A recent article in The Irish Times highlighted the significant amendments needed to the draft Multi-Unit Developments (MUD) Bill 2009, prior to its enactment into legislation.

"A MINIMUM of snagging by developers means that service charges are being used by apartment owners to make good their estates. That was one of the stark findings heard by delegates at last weekend’s IPFMA Conference, which was chaired by Siobhan O’Dwyer of O’Dwyer Property Management. The industry gathering of the Irish Property Facility Management Association also heard reports that there were serious flaws in the manner in which fire safety systems are being completed and certified or, in many cases, not completed or certified.

Equally worrying for apartment owners, legal experts identified a complete lack of assurances and entitlement for legal remedy or recourse by the purchaser against the developer in the event that defects occur.

The conference followed on from a recent IPFMA submission to government, which called for significant amendments to the draft Multi-Unit Developments (MUD) Bill 2009, prior to its enactment into legislation.

The IPFMA welcomes the advent of the new Bill but believes that its legislative proposals are not sufficiently all encompassing and do not go far enough to protect owners of future multi-unit developments by providing an effective and workable legal framework. As the organisation is made up of professionals working on the ground, including property managers, surveyors and engineers, who spend their working days dealing with problems in new apartment blocks, their opinions are certainly worth listening to."

The Irish Times, Thursday October 8th 2009.

A.K. Property Services is delighted to announce that Cúil na Canálach has just been awarded the "Best Private Housing Development" award for 2010 at the Zurich LAMA Awards.

Situated adjacent to the former Grand Canal at Pollboy, Ballinasloe, County Galway, Cúil na Canálach, which is managed by AK Property Services, is an exclusive new architecturally designed development of stunning houses and apartments.

Cúil na Canálach incorporates the luxurious warmth of timber frame construction with the stylish tough exterior of rendered block work, with cut stone cills and lintels and each home having its own private balcony.

The Zurich Lama Awards provide an opportunity to acknowledge projects in construction, engineering, and infrastructure.

Having revamped and revised this years categories to better reflect climate conditions, and further support its nominees, the Zurich LAMA Awards provided a positive opportunity to commend individuals, initiatives, and projects of benefit to the community.

The Zurich Lama Awards took place on the 30th January at the Burlington Hotel. The annual awards showcased the best projects and companies in communities across Ireland.

Over 450 guests were in attendance on the night at which Miriam O'Callaghan was MC and Minister Michael Finneran, Minister for Housing and Local Services was guest of honour.

Just some of the reasons why Cúil na Canálach is "The Best Private Housing Development" 

•Architecturally designed to maximise living areas & natural light

•Excellent energy rating as standard

•Timberframe construction

•Integrated sun lounges to three and four bed homes

•Exceptionally landscaped site incorporating canal walks and existing maturetrees

•Black uPCV windows with low E glass to all glazing

•Natural gas heating / cooking

 Congratulations to all involved!

We have recently received long awaited correspondance from the PSRA regarding impending licensing and regulation of our industry. We have been advsied of the Review Group's recommendation for the establishment of the PSRA to take over responsibility, from the Courts and Revenue Commissioners, for the licensing and regulation of Property Services Providers (PSP's).

The Government, in accepting the Review Group's recommendation, decided to establish the Authority on a statutory basis and the necessary legislation began its progress through the Oireachtas in May of this year. 

Pending enactment of the legislation, the Minister for justice, Equality and Law Reform set up an Implementation Group to assist and advise on practical matters relating to the establishment of the new body. The Group has identified a number of issues which it considers can be addressed in advance of the Authority being established on a statutory basis. One such issue is the identification of those PSP's who have not been subject to licensing up to now. 

The definition provided in the proposed legislation will mean that licensing will be extended to include Residential Property Management Agents as well as Auctioneers, Estate Agents ( House Agents) and Letting Agents. The Authority carried out an exercise to compile a list of those who it believes will potentially require to be licensed under the proposed legislation. 

A.K. Property Services welcomes this proposed legislation. 'We look forward to working within an industry with enforced standards and continued education and training. We see this as an opportunity,-  it sets clear standards in respect of the services that we provide, which in turn helps to build consumer confidence.'

'We believe that consumers are entitled to expect a high and consistent level of service from our profession and that we are entitled to compete on a level playing field. Regulation is the best way of ensuring delivery of these expectations.'

In our recent bolgs we have discussed the issues that have finally been dealt with in the publication of this new Multi-Unit Developments Bill. This new Bill will particularly benefit apartment owners.

In a statement issued by the National Consumer Agency, Ann Fitzgerald has said "With more and more consumers living in multi-unit developments, we have long been aware of the need for regulation of the industry."

"The publication of the bill represents a good day for consumers as many Irish owners of multi-unit properties have found themselves in difficult positions arising from the poor operation and management of their developments. The Bill will serve to empower them to have a greater say in the way in which their developments are managed and administered."

She went on to say, "From a consumer perspective there are a number of key areas adressed in the Bill including the transfer of the common areas to the ownership of the Owners' Management Company, changes in voting rights, transparency in the calculation of service charges and the requirement to create a sinking fund."

Key Areas Addressed in the Bill of Benefit to Consumers : 

1. Transfer of common areas & extinguishment of beneficial interests: The Bill provides a schedule for the transfer of the common areas to the ownership of the Owners' Management Company and, most importantly, for the extinguishment of the Developer's beneficial interest on completion of the development. This clarity is most welcome in delays in transfer of ownership and of beneficial interests in Common Areas have proven a particularly thorny issue for Multi-Unit Developments Owners.

2. Voting: The Bill provides that votes shall be allocated on a single vote per unit basis. This should obviate previous difficulties relating to 'golden votes' being held by Developers. However, the Bill makes no provisions for the voting rights of tenants. 

3. Service Charges: The Bill provides for clear iteration of cost categories to be included in the calculation of the service charge and a formal process, through a general meeting of the Owners Management Company, for the approval of such service charges. 

4. Sinking Funds: The Bill establishes a statutory requirement to create a Sinking Fund. The National Consumer Agency particularly welcomes this as a means of preserving and protecting the long term interests of Unit Owners as developments age and may require works more substantial than mere care and maintenance".

A new publication from ODCE called 'Company Law Handbook on Residential Property Owners' Management Companies' is now available from their website at the following link:

http://www.odce.ie/en/media_decision_notices_article.aspx?article=12636a...

The aim of the handbook is to provide a general guide to issues relating to the governance of residential property owners' management companies.

The handbook is written from the perspective of the ODCE which is a statutory agency whose remit includes that of encouraging compliance with company law.

The ODCE hopes that the handbook will be a useful resource for a variety of persons concerned with management companies, especially - 

a) the owners or occupiers of houses or apartments located within multi-unit developments where a management company is involved in issues such as the ownership and control of common areas and the provision of common services in respect of those areas.

b)persons contemplating the purchase of such properties.

c)persons connected with the central management of management companies, e.g. their directors, and persons (such as managing agents) who are engaged by management companies to deal with day-to-day management tasks.

d) the developers of multi-unit developments.

e) solicitors and accountants, who from time to time find themselves called upon to give professional advice to management companies.

Property Management Companies are set up mainly to provide a forum for all owners to be represented equally and to hold title to the common areas of the development be it apartment block or housing estate.

On this topic, here is an article that has recently appeared in 'Accounting Matters'...

"Property Owner Management Companies are companies set up to hold title to common areas of apartments and housing estates. The company pays for maintenance etc. and bills this to the residents as an annual service charge. It is usual for the title to the land to vest with the developer until they have finished the development and then transfer once the development is complete. It has now become common for builders to delay transfer of the common land sometimes in the hope of further developing the land or sometimes just by oversight. This does not preclude the Property Owner Management Companies charging residents their annual service charge although it is likely that an auditor will put in an emphases of matter paragraph in their audit report drawing attention to the non transfer. Not owning the grass does not mean that you can't mow it and you certainly have an insurable interest in maintaining the property you may not technically own.

However, it is very common for the property transfer agreements to state that the builder is responsible for maintenance until the common area is transferred. For some reason this seems to have been ignored in most developments. An auditor would be minded to check the transfer agreements as there may be no basis for charging the annual service charge where the builder has held on to title to the common area and this standard clause is in the transfer agreement."

While the author of this article may note that "there may be no basis for charging the annual service charge" the reality is that if the owners do not pay service charges to maintain the common areas the chances are the the builders will not pay it and this will lead to a long dispute all the while the development is deteriorating and the value of the properties within are affected negatively.

This is an article that I hope to develop in the coming weeks as I have spent some time discussing this topic with colleagues, friends and clients. The wide area that this covers includes unsold properties within a development and owners/investors not paying their annual service charge to their management company. All the while, the common areas, buildings and management company have to be continuously maintained. Those who are paying their service charges in the company are financially carrying the non/slow payers.

In the past 10 years of managing properties in Ireland we have been asked who is liable for service charge payments in developments where there are unsold units? For example there may be an apartment block of say, 50 apartments. In the first year only 40 are sold but services and utilities for common areas still have to be paid for the whole development. Is it the existing owners that have to pay their equal share of these 10? Who is responsible for picking up this tab?

The recent boom years in our economy has seen many new types of investors in the property market. Let's give one hypothetical example: a young single couple late twenties, having purchased their very own investment property. They already live in another house purchased years earlier that gained sufficient equity for their bank to impress another mortgage upon them for an 'investment' property.

This young professional couple have in the past been able to rent out their investment property, a 2 bedroomed apartment within a complex that has electronic gates, large green area, interior common areas with lifts etc. The service charges in this complex for this apartment are €1,400 in 2005, €1,500 in 2006, and €1,600 in 2007. The current year service charges are €1,700 and this young investor is unalbe to get a tenant. In 2005, 2006 & 2007 finding a tenant was not a problem. There were plenty of construction workers working in the area looking for accommodation. The area has now got a surplus of accommodation.

There are numerous apartment blocks built in the area and today most of these constructions workers have moved out of the area, gone back to their home country/county. They no longer require that apartment that they lived in while they were building the block down the street. This investor is already dealing with higher interest rates & rising overheads and is finding it difficult to pay the current 2008 annual service charge for the apartment.

This is of course one such example. This situation has further reaching implications where the 'investor' owns 5 apartments in a development of 20 and has gone into their 2nd year of not paying their service charges. Other owners in this development have much higher service charges as result.

Property owners must factor in the cost of service charges to their own annual budget in advance of purchasing a property within a Management Company.  It is a commitment  just like their mortgage repayments regardless of occupancy. Very often the annual service charges are not factored in and this is where the owners get into difficulty trying to pay their fees.

A good tenant is an asset

A bad tenant is a liability

For landlords looking to get a tenant for their property it is of paramount importance that they adequately screen prospective tenants in advance. Screening of tenants can include collecting, coalating and evaluating information on the prospective tenant in order to reach an informed conclusion on their eligibility to rent the property. Its recommended to dig deeply into how the tenant will treat your valued property.

If a landlord rents his/her property to a low calibre tenant it may prove costly. They risk slow or non payment of rent, disregard for property causing damage such as broken windows, poor housekeeping skills, parties and having many friends or family staying over on a continuous basis increases wear and tear of the property. After a very short while the property may need to be refurbished and have expensive repairs carried out in preparation for a new tenant.  It  can be difficult and very time consuming to go through the process of evicting a tenant even in circumstances where the tenant is in the wrong.

In a recent case, a family renting a three bedroomed house in a small housing estate had caused serious problems for the owner of the property. There were, continuous  alcohol fueled parties in the house causing damage such as broken windows and doors, a constant stream of complaints to the owner of the property from other residents in the estate about the anti-social antics of these tenants. These tenants placed a large skip on the common green area of the development to dispose of their domestic waste. After a long and expensive court battle, the cost of this clean-up was borne by the management company at the time and later was billed to the owner of the property. Regular visits from the Gardai to the estate left the estate with a less than desirable reputation.

It is important to note that most of the time a landlord will find it difficult to verify past records including criminal reports of a prospective tenant. Reylying on the assurances of friends, past tenants and so on may backfire as past experiences has proved time and time again that verbal assurances are not worth the paper they are written on.

It is recommended that landlords engage the services of the professionals in this area to handle lettings. A reputable and proven firm of letting agents will have exact policies and proceedures and the expertise to cover most or all eventualities and they will take responsibility for any tenant they place. 

With the right tenant in place renting out your property can be profitable.

Working with several property owners daily we realise that many owners are unaware there is a tax relief due to them as PAYE workers at the standard 20% rate. 

Income tax relief is available for individuals who pay service charges to local authorities and other independent contractors. Relief is given for service charges paid in full and on time in the previous calendar year.  

Service Charges which qualify for tax relief are all service charges paid to Local authorities for the provision of domestic water supply, domestic refuse collection, domestic sewage disposal, group water schemes for domestic water supply. There is also tax relief for Independent contractors for domestic refuse collection or disposal. 

For more detailed information on this you should contact your local revenue office or you may download the tax relief form 'IT27 Tax Relief for Service Charges' 

There will be elements of your service charges that do not qualify for this tax relief such as sinking fund or Managing Agents Fees, however as all PAYE property owners are entitled to claim this relief on other services we recommend that you do this. A.K. Property Services provide a detailed breakdown of all service charges so any property owner can easily calculate their individual costs in all areas. Should you require any assistance in completing your IT27 you should contact your Managing Agent.