Apartment block developers agree new code of practice

A NEW code of practice for developers building apartment blocks will come into force from September.

The Irish Home Builder’s Association (IHBA) code and an information booklet for people living in multi-unit developments were published by the National Consumers’ Association yesterday. IHBA members build 80 per cent of homes.

Legislation on such developments is expected later this year. Under the code, developers must set up an apartment complex’s management company and give ownership of the company to the apartment owners on completion.

The developer may not allow the service fee to be used to pay for snagging or completion of the development and the fund will be reasonable but adequate enough to meet the complex’s needs.

In the past some developers have set unrealistically low service charges in order to attract potential buyers; in other instances, owners have faced exorbitant charges which are used to complete development of the complex.

Under the code, if apartments are not sold, the developer will make up the shortfall in service fees until they are sold. The developer will have to set up a sinking fund in most developments.

The code pays particular attention to the transfer of the management company from the developer to the apartment owners after completion of the development. Developers must ensure that voting is weighted evenly so they do not retain a controlling share.

The developer will not transfer ownership until planning permission is satisfied and the common area snag list is complete. Developers will provide purchasers with details on the management company including its budgets.

The new regulations will be in force for IHBA members building new multi-unit developments from September 1st. If members breach the code they can be expelled.

Guidelines for consumers on the duties of management companies, managing agents and developers were published yesterday. Potential buyers are advised to look at the financial state of a management company (in particular its sink fund), to look at agreements with management agents and owners’ legal obligations.

“Rather than wait for the legislation to come through, we wanted to work immediately to provide consumers with as much information as possible,” said Ann Fitzgerald of the National Consumers’ Association.

The 500-member Irish Property and Facility Management Association has called for immediate legislative reform for multi-unit developments. It said the area was a “minefield” and so-called “management problems” actually come from flaws within the earlier stages of planning and construction.

A key problem it identifies is the difficulty of resolving building defects and failed completions under existing legislation.