year.

Valetta

See if you can get a copy of the minutes of the meeting. The increase would have been discussed and you may get a better idea of the reasoning behind it.

If you say that the reserves were used for fixing leaking pipes etc., then it may be the case that they want to replenish those reserves, and if there are no unexpected items this year then you can push for a reduction for 2016.

Lantus

Actually your first chance would of been at least 21 days BEFORE the AGM. Every member would of received a full budget breakdown and the service fees for the next period. At this point you had almost a month to review these documents, compare them to last years and identify where the uplift is which I wouldn't imagine would take more than 20minutes.

You could of contacted the company at any point before that to talk out or clarify any issues and of course you would of ben 21days notice of your AGM at which you could attend and vote on your budget. The MUD act even allows for modifications to be made on the night assuming 60% of the members vote in approval and the changes are quantifiable and do not compromise the companies ability to operate (you cannot vote to reduce your service fees to €1!)

There could be a very good reason for the fees including essential repairs, insurance premium increases or other costs.

A good sinking fund is a very variable thing. Have you calculate the replacement cost of every major item (Lifts, gates, roofs, doors, alarms, lighting systems, fire safety etc.....over the next 20+years against the income and current funds available?) Most sinking funds are woefully inadequate. A tiny lift could cost €30k to replace. They have an expected lifespan of 15 years.

The short answer is after all that NO you cannot suddenly change this after such a lengthy and thorough process. If approved it is now the legal service fee for the year and every member is contractually bound by it. You could still look into where the extra money is needed though for your own peace of mind.

Santa Cruz

Unfortunately many Irish people are not aware that when buying an apartment they become shareholders in a management company with the right to attend A.G.M.s become elected as a Director, have full access to all financial records, have a vote on the level of management fees etc. Until they get more involved in the running of their management company problems will continue and managing agents will continue to make big profits

MarkAnthony

OP there are quite a few technicalities that get ignored if the management co is taking a slap-dash approach. It may be possible to force an EGM or overturn the decision in regards to the fee. However it may simply be a case that for OMC has been forced into the decision to comply with the MUD Act.

Really there's no where near enough info to go on. That said I'm a director of a very well run city centre complex and our management fee would be in around 1100/1200 a year (one bed) so €1400 isn't completely bonkers.

Best of luck, I hope you get it sorted.

Paulw

MarkAnthony wrote: »

That said I'm a director of a very well run city centre complex and our management fee would be in around 1100/1200 a year (one bed) so €1400 isn't completely bonkers.

The OP said it was increasing by €500 from €1400 ... so a €1900 fee for this year.

I'm a director of our management company, and a 3 bed unit is around €1500 a year, while a 1 bed is about €900.

If there is a massive jump in fees, then there should be a serious reason, and it should have been discussed and voted on at an AGM.

MarkAnthony

Paulw wrote: »

The OP said it was increasing by €500 from €1400 ... so a €1900 fee for this year.

I'm a director of our management company, and a 3 bed unit is around €1500 a year, while a 1 bed is about €900.

If there is a massive jump in fees, then there should be a serious reason, and it should have been discussed and voted on at an AGM.

Sorry misread that. That said that could be very easily explained by a proper sinking fund not having been maintained.

€1900 is still not beyond the pale for city centre, although that's only because the majority have piss-poor managing agents and OMC directors.

Fkall

€1800 to €2500 is typical for 2 bed apartment in Dublin city centre.

padd b1975

I pay just over 1600 for a three bed ground floor apartment in Lucan, the building doesn't have lifts.

blacklilly

Request a copy of the minutes. It's unlikely that the OMC decided to increase service charges by €500 for no reason. The sinking fund may not be adequate, there may be planned future expenditure which the OMC want to start providing for now (they may have arranged for a building investing fund survey during the year and this may have altered them to various items that require attention).

Also to add, it is quite possible to have two separate developments of the same size which have substantial difference in service charges. Reasons for this may be down to insurance (claims history), number of lifts, gates, plant, sf etc. It's important to always compare like with like

jd

blacklilly wrote: »

Request a copy of the minutes.

These may not be available - aren't they normally circulated with notice of next agm, and then read/voted upon at that agm?

blacklilly

jd wrote: »

These may not be available - aren't they normally circulated with notice of next agm, and then read/voted upon at that agm?

The minutes should be circulated shortly after the AGM. The Board of Directors will review them prior to being issued to ensure they are accurate. They are then put forward for approval by the members at the following AGM.

If the minutes are not ready for circulation, the Managing Agent should be able to advise the OP on the matters discussed at the AGM and the reason for the increase in service charges. I would also be surprised if a letter of information regarding the increase was not circulated along with the notice of the AGM

Mr Frog

What's a sinking fund?

Victor

Johnnio13 wrote: »

There is a healthy sinking fund.

previous year all reserves were used fixing burst pipes etc.

How do you reconcile these two statements?

Greenmachine

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

The_Morrigan

Greenmachine wrote: »

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

It goes into things like security, general maintenance & repairs, cleaning, insurance , bin charges, utilities for communal areas, pest control, landscaping and sinking funds.

athtrasna

Greenmachine wrote: »

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

No. You can't insure what you don't own. You take a long term lease on an apartment, several hundred years, the management company own and insure thebuildings.

shruikan2553

Mr Frog wrote: »

What's a sinking fund?

Some money that can be accessed when something gets broken or needs replaced.

MarkAnthony

OP sorry I've rather failed at reading your OP correctly. That amount out in D15 is on the high side. You folks need to make sure there is high attendance at the AGMs.

As for a health sinking fund - ours currently stands at around €250k IIRC. If yours has been exhausted fixing pipes you can bet your bottom dollar this is where the majority of the rise is from. Again IIRC there is a recommended minimum contribution of €250 per unit per year.

OP make sure everyone is going through the accounts line by line. See if you can get some input from friends in well managed complexes. We pay a lot for our agent but it pays for itself twice over in cost reductions elsewhere. A €1900 fee out in Blanch to me seems nuts.

blacklilly

MarkAnthony wrote: »

A €1900 fee out in Blanch to me seems nuts.

I cannot for the life of me understand your logic here. Service Charges have no correlation to property prices/rental prices/location,

We know little or nothing about the development the OP lives in. The block insurance premium could be huge due to previous claims. There could be 20 lifts in the development, costing a considerable amount to maintain yearly, the blocks may require re-roofing, so on and so forth.

Drop the Ball

MarkAnthony wrote: »

OP sorry I've rather failed at reading your OP correctly. That amount out in D15 is on the high side. You folks need to make sure there is high attendance at the AGMs.

I agree, management fee differ from depending on the location and services offers/required. From my knowledge of D15, management fees range from the low end of about €600-800 to €1200-1400 at the high end. Attend your AGM, review the forecasted budget and compare with current/previous year budgets beforehand, challenge the directors on any increases and they should be able to provide you with justification for these increases.

Heisenberg.

This post has been deleted.

blacklilly

Heisenberg. wrote: »

This post has been deleted.

You're not at the mercy of some corporate company. Anyone who owns a property in a managed development becomes a member of the management company and thus has voting rights.They can also put themselves forward to become a Director of the Management Company if they so wish.
There's no such thing as a Mgt Co increasing Service Charges "willy nilly", the management company is not there to make a profit.
The biggest problem is a lack of understanding of how Management Companies operate and a total lack of interest from many members

markpb

Heisenberg. wrote: »

This seems to me like a major deterrent to buying an Apt.
Forever at the mercy of the Mgmt. Company who can raise their annual fee willy nilly.

That's only partially true. Apartment owners are at the mercy of a company they themselves are a member of. They have the right to elect directors, a right to vote in anything raised at an AGM. They also have aright to put themselves up for election as a director.

But other than that, they're helpless...

MarkAnthony

Heisenberg. wrote: »

This post has been deleted.

Not really, the unit owners are the 'management company'. The issue arises because owner occupiers rarely turn up, directors probably get a discount and landlords write off the management fee on tax so don't really care.

With the low numbers at AGMs it's easy for a quorum of residents to have an impact on the way the complex is run and that works both ways. For the sake of about 2 hours once a year it seems crazy to me that people don't turn up. There are rules on where, when and with what notice an AGM is held so it's not as if they're 20 miles away 2pm on a Tuesday with 24 hours notice.

A properly run OMC shouldn't cost much more than insurance, maintenance and upgrades. It should certainly be cheaper than owning a house in the long term. You can also have the advantages of a proper community, we've got a little 'neighbourhood watch' effort, a gardening group and various other little projects.

P. Breathnach

blacklilly wrote: »

...
The biggest problem is a lack of understanding of how Management Companies operate and a total lack of interest from many members

That lack of understanding sometimes extends to the directors.