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03 Jul

An Analysis of the of the Impact of the Multi-Unit Developments Act 2011 on New Multi-Unit Developments

The following is a keynote speech Paul Mooney, Director Benchmark Property delivered to the SCSI.

The long awaiting introduction of the Multi Unit Developments Act in 2011 was an underwhelming affair.  The rights of apartment owners had been put in law at exactly the time when the number of apartment completions was at its lowest since it became an acceptable housing model in Ireland.

 

Year

Apartments as % of
Homes Built

Total Apartments
Built

Total Homes
Built

 

 

 

 

2005

22.4%

18,035

80,557

2006

21.4%

19946

93,019

2007

24.1%

18691

77,627

2008

25.0%

12811

51,324

2009

19.5%

5148

26,420

2010

14.3%

2088

14,602

2011

12.8%

1340

10,480

2012

11.7%

993

8,488

2013

11.1%

922

8,301

2014

20.4%

2250

11,016

2015 - First 3 months

11.5%

303

2,629

 

Since 1994 almost 190,000 apartments have been developed in Ireland, mainly developed within managed communities when shared services, owner obligations and service charges are considered an equitable solution to co-operative living.  As Ireland evolves from recession and a devastating property crash there has been harsh truths to face in many areas, in the construction sector self- certification has been exposed as a failure particularly in high profile deficiencies realised in apartment complexes built at the height of the property boom.

New legislation enacted during the recession will only begin to impact in the coming years and with an urgent need for housing in Ireland’s urban areas it is important that we get it right this time.  Sustainable cities require high density housing, well built, creating communities for all stages of life cycle embracing a cosmopolitan and multi-cultural Ireland.

One piece of new legislation was the Property Services Regulatory Act 2011, which introduced for the first time a requirement for Property Service Providers involved in the Management of Multi Unit Developments to be licenced.  This, together with the enactment of the Multi Unit Developments Act 2011, presents an opportunity for experienced and qualified Property Service Providers to work with property developers in getting Multi Unit Developments right from the outset.

As we can see less than 5,000 of the 190,000 apartments developed since 1994 were built since the introduction of the MUDs Act, many of those 5,000 units are completions in pre-existing developments while others are developed as Multi-Family Investments where the MUDs Act does not apply.

Its only now as the housing crisis deepens, developers grow confident and financiers see reward that we are returning to sustainable high density housing requiring management structures and moving away from the comfort of traditional housing in suburban locations.  If we are to see development in our city centre again, it has to be through high density housing and Multi Unit Developments.

This is positive, with new building regulations and clear rules and regulations for the creation and ongoing management of Owners Management Companies for Multi Unit Developments the path should be clear for a new wave of well built, well designed and properly structured apartment developments to be developed for a more welcoming and cosmopolitan urbanite to consume and enjoy.

The practicalities of the MUDs Act for new developments are as follows;

  • The developer must set out from the outset, the full suite of documents and management structures for the Multi Unit Development.
  • The developer must transfer the relevant parts of the common areas of the estate before the sale of the first unit.
  • The developer must enter into a contract with the Owners Management Company contracting to complete the estate to a detailed standard.
  • The developer must pay the set up costs and pay service charges on each unit until it is sold.
  • The developer must provide certification and confirmations that the development is completed in accordance with Planning Permissions, Fire Safety Certificates and Building Regulations
  • The developer must deliver all documentation to the Owners Management Company on completion of the estate.

For the apartment owner there are also many benefits that can now be enjoyed with the introduction and operation of the requirements under the MUDs Act;

  • Equal voting rights for all owners within a Multi Unit Development
  • Service Charge Scheme Approval at General Meetings of Owners
  • A requirement that Service Charges shall be apportioned in an equitable and transparent manner
  • Binding House Rules on owners and tenants
  • A requirement for the Owners Management Company to deliver certain information on an annual basis encouraging communication between board and owner.
  • The requirement to create a sinking fund

It is now incumbent on Developers and Management Agents and the bodies representing the construction industry and its professionals to work together to make Multi Unit Developments a sustainable housing model and solution to urban sprawl.  Through working together to create enjoyable environments for individuals and families, the stigma’s and poor reputation attached to apartment living can be cast off with a positive impact for all parties.  As apartment living grows in popularity, it will grow in value, as apartment owners are more willing to pay service charges, owners management companies can deliver more value for money and Multi Unit Developments will be better kept.

Property Managers must play their part.  Getting involved in the process of establishing Owners Management Companies from the outset is an important task.  From the wording of House Rules to the development of equitable service charge schemes and reflecting such schemes in legal title is absolutely necessary for the proper and perpetual operation of any OMC.

Property Managers in this sector have long bemoaned the lack of professionalism in Apartment Block Management and the lack of controls – now there is controls and legislation detailing and demanding greater service, equity and transparency.  Developers and their legal advisors will now look to competent and professional Property Managers to assist and advise on the formation of Owners Management Companies and to take responsibility for the equitable and transparent service charge scheme now required under law.