Slack investors may pay the price learns Edel Morgan
I'VE WRITTEN quite a few columns about spiralling management charges, but never one focusing on tax-designated apartment blocks, where a high proportion of units is owned by investors. Two investors contacted me recently with similar tales of woe about soaring charges and a less than transparent management agent (which, co-incidentally, turned out to be one and the same).
One, who bought into a Tallaght development and owns several other properties, said that buying an apartment was the "the biggest investment mistake" of his life. He bought the three-bedroom unit in 2006 when the management fee was €1,650 per annum. It has since risen by 112 per cent to €3,494 - the equivalent of over two months' rent.
In the normal course a development is handed over to the owners by the developer when all the apartments are sold. This scheme is still in the control of the developer because three apartments are unsold. He says meetings with the agent to determine why the annual charge had more than doubled were "unproductive". Admitting he only ever got involved with the residents' committee out of sheer necessity, he is now a very reluctant chairman of the committee of six. Sounding resentful when talking about the amount of unpaid hours that come with the role, he says he is "pushed to the limit" attending meetings and drafting correspondence. Being largely an investor-owned development, it has been difficult to track down other owners, and he says the management agent wouldn't provide their contact details.
The committee eventually contacted the developer directly to express its dissatisfaction. The agent has since been fired and the developer has provided the committee with contact details of other owners. A new agent has been appointed by the developer and, while it is still early days, he says security costs in the revised interim budget for this year provided by the new agent have been reduced from the €354,000 estimated by the previous agent to €180,000. He feels, however, that the owners have no "real power" until the development is handed over.
Another investor who has just sold his two-bed Section 23 apartment in a Bray scheme after 10 years admits that, like many investor-owners, he didn't get involved in the day-to-day running of the complex or demand an explanation for why the service charge crept up from £400 in 1998 to €2,727 this year.
He put the apartment on the market for "a realistic price" and sold it within six weeks. To make the deal more palatable for the buyer - an owner-occupier - he agreed to reduce the price of the property by €4,000 to contribute towards the service charge. When he contacted the management agent to say he was selling, they ordered him to pay the management charge up to the end of the year (he was up to date with his quarterly fee) before they would issue him with a receipt for his solicitor so the sale could proceed. Anxious to close the sale, he agreed to pay but it took him days of chasing their accounts department to get the receipt. Desperately trying to contact someone in the office he e-mailed me in frustration asking me to call the agent and listen to the voicemail of one staff member saying "our opening times are 9am to 5pm Monday to Friday, but this Friday we close at 3pm for staff celebrations".
"It was a nightmare. Communication is by e-mail, they won't take calls directly, so if something needs urgent attention they won't react to it. The moral of the story is investors tend to be a lot more slack than owner-occupiers, and need to be more involved in what is going on. The culture of some agents seems to be to screw people - to treat them mean."
emorgan@irish-times.ie
