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What to expect when you own in a managed apartment building

The following piece is a query which was sent to The Irish Times Property Clinic and which our MD, Enda Mc Guane was asked to respond too. Winters  Property Management has over twenty years experience in the management of residential and commercial property. All our property managers are licensed by the Property Regulator and as a business, we are members of both the Society of Chartered Surveyors and the Royal Institute of Chartered Surveyors. Our expertise is often called upon by owners to advise them on difficult situations.

“I was looking into buying a one or two-bed apartment in Dublin but my parents really aren’t keen on the idea and are pushing me to hold out and buy a house instead, because they’ve heard stories about issues with buying an apartment i.e. management fees, sinking funds, neighbour issues, etc.  I really would much prefer to go down the apartment route myself. Could you shed any light on what to expect when you own in a managed apartment building, and would you have any advice on the most important things to consider if I go down this route?”

Thanks for your query, which is interesting as it illustrates two very differing perspectives on housing. One of the biggest challenges facing Ireland is how we will live in the future, particularly as our population grows. Traditionally we have had a huge focus on owning houses with the 3 Bed Semi-detached house located in a convenient suburb close to work and schools being the most popular option.

However, as the suburbs get further and further from the city/ town centres and commutes get longer planners and people have begun to rethink this approach. The recently published Ireland 2040 plan recognises that in order to cater for our growing population we need to make our cities denser. The result has been a new focus on apartment living which is heavily influenced by continental European approaches and standards. Up to very recently, we did not focus on “placemaking” when we developed apartments which is how your parent’s perceptions of apartment living formed. However, over the last ten years as we have begun as a society to recognise the need for denser cities we have started to legislate and regulate apartment development and management which is the focus of your query.

As the owner of an apartment, it is the norm for you to be a member of an Owners Management Companies (OMCs) whose structure and operation are laid out in the Multi-Unit Developments Act which was introduced in 2011. In simple terms, the OMC is usually responsible for the shared common areas of the apartment block including corridors, external walls and roofs. There can be some variations on this arrangement so when purchasing you need to ask your solicitor to review your title documents which will outline in detail the services that the OMC is to provide. They will review the long leasehold title of the apartment which determines the responsibilities of the owners’ management company (lessor) and apartment owner (lessee).

Examples of common area services are block insurance (including public liability); cleaning of common areas; maintenance/management of the car park; repair of roofs and gutters. These services are budgeted for on an annual basis and the budget should be approved by owners at an AGM. Service charges are then levied on all owners; The annual service charge will also include a contribution towards a long-term sinking fund and the amount to be paid is also agreed at the AGM as part of the budget approval process. The Act also put in place additional obligations (on top of the Companies Act) on OMC Boards of Directors relating to consulting with owners and reporting on all aspects of the OMC’s role including use of funds. Your solicitor should as part of the conveyancing process conduct pre contracting enquiries on the OMC and its Operation. This will include details on the unit service charge as well as a snapshot of the overall health and importantly regulatory compliance of the OMC and the outcome can help to inform your purchasing decision.

Individual apartment owners are usually responsible for everything inside the four walls of the apartment including insurance and maintenance. However, all owners within an apartment complex are bound by the covenants and conditions contained within their Indenture Lease, which forms part of a property’s title and is signed by owners when purchasing. One of the standard conditions, for example, is that each owner is required to keep their property in a good and tenantable state of repair. Some leases will also have clauses about noise within the complex and the obligations of owners to address any noise issues which arise. The OMC is responsible for taken action to ensure that all owners comply with the terms of their long leasehold title and with the OMC house rules.

Purchasing a property is always a big decision and it is important to carry out as much due diligence as possible. We would always recommend that in addition to the above you would retain the services of a Chartered Building Surveyor to provide you with a more complete structural review of the property.

 

Enda Mc Guane is a Chartered Planning and Development Surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie

If you are considering purchasing a property or preparing to sell a property and need advice please contact our Senior Sales Agent Ian Hutchinson direct for further advice on 091 771898 or email ihutchinson@winterspm.com 

 

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