Every year, apartment block management firms operating under lax governance and financial regulations receive tens of millions of euros, according to information provided to lawmakers. A conference held in Dublin on Tuesday saw calls for an immediate appointment of a sector regulator, particularly before additional billions of euros are poured into remedying schemes for houses found to have construction or fire safety defects.
Clúid’s CEO, Brian O’Gorman, highlighted that several owners’ management companies, where voluntary directors were awarding themselves substantial sums of money, were grappling with substantial financial and governance issues. “A regulator is required to enforce good practice,” he stated. He further added many such companies were on the verge of insolvency.
The Apartment Owners’ Network’s chairman, Bryan Maher, shared with the meeting that the financial status of the owner management companies sector was largely undetermined. According to him, their duty to collect management fees for continual maintenance also encompassed establishing a “sinking fund” to allocate resources for dealing with major issues like structure defects and roof replacements. Yet, about a quarter of owners haven’t kept up with their management bills, and 10% have considerable long-term arrears, possibly spanning several decades.
Maher also informed the meeting that sinking funds often covered expenses like insurance, energy, and waste management. Given that the Celtic Tiger construction surge occurred 25 years ago, he posed the crucial question of whether enough funds would be available when significant replacements become necessary.
While the 2011 Multi Unit Developments Act recommends a contribution of €200 per apartment annually to the sinking fund, Maher asserted that research suggests this should be around €1,000. As many firms adopt the lower figure, a yearly shortfall of €800 per apartment builds up.
Several attendees, many of whom were individual apartment owners, voiced concerns over a lack of transparency in management company finances. The meeting’s coordinator, Pat Montague, expressed an urgent need for reformation in the Multi Unit Developments Act. Despite this being part of the government’s agenda, the latest announcement from the Department of Justice suggests that such reforms would be postponed until the Government’s defective housing redress scheme is resolved can be implemented.
He emphasised the necessity for change before introducing the drawbacks resolution plan, therefore ensuring that homeowner management organisations are adequately equipped from a regulation standpoint when applying for state subsidies through this scheme. The proposed legislation surrounding the plan for resolving defects would be entirely unrelated to service costs and saving funds issues, thereby making any hold-ups unnecessary, he added.