CityLiving: Builders are looking to add space to old apartment blocks, says Edel Morgan

As you read this column it's entirely possible that an apartment block near you is being sized up by a developer who has his beady eyes on the roof space as he calculates how many penthouses he can squeeze onto it. He (or she) may be about to approach the residents with a deal. Or it could be that the residents are planning to approach a developer or builder with a proposition. Both can be win-win situations for all involved but the anecdotal evidence is that they can also be fraught with difficulty.

With development land scarce in Dublin, developers are being forced to build upwards or outwards on existing sites. This means finding suitable buildings and pre-1980s apartment blocks, often flat-roofed and on substantial grounds, can fit the bill.

Some of the residents will know their block needs to be dragged into the 21st century and that younger buyers often have an aversion to any apartment complex that even mildly resembles an old folks home. St Cathryn's Court was one such block. Formerly an ungainly 1970s blot on the Sandymount landscape, it has undergone a radical facelift which gave it a new penthouse level.

Local estate agent Nigel Bennett recalls how by the mid-1990s, the original flat roof of the 36-unit development began leaking, causing water damage. "At the time it was estimated that the cost of re-covering it would be £100,000 but it was felt it could happen again in another 10 years. A deal was done with two developers to build another storey on the roof and in return the existing building would be upgraded with a new exterior, windows and a bay windowed lobby, as well as a lift and CCTV."

Progress stalled when only half the residents of the 36 apartments agreed to the revamp. The remainder "mainly elderly" took longer to persuade. In 2004 - eight years later - the transformation of St Cathryn's Court was finally completed. Bennett reckons the complex has increased in value by 10 per cent - a two-bed apartment there sold recently for €665,000 - €70,000 more than the asking price. Another apartment complex, Carrig on the Carrickbrennan Road in Monkstown, Co Dublin where a developer is reputed to have approached the residents, has also been modernised in return for building five penthouse apartments.

At Ardoyne House in Pembroke Park, Dublin 4 residents raised funds from the sale of garage sites that were converted into luxurious mews houses. Elm Court on Merrion Road, also in Dublin 4, is another example of a flat roof complex that was updated in return for apartment sites. According to Donal Dunne of Hassett and Fitzsimon auctioneers, the building works were "traumatic" for some of the elderly people living there, "as a chunk had to be taken out of the building to put the lift in". As competition for land intensifies, some management companies are also extracting cash injections from developers for their sinking fund and/or pay outs to each resident. This only happens if the developer stands to make a decent profit; if the roof will support another storey without major work; if there's enough roof space or adjoining land to build a number of apartments or if the location is so good they can charge through the nose for a few.

One industry source told City Living that in his experience both residents and developers can "regret ever having become involved. You get residents complaining they're not happy with the way the development is going. It can take ages to complete the building, which is a nuisance for them. There's an awful lot of hassle and bickering and legal implications. One developer told me it was painful to go through and he wouldn't do it again. There are a lot easier ways of making money."

Gavan Carty of Kent Carty solicitors agrees it is a very complex arena with legal and, sometimes, tax implications. He says the first step for any residents considering entering into an agreement with a developer is to hold an extraordinary general meeting (EGM) to get every resident's consent. A lawyer should then examine the lease to ensure it doesn't preclude further development and there's been transfer of ownership. After that, it is important to check the builders credentials and "ensure they stick to a time frame and have the proper health and safety measures in place. Residents should also have their own project supervisor," says Carty, who advises a "belt and braces" legal agreement with the builder who should be answerable to the residents.

"Residents should be cognisant of the fact it's going to be unpleasant for six months with dust and noise which may entail an agreement that people vacate on a short term basis and are compensated by the builder. Residents should also be aware that financial dividends from a developer will give rise to taxation issues."

The worst case scenario, says Carty, is if the management company doesn't plan ahead "and the builder does a half ass job or runs out of money and the residents find themselves in litigation with a building site on the roof, which has insurance and health and safety implications. The advice is: do your homework and get the appropriate guarantees. You don't want a situation where there's work left unfinished."