A new property law, aimed at owner-occupiers of apartments and development properties, should be enacted shortly, writes CAROLINE MADDEN

THE WEEK before the local and European elections, the Government unveiled a new piece of property law that promised to provide long-overdue legal protection and empowerment to apartment owners.

While the timing of the publication of the new Multi-Unit Development Bill was deemed suspicious by members of the Opposition, the piece of legislation itself has given hope to thousands of frustrated and irate owner-residents.

One of the most welcome provisions of the new Bill relates to the transfer of common areas (such as lobbies, lifts, corridors and roof gardens) in apartment complexes from the developer to the unit owners.

In recent years, it has been common practice for the builder to hang on to common areas until the last unit in the development is sold. This creates a problem because, until the transfer occurs, the owners can’t take control of the property management company.

During this limbo period, owners have no say in the running and upkeep of their complex. To make matters worse, some developers have refused to pay property management fees on their unsold units, which has pushed up service costs for other owners.

The new Bill provides that developers will have to transfer common areas to an owner’s management company before any apartment in a complex is sold. This represents a significant coup.

What about existing complexes though, where problems have been rumbling on for years? There is good news here as well.

If the common areas of an existing development that has not been completed, or a completed complex, have not already been transferred to the property management company, the Bill specifies that they must be transferred within six months of the enactment of the legislation.

It also provides for dispute resolution mechanisms in new and existing complexes.

“While the emphasis is on resolution of such disputes by means of mediation, the court will be empowered to make appropriate orders where mediation attempts have failed,” Minister for Justice Dermot Ahern said when publishing the Bill jointly with the Minister for the Environment John Gormley

The Bill, which is based on recommendations made by the Law Reform Commission in its report on multi-unit developments published last year, also tackles another major bugbear for apartment owners – service charges.

Firstly, it specifies that developers must pay service charges in respect of any unsold units. It also proposes that the annual service charge must be calculated on a transparent basis by the owners’ management company and must be split fairly between owners.

Many apartment owners have felt ripped off by the level of service charge levied on them in recent years (such charges can run to several thousand euro a year), particularly when the level of service provided in return leaves a lot to be desired.

Although the Bill offers some light at the end of the tunnel, until the National Property Services Regulatory Authority – a body established in 2006 to license providers of property services – is given regulatory teeth, the quality of service is unlikely to improve.

The Property Services (Regulation) Bill 2009, which will give the Property Services Regulatory Authority the power to license property management agents (businesses hired by management companies to carry out the day-to-day maintenance of a development), was published in May and is currently before the Seanad.

“Currently, management agents do not require a licence and consequently there are no controls on them,” the authority said. “The new legislation will bring them within the proposed new regulatory regime for the first time.”

Overall, the reaction to the new Multi-Unit Development Bill has been positive.

“This new legislation will go a long way towards fixing the problems created over the last 10 years and restoring confidence in apartment living,” the Apartment Owners Network said when the Bill was published.

Mark Boyle, a spokesman for the network, has told The Irish Times that the Bill is “fantastic”.

There is one aspect, however, of the draft legislation that slightly concerns him. The Bill provides that owners’ management companies must set up a “sinking fund” for one-off maintenance and repair jobs such as replacing the roof of the complex or fixing the lifts, and that owners must contribute a minimum annual charge of €200 to this fund.

Boyle says that people tend to underestimate the cost of maintaining apartment blocks and feels that this level of annual contribution is reasonable for apartment owners.

However, it may present a problem in housing estates.

Some small housing developments are run by management companies and Boyle says that the level of common areas to be maintained in these cases is limited. Therefore the imposition of a €200 minimum annual contribution to a sinking fund may not be appropriate in these situations.

“I’m not sure what the sinking fund would be used for,” he says.

Jim Gollogley, head of commercial property at LK Shields, whose clients include developers of multi-unit developments, broadly welcomes the proposed legislation.

“I think anything that is proposed to deal with some of the unfortunate situations that exist around the country is to be welcomed,” he says.

However, Gollogley feels that there are some important differences between the Bill and the Law Reform Commission’s report.

He points out that many multi-unit developments around the State are mixed-use complexes, combining retail and residential units. “The Law Reform Commission seemed to try to contemplate those types of developments, whereas this Bill seems to be far more focused on residential developments only,” he says.

“If we’re going to pass legislation, arguably it should be as broadly based as possible.”

The second area with which he takes issue relates to the voting rights of unit owners as members of the owners’ management company. “The current Bill prescribes that each unit owner will have one vote regardless of the size of their unit, which, of itself, strikes me as a little bit unfair,” he explains.

His argument is that if an individual owns a two- or three-bedroom unit, they are likely to pay a higher service charge than an owner of, say, a studio apartment, as the service charge contribution is sometimes dependent on the size of the unit. He feels therefore that owners’ voting rights should reflect the level of service charge paid.

Fine Gael housing spokesman Terence Flanagan is disappointed the Bill doesn’t contain any provisions relating to fire safety in apartments. “People’s lives are currently at risk because nobody is taking responsibility for fire safety in apartments. The law must now be changed to make developers initially responsible for providing fire safety equipment in new apartments.

“In existing apartments,” Flanagan adds, “where management companies are in operation, the onus for providing fire safety equipment should lie with the management agent.”

Despite the criticisms, the Bill represents a significant and very welcome step forward for apartment owners who have battled long and hard to make their voices heard.