Property Management Companies are set up mainly to provide a forum for all owners to be represented equally and to hold title to the common areas of the development be it apartment block or housing estate.

On this topic, here is an article that has recently appeared in 'Accounting Matters'...

"Property Owner Management Companies are companies set up to hold title to common areas of apartments and housing estates. The company pays for maintenance etc. and bills this to the residents as an annual service charge. It is usual for the title to the land to vest with the developer until they have finished the development and then transfer once the development is complete. It has now become common for builders to delay transfer of the common land sometimes in the hope of further developing the land or sometimes just by oversight. This does not preclude the Property Owner Management Companies charging residents their annual service charge although it is likely that an auditor will put in an emphases of matter paragraph in their audit report drawing attention to the non transfer. Not owning the grass does not mean that you can't mow it and you certainly have an insurable interest in maintaining the property you may not technically own.

However, it is very common for the property transfer agreements to state that the builder is responsible for maintenance until the common area is transferred. For some reason this seems to have been ignored in most developments. An auditor would be minded to check the transfer agreements as there may be no basis for charging the annual service charge where the builder has held on to title to the common area and this standard clause is in the transfer agreement."

While the author of this article may note that "there may be no basis for charging the annual service charge" the reality is that if the owners do not pay service charges to maintain the common areas the chances are the the builders will not pay it and this will lead to a long dispute all the while the development is deteriorating and the value of the properties within are affected negatively.

This is an article that I hope to develop in the coming weeks as I have spent some time discussing this topic with colleagues, friends and clients. The wide area that this covers includes unsold properties within a development and owners/investors not paying their annual service charge to their management company. All the while, the common areas, buildings and management company have to be continuously maintained. Those who are paying their service charges in the company are financially carrying the non/slow payers.

In the past 10 years of managing properties in Ireland we have been asked who is liable for service charge payments in developments where there are unsold units? For example there may be an apartment block of say, 50 apartments. In the first year only 40 are sold but services and utilities for common areas still have to be paid for the whole development. Is it the existing owners that have to pay their equal share of these 10? Who is responsible for picking up this tab?

The recent boom years in our economy has seen many new types of investors in the property market. Let's give one hypothetical example: a young single couple late twenties, having purchased their very own investment property. They already live in another house purchased years earlier that gained sufficient equity for their bank to impress another mortgage upon them for an 'investment' property.

This young professional couple have in the past been able to rent out their investment property, a 2 bedroomed apartment within a complex that has electronic gates, large green area, interior common areas with lifts etc. The service charges in this complex for this apartment are €1,400 in 2005, €1,500 in 2006, and €1,600 in 2007. The current year service charges are €1,700 and this young investor is unalbe to get a tenant. In 2005, 2006 & 2007 finding a tenant was not a problem. There were plenty of construction workers working in the area looking for accommodation. The area has now got a surplus of accommodation.

There are numerous apartment blocks built in the area and today most of these constructions workers have moved out of the area, gone back to their home country/county. They no longer require that apartment that they lived in while they were building the block down the street. This investor is already dealing with higher interest rates & rising overheads and is finding it difficult to pay the current 2008 annual service charge for the apartment.

This is of course one such example. This situation has further reaching implications where the 'investor' owns 5 apartments in a development of 20 and has gone into their 2nd year of not paying their service charges. Other owners in this development have much higher service charges as result.

Property owners must factor in the cost of service charges to their own annual budget in advance of purchasing a property within a Management Company.  It is a commitment  just like their mortgage repayments regardless of occupancy. Very often the annual service charges are not factored in and this is where the owners get into difficulty trying to pay their fees.

A good tenant is an asset

A bad tenant is a liability

For landlords looking to get a tenant for their property it is of paramount importance that they adequately screen prospective tenants in advance. Screening of tenants can include collecting, coalating and evaluating information on the prospective tenant in order to reach an informed conclusion on their eligibility to rent the property. Its recommended to dig deeply into how the tenant will treat your valued property.

If a landlord rents his/her property to a low calibre tenant it may prove costly. They risk slow or non payment of rent, disregard for property causing damage such as broken windows, poor housekeeping skills, parties and having many friends or family staying over on a continuous basis increases wear and tear of the property. After a very short while the property may need to be refurbished and have expensive repairs carried out in preparation for a new tenant.  It  can be difficult and very time consuming to go through the process of evicting a tenant even in circumstances where the tenant is in the wrong.

In a recent case, a family renting a three bedroomed house in a small housing estate had caused serious problems for the owner of the property. There were, continuous  alcohol fueled parties in the house causing damage such as broken windows and doors, a constant stream of complaints to the owner of the property from other residents in the estate about the anti-social antics of these tenants. These tenants placed a large skip on the common green area of the development to dispose of their domestic waste. After a long and expensive court battle, the cost of this clean-up was borne by the management company at the time and later was billed to the owner of the property. Regular visits from the Gardai to the estate left the estate with a less than desirable reputation.

It is important to note that most of the time a landlord will find it difficult to verify past records including criminal reports of a prospective tenant. Reylying on the assurances of friends, past tenants and so on may backfire as past experiences has proved time and time again that verbal assurances are not worth the paper they are written on.

It is recommended that landlords engage the services of the professionals in this area to handle lettings. A reputable and proven firm of letting agents will have exact policies and proceedures and the expertise to cover most or all eventualities and they will take responsibility for any tenant they place. 

With the right tenant in place renting out your property can be profitable.

Working with several property owners daily we realise that many owners are unaware there is a tax relief due to them as PAYE workers at the standard 20% rate. 

Income tax relief is available for individuals who pay service charges to local authorities and other independent contractors. Relief is given for service charges paid in full and on time in the previous calendar year.  

Service Charges which qualify for tax relief are all service charges paid to Local authorities for the provision of domestic water supply, domestic refuse collection, domestic sewage disposal, group water schemes for domestic water supply. There is also tax relief for Independent contractors for domestic refuse collection or disposal. 

For more detailed information on this you should contact your local revenue office or you may download the tax relief form 'IT27 Tax Relief for Service Charges' 

There will be elements of your service charges that do not qualify for this tax relief such as sinking fund or Managing Agents Fees, however as all PAYE property owners are entitled to claim this relief on other services we recommend that you do this. A.K. Property Services provide a detailed breakdown of all service charges so any property owner can easily calculate their individual costs in all areas. Should you require any assistance in completing your IT27 you should contact your Managing Agent. 

This was a question submitted to us:

"Madam,I live in an estate where I must pay services in respect of the roadsand services only. I have been sent a bill for service charges butthere is no indication of how these charges are calculated. The chargesI have to pay are more than my neighbours. I have a detached house andthey have a semi detached house. I don't understand why my charges arehigher as in fairness the charges only refer to the use of the roads. Iasked my managing agent for a break down of costs but they onlyprovided me with a small sheet of paper outlining all overall costs andwhen I phoned they just told me that was the way it is. Is thereanything I can do about this? I'm very upset that I am being asked topay a charge when I don't know what its for or how its calculated. Anyadvice as to my options?D. C. Galway"

Dear D.C. Galway,

Thank you for your query. Often property owners find it difficult to ascertain what is included for their service charges and how the calculations are made. On our website we have a section on this very issue. If you follow this link http://akproperty.ie/typical-costs it demonstrates examples of items that would be included. Perhaps the reason why you have to pay more service charges than your neighbour is because your property is bigger. If you check the Management Comapny Agreements and Memorandum and Articles of Association of your Management Company it will set out there how the charges should be calculated. I suspect that the reply from your Managing Agent 'thats just the way it is'  refers to the fact that 'the way it is' is set out in the legal documents attached to the title of your property and they must adhere to these documents when calculating the service charges. If you check these documents in relation to your Management Company you should have a greater understanding of how the charges are calculated. 

The official launch of Galway based, A.K. Property Services' new website www.akproperty.ie, took place recently at the plush VBar, City Limits, Oranmore.

A.K. Property Services is a well-established nationwide firm of managing agents, founded in 1998 by Aisling Keenan from Terryglass. Considered to be one of the leading property managing agents in Ireland, they have a reputation built up over the past ten years based on their performance and expertise.

A.K. Property Services started out managing a number of apartment blocks in Galway and has since grown to become one of Ireland's top firms of managing agents, with many different developments in several locations throughout the country.

Ms Keenan said: 'When we started building our website last June, I set out to create a site that was current, spontaneous, colourful and edgy, that could deliver news on all our latest developments and tell the site visitor exactly what they needed to know.'

One novel feature of the site is their use of the National Consumer Agency's very own guidelines for property management. At the end of their booklet 'Property Management Companies and You' they pose 17 questions that a client should ask any prospective management agent; questions such as whether there is an out-of-hours service for emergencies or how financial records are kept about each development.

Ms Keenan added: 'We hit upon the idea of answering all those questions in full on the site, putting the clients mind at ease straight away, and we even threw in a few answers the National Consumer Agency hadn't thought of.'

Another wonderful features of the site is their new blog which will enable visitors to the site to keep up with the latest developments in Property Management.

The Client Listings allow visitors to the site to quickly and easily see the developments they manage near them, and see the nationwide spread of the company.

There are quotes from some of the world's best managers and thinkers which really articulate the vision of A.K. Property Services such as the one on the front page, by Edward C Simmons: "The difference between failure and success, is doing a thing nearly right, and doing it exactly right."

Further details from Aisling Keenan at Tel 091 795883, email:aisling@akproperty.ie, www.akproperty.ie

At A.K. Property Services we are committed to keeping you updated on all issues relating to Property Management in Ireland. We welcome your continued and regular comments and questions that you are looking to have answered. 

Very recently we had a question on our blog relating to service charge bills. We recommend that all property owners paying annual service charges check the bills. Ask your Managing Agent for a breakdown on what is covered.

Our web page 'services-typical costs' gives details on what may and may not be included in your bills.

We look forward to hearing from you.

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

The Offaly Independent Newspaper last week published the following article about A.K. Property Services :

'A well known nationwide property services firm launched a new website, www.akproperty.ie recently.

A.K. Property Services is a well-established nationwide firm of managing agents, founded by Aisling Keenan in 1998. Considered to be one of the leading property managing agents in Ireland, they have a reputation built up over the past ten years based on their performance and expertise.

A.K. Property Services started out managing a number of apartment blocks in Galway and has since grown to become one of Ireland's top firms of managing agents, with many different developments in several locations throughout the country.

In an address by Ms Keenan on the evening she said 'when we started building our website last June, I set out to create a site that was current, spontaneous, colourful and edgy, that could deliver news on all our latest developments and tell the site visitor exactly what they needed to know'.

One novel feature of the site is their use of the National Consumer Agency's very own guidelines for property management. At the end of their booklet 'Property Management Companies and You' they pose 17 questions that a client should ask any prospective management agent; questions such as whether there is an out-of-hours service for emergencies or how financial records are kept about each development.

Ms Keenan said: 'We hit upon the idea of answering all those questions in full on the site, putting the clients mind at ease straight away, and we even threw in a few answers the National Consumer Agency hadn't thought of.'

The Client Listings allow visitors to the site to quickly and easily see the developments they manage near them, and see the nationwide spread of the company.