A.K. Property Services Quote for Irish Independent article 'High Rise Bills'

Submitted by Aisling Keenan on Tue, 05/27/2008 - 09:24.

In todays Irish Independent, Ciaran Brennan writes about the service charges associated with apartment living:

"IT doesn't take a well-paid economist to tell people that the cost of home-ownership has gone up. Householders are already feeling the pinch of higher interest rates and mortgage repayments, on top of rising fuel and utility costs.

But for apartment owners the pain can be often more severe -- many have had to contend with soaring service charges for the block in which their apartment is situated.

All apartment owners must pay a service charge. This fund covers the costs of running the apartment development, including insurance, electricity in the common areas, lift maintenance, cleaning, garden and grounds maintenance, waste removal and management agents' fees.

The service charge should also include a payment into a "sinking fund" to deal with heavy expenditure such as replacing carpets, gates, lifts, painting, building repairs and paying for unforeseen emergency expenses.

Aisling Keenan from Galway-based management agents AK Property Services says: "Each of the apartment owners in that development has a financial stake in ensuring that it is maintained to a proper standard and that adequate reserves and sinking funds are accumulated to deal with medium to long-term refurbishment needs."

That may be so, but if anything has irritated apartment it has been service charges.

But why have they been such a contentious issue? It's a cultural issue, says Ann Fitzgerald from the National Consumer Agency.

"The main problem was apartment living became a feature of Irish life over the past 10 years with no concept amongst us as a nation that it is a different ball game than living in a house.

"Whereas apartment living is a shared form of living, communal living with shared responsibilities and it has taken a lot of problems for that realisation to hit home," she says.

A big problem is that many apartment owners don't understand what a property management company is.

A property management company is made up of all the owners of apartments in a development. It is legally responsible for maintaining the standard of the development.

This means that you, and the other owners in the apartment development, are responsible for the upkeep of the apartments and of all the common areas, says the NCA.

Ben Gough managing director of property agents Wyse says: "This is a cultural thing that the Irish general public have got to get used to.

"It is working in every country in Europe but we are behind when it comes to understanding the whole concept."

But what many people have a problem with understanding is the huge hike in management fees after they have bought their apartments.

Service charges are being driven by the size and complexity of modern buildings and fire, health and safety regulations, according to Mr Gough. For instance, many glass fronted apartment buildings require specialist cleaners.

While we have been living in a high-inflation era, the rise in service charges in many cases far outstrips the rate of inflation. A recent Dublin City Council report found that the average service charge per unit rose from €941 on 1992 to €1,530 in 2007.

"Very often in the heady days of the market, service charges were used as come-on charges. You might be quoted €500-600 a year which would double the following year," says Ms Fitzgerald.

On top of that the standards of management agents hired varied, with some being nothing short of useless, while in the initial stages some developers set up and ran the management company.

Developer-dominated management companies left many residents feeling powerless. But that shouldn't be the case, argues Ms Fitzgerald.

"People who buy into the development are members," she says. They have the right to attend AGMs, vote for directors and change the management.

Many of the issues will be sorted out by regulation next year. In the meantime, the NCA is hoping a code of conduct between the different parties will be drawn up next month.

But the general advice is to go into apartment living with your eyes open and ask the right questions about service charges.

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