Cleaning, security and maintenance of apartments and houses are suffering because of unpaid service charges, says a new survey

AN INCREASING number of investors who bought apartments and houses to rent in recent years are failing to pay service charges, according to a new survey.

The study by the Society of Chartered Surveyors and the Irish Property Management Association found that about half the property managers questioned reported that up to 20 per cent of the owners had not paid their services charges in the past year.

The remaining property managers calculated that between 20 and 40 per cent of the owners were in default in other residential schemes.

Clare Solan, honorary secretary of the Society of Chartered Surveyors, said the results showed that the non-payment was more likely to occur in newly-built developments than in older schemes. Investors were again identified as the largest single group of owners who were more likely to try and dodge the payments.

This was largely due to the fact that they did not reside in the apartment blocks and distanced themselves from the problem. The investors had to cope with reduced cash flow and restrictions on bank funding.

The survey identified developers as the second most likely group to have fallen behind with the payment of service charges. Ms Solan said this was probably as a result of a reduced cash flow since the intervention of Nama. Developers were also slow to pay service charges on residential units remaining unsold.

Around 65 per cent of the property managers questioned said that as a result of the fall-off in payment of the charges, services such as cleaning and security had been either withdrawn or reduced in many developments.

“Continuing redundancies, pay cuts, declining property values and overall uncertainty in the property market means that this problem is likely to continue and indeed worsen,” the report said.

“As repairs, maintenance and cleaning decline, the quality of the properties will suffer, leading to a depreciation in values. Once the housing stock deteriorates as a result of reduced maintenance, it will require greater levels of repair and investment in the future.

Ms Solan says the Society of Chartered Surveyors had sought the support of the Department of the Environment, Heritage and Local Government to tackle the problem of unpaid service charges.

The SCS had suggested that as part of the annual tax returns, an investor claiming mortgage relief or Section 23 relief should have to provide proof of payment of service charge before he could secure these benefits.

Ms Solan also suggested that the Small Claims Court should have jurisdiction to a limit of €3,000 (currently €2,000) to deal with cases involving the non payment of service charges.