Can management fees be different for Owner Occupiers than property investors

[SimplyWorried]

I live in a housing estate that is not taken in charge so we have a management company. The management company directors are all residents and they do tremendous work to the benefit of the residents of the estate. The original builder is gone. The management company do employ a management agent to look after the day to day

What bugs me is that a large number of the members of the management company are invested purly to make a profit out of the estate, by way of being a landlord. They don't contribute to the community in any way nor turn up to AGMs ect. The management company function is not to make a profit however a large number of its members are using it to turn a profit.

So my question is, can the management company increase the annual fee by 20% and then offer the owner occupies a 20% discount?
I believe paying a management fee to live in your home should be different than paying a management fee on an investment property. Why should the directors run a company for landlords to turn a profit?

Has anyone heard of this approach being taken? Would it be legal?

 

[_OkGo_]

I could be wrong but I don't believe you can do that. Under the MUD Act, the apportionment of service charges should be fair and equitable based on the class of each unit.

My understanding of this is that the service charge can be different for types of property (e.g. detached, semi-d, terrace, duplex, apartments etc) because there is a fair reason for the distinction. For example, a house may not benefit from the routine maintenance (painting/window cleaning) while an apartment needs to pay for use and service of elevators. I don't believe that the management company can specifically identify owners as landlords and charge them more

Multi-Unit Developments Act 2011

www.lawreform.ie

 

[NoRegretsCoyote]

A management company could probably spend a small % of outgoings on things like prizes for best-kept garden, or an annual barbeque for paid-up members.

Unlikely that landlords would derive any benefit from that.

 

[Brendan Burgess]

So my question is, can the management company increase the annual fee by 20% and then offer the owner occupies a 20% discount?

It's a great way to ensure that the investors refuse to pay their management fees.

 

[SimplyWorried]

@_OkGo_ You are probably right, it could be seen as not being equitable. We do currently offer a 10% discount for people who pay on time so there is a precedent on discounts. The local councils are doing similar via the NPPR charge of €200 a year on no principle properties so if they can justify it.

@NoRegretsCoyote That's a good idea, thank you

@Brendan Burgess The largest landlord in the estate is the county council, who have bought up a lot of the housing, rather than building social housing so it's unlikely they would not pay. They could attend the AGM and vote down the proposal.

 

[8till8]

Everyone's lease may specify how service charges are apportioned so find out whats in your lease first.

Also its unclear what your saying in the original post, the investors don't turn up to AGM's but the directors are running the company for landlords -- I'm confused.

Have you considered going forward as a director of the management company ?

They don't contribute to the community in any way nor turn up to AGMs ect.

Why should the directors run a company for landlords to turn a profit?

 

[Threadser]

I am a resident director of an OMC in a development where there are now more landlords than owner occupiers. Management fees have to be apportioned per unit based on the allocation in the head lease. You cannot discriminate regarding the status of the owner. We offer an incentive for early payment which is open to both resident owners and landlords.

 

[SimplyWorried]

Everyone's lease may specify how service charges are apportioned so find out whats in your lease first.

Also its unclear what your saying in the original post, the investors don't turn up to AGM's but the directors are running the company for landlords -- I'm confused.

Have you considered going forward as a director of the management company ?

I own a house in the estate, not an apartment so I don't have a lease to check. This has caused so much confusion over the years. I own my house and the land its on, unlike an apartment owner, who owns his/her apartment but has a 1000 year lease on the land. Therefore only apartment owners have a lease. The houses don't have a lease but are part of the management company. We do have a Memorandum and Articles of Association but no lease but the MUD Act overrides them now. Neither detail if we could offer a discount to owner occupier.

@Threadser Thanks for your feedback. Seems a shame we can't. The government deem it appropriate to apply a NPPR tax, I was hoping we could do similar.

 

[Bilbo1]

Both the owner occupied and the landlords are getting value (or making profit as mentioned) out of it.
They are getting a rent, and you are getting the value of having where to live and not having to pay rent.
Look at the positive: they don't go to the AGMs, so you (the owner occupied) get to decide what the money is spent on without they objecting.

 

[odyssey06]

I live in a housing estate that is not taken in charge so we have a management company. The management company directors are all residents and they do tremendous work to the benefit of the residents of the estate. The original builder is gone. The management company do employ a management agent to look after the day to day

It sounds more like the split in effort \ free rider benefits are not between owner-residents and landlords, but between the effort put in by management company directors and the rest.

Just thinking out loud here...
Is it possible for the management company directors to e.g. receive a deduction in service charge in recognition of this?
Or something like a one 4 all voucher?
Or an expensed directors company christmas lunch or something.

 

[Threadser]

Just thinking out loud here...
Is it possible for the management company directors to e.g. receive a deduction in service charge in recognition of this?
Or something like a one 4 all voucher?

We don't receive anything for our time given on the board. There was discussion about giving a reduction in management fees but we decided against it as it could motivate people to be voluntary directors for the wrong reasons. You could probably claim for genuine expenses but we never have, as we prefer to be totally transparent.