New apartment block - Management Fee Query

A few points before I give on this board completely.

1) There was legislation published this year. See here:
[broken link removed]

2) Tenants have rights. The (slow and nowhere near as good as they should be) PRTB are very pro-tenants.

3) Developments that are not completed and all sold are very different to ones that are finished and occupied.

4) Of course I agree that regulation is important. But it isn't there yet and in the meantime, developments need individuals to get involved and stop sitting around complaining.

Finally, Juris - why would you wait for 6 weeks to bring such serious allegations to the Gardaí?
 
Juris said:
Lets not kid around here. Charging someone the equivalent of 10% or more of yearly rent is not trivial, is not regulated and although you have found it productive to get involved (hope that continues to work for you) it lacks any transparency. There are virtually no legal protective measures for tenants in place as of yet. All the good will and community spirit will mean nothing before a management companies counsel in court.

Furthermore as explained above by ontour where if you rent 1 apt in a 50 apt complex your management fee = 2% = "your share of the cost of running the complex" it does not grant you additional equity in, legal recourse against, or locus standi to enforce as against any defects in another tenants premises which may increase your personal management costs. You pay for someone else, often their negligence, poor material usage, construction etc with no recourse. Similarly if 25 of the 50 apts are left vacant and your fee where to double, your now 4% stake in the fee payment does not grant you greater equity in empty premises which may suffer damage and you have to cover it. How very Celtic Tiger.

I'm truly glad you have found management company you feel happy to deal with but if your trying to say many Irish management companies and developers are not widely engaged with profiteering I think your missing the reality of Irish real estate and how the last 10 years of corrupt politics has assisted them, and the desperate need to regulate through legislation. Its not surprising they remained unregulated throughout the boom when its the politicians who make the laws is it.

If I'm in a management company, who just so happens to have close ties to a/the developer, who also happens to have close ties with (say own or have business interests with) contractors who do you think I will get to do my next paint job, my next lift maintenance. Thats right. Interweaving companies are a factor of Irish company law and little more than a law suit and applications for discovery (you should see that cost for laughs) will uproot the reality of a system of endemic corruption and back door profiteering where its basically a closed loop, even in tendering for maintenance.

Can you explain the rise in many tenants management fees this year as opposed to last, even in complexes with full capacity. I can. Its called covering your loss. Developers/landlords who have lost out during the downturn try to pick up part of the loss in rental prices by upping the management fee. They may make cross agreements with another development: developer A has ties to subsid management co A, who manages developer B's complex while developer B has a management co to manage A's complex. If they all raise prices together = revenue stream cross-flow.

Example:
Rent + management fee
'08 €2,000 + €2,000 = €26,000
'09 €1,800 + €3,000 = €24,600

Factor decreasing costs of materials for maintenance, vastly greater bargaining power of management companies as against contracting for workers (desperation in the industry means they will work for 25% less than last year just to see a paycheck) with many other potential savings as occurs during recession and even the gross loss of €1,600 above is not only wiped out but profits may be increased. Thats the reality.

To the OP, I'm paying 0 in management fees officially where I'm renting. I say officially as I have discovered the management company have been overcharging for utilities to the tune of nearly 250% and misrepresenting utility costs. They may also, in league with the overall landlord, who is a well known figure in Irish property, be charging and accounting the apartment blocks utility fees to a franchise business adjoining the premises owned by the landlord, but I believe not declaring the residential usage to revenue and instead claiming the usage as business purpose sole. I spotted this about 7 months ago and after chasing management I finally caught up with them and made them sign a statement refusing to pay utility fees until the discrepancies were explained. They can't and seemed worried by my discoveries. The management company have been telling foreign nationals in my development (majority) that their false costs are real (ESB + Gas) direct supply charges by doctoring and issuing false statements and playing on their unfamiliarity and often lack of good English. Thats a criminal matter and I'm only waiting till after Christmas to bring the matter to the attention of the Gardai. I doubt their '10 will be as good as '09 from where I intend to put them. Be cynical, be vigilant and if you spot any abnormalities, inform all other residents and hunt as a pack. Irrespective of the lack of legislation we have very clear laws regards fraud. Hope it works out for you and everyone else. Slan.
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Am I the only person confused by this post?? For starters there's a clear misunderstanding of the management company/agent thing but also where does tenant come into it?

If you rent an apartment in a managed development you pay zero management fees and you have zero input into affairs of the management company :confused:
 
New-Red said:
Hi Orionstar!

If I get a contract stating that I will only be liable for 1/23rd of the upkeep in my apartment, does that not protect me (or help protect me) against any hugely insane rises in my yearly fees? (a genuine question, not a rhetorical one btw)
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Hi New-Red. Your contract to only pay for 1/23rd may be irregular but there is no legal bar to implementing it as far as I am aware. However, there will also be no legal bar from the management co. increasing to double the current amount. For the sake of math lets make it a 24 apartment complex.

You sign a contract stipulating 1/24th payment of management fee currently at €1,900. Imagine all 24 apartments are filled. Management are happy with €1,900 x 24 = €45,600.

3 years later 12 people have left the apartments. Management have now got intake of €22,800 = €1,900 x 12. The management could double your management fee to €3,800 to cover their loss (although not a legal loss but prospective) and still claim you were not paying for the other empty apartments. Although it is clear what is going on legally there is little at the current time to protect the tenant.

If I were arguing against you in a court (as defense for management) I would site the inability to forsee increasing costs when signing the contract, the 'fact' that costs of maintenance for common grounds/lifts etc remain the same or have risen (and health and safety obligations to upkeep by statute to back it) irrespective of the numbers of units occupied. Net effect is I could likely nullify your contracts purpose (i.e keeping the managements costs down) without having to try and nullify the contract itself = valid but useless piece of paper. Proving that costs have not risen would be difficult for you if the management co. were engaging companies they are (cough) 'comfortable with' to do maintenance and funneling the revenue back to themselves through the back door. I'm not your solicitor but I would ask them if they have a better way to do it, such as an agreed cap (management co. may have a heart attack with such proposals but try anyway) or alternative method. I'm sure they will be helpful if they can. Also be sure to query the potency of the new legislation with them and outline how it will relate to you. If they don't know tell them to get acquainted with it, quickly.

May I ask why you are purchasing now, at this moment in time. I know its a broad question and I don't mean to pry or put you off but with the worst budget in Irish history about to hit, a mass destabilisation in the housing market, likely increased property taxes (may be small, may be the same as your management fee) in that budget and lending capability likely to improve if NAMA's ensures bank liquidity improvement (I'm wary on that but however you did say that getting a house was impossible due to current lending criteria) I'm just wondering if the deal on the apt is too good to wait really. Sorry if I sound like I'm prying, just concerned as have family and friends who have gotten into financial strife with recent purchases and mortgages.

@shesells: Tenant comes from someone residing in a premises for rent. I'm coming from a tenants perspective, not owner. As for not paying a management fee myself the point is the management co, while stating there is no direct management fee being paid by tenants (as he stated the landlord was paying him from rent accrued, naturally) was in reality accumulating a fee through fraud on utility bills. The landlord was/is assisting/directing in that fraud, and potentially using some of that fraudulent accrual to pay off his own management fees. Circular fraud. As for not understanding the "management company/agent thing" please clarify what you feel is wrong?

@purpeller. Hi. My own dealings with the PRTB (not huge thank god) have been very pro landlord but everyone seems to have their own totally valid viewpoint. It is an arbitration board only and unfortunately although they can be beneficial it can also be a slightly haphazard experience for some. I'm looking forward to the legislation as well, its been long enough coming and in the current economic climate will be battle tested to within an inch of its life very soon I'm sure. It'll be great for everyone to know where they stand, especially in these uncertain times. I agree that anyone buying in a development should make it a priority to get acquainted with all aspects of the management and community dealings. The 3 of 23 sold in the OP's situation would make me nervous as others have said. If its your home be proactive, it can really help. As for waiting the 6 weeks, multiple reasons.

1. I don't want to disturb my Christmas playing with the courts and Gardai.
2. Will be moving out soon as over the lease period, running on rolling 30 day. I have dependent family with me and until I have them somewhere comfortable I don't want to raise a storm.
3. Gardai unlikely at Christmas to give a crap about investigating fraud. Drunk drivers make better targets for arrest targets.
4. Even if they are being fraudulent and slimy I don't want to hammer someone else's Christmas with fraud allegations. January is fine.
 
Juris said:
You sign a contract stipulating 1/24th payment of management fee currently at €1,900. Imagine all 24 apartments are filled. Management are happy with €1,900 x 24 = €45,600.

3 years later 12 people have left the apartments. Management have now got intake of €22,800 = €1,900 x 12.
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I know it's a hypothetical but what do you mean by "12 people have left the apartments"? If an apartment is sold, then someone else owes the management company the service charge, regardless of whether it's vacant or not.:confused:
 
purpeller said:
I know it's a hypothetical but what do you mean by "12 people have left the apartments"? If an apartment is sold, then someone else owes the management company the service charge, regardless of whether it's vacant or not.:confused:
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Over the course of the next 3 years I fear an escalation in repo's due to mortgage default. Although the bank would then be liable to pay management fees in lieu of the original clients the fact is many developers (who may own or be heavily affiliated with management companies, even if not as far as is registered with the CRO on the face) may be indebted to the banks. The banks will use their hold/position on this, potentially offsetting payment as against money owed to them which the management will likely require to function at 100%. If I was a management company I know I would prefer to increase costs to non-bank held occupied premises, engage in creative accounting (as many are already engaged in now even without such pressures), rather than try to enforce payment from the banks directly for management costs. ****ing off banks or fighting them in court is an expense few managements companies have either the resources, courage or stupidity to engage in. Even if you win a battle you can lose the war in the long run against these people. They are your credit line after all. Charging the little guy more is more like Irish business practice.

Please don't tell me there is no underhanded interplay such as this in Irish business as its a simple reality and is becoming more and more evident ever day. I'm not fighting with you on this as its clear your very clued in and savvy from your comments.

I would advise increased vigilence in these times from those in developments. Just ensure as best you can that this does not become a practice which goes unchallenged. The problem may be proving it. As you said yourself, be proactive, engage in participation, monitor budgetary expenature as best you can and be vigilent.

Although this is all predictive re the next 3-5 years when a person is entering into a 25-30 year mortgage and therefore massive longterm obligation I feel cynicism may be better than the blind sheep like faith and trust we collectively engaged in during the Celtic Tiger. Look where that got us.

Having had to call the Gardai and fire brigade at 12.30am last night to break the development gates to gain access (and ensure 100+ others could get out particularly in a fire situation) while management stated the work they contracted 'their man' to do was safe (brigade disagree after 6 of them couldn't break open the gate without equipment) I have no faith many such unregulated companies have the best interests of tenents/clients at heart. Solicitors will be brought in.
 
Juris, thanks for the reply mate. Very informative. And capping the fee is a good idea, and worth a shot at least. As for the timing, no there's no reason why I cant wait a bit longer. If I could iron out these fee issues then I'd be happy to go ahead, but if not, then I will pull out of the sale and then wait and see how other things pan out, as you suggested.

Shesells, yes the fees sound very excessive. There's underground parking with a barrier, elevators, etc so I can understand them adding more on for these but 1,900 for a one-bed seems far too high alright.
 
While I agree €1900 is excessive, it may be that the company is not in good shape. My own fees are similar to that level and we are going through a period of sorting out major problems with bad managing agents over 8 years, with only one proper year of management and oversight. We (the board of directors) wanted to reduce the fees this year but we have so much debt owing (which is being pursued through the courts) that we couldn't afford the income drop.

New-Red: The number of lifts will increase the costs as well. Have you gotten a look at the accounts yet?
 
Hi Purpeller, I will finally get a look at the budget etc today, meeting the solicitor to discuss it all at lunch-time today.

I guess the 1900 is just about do-able for me, but its what happens over the next few years that really concerns me, with only a few of the units sold.

Hopefully what I see on paper today will give me some sort of indication about whats going on...
 
developer agreeing to cover the management fee fopr any unsold units??? BE VERY CAREFUL, he will be happy to walk away from this too if the development goes bust. You can be sure that it is a stand alone development company and you will have recourse to nothing and no one. Your solicitor should of appraised you of this massive shortcoming in the developers offer. Run fast and far is my advice.
 
Southside, thanks for the reply.

So look, is the general consensus that it will just end in disaster if I buy into this apartment due to the fact that they've had units for sale for a year and only 3 out of 23 have sold so far?

And if I cant buy a house in the area then the next best thing is to buy an apartment in a block that has over 80% occupancy?

Or at least thats what I'm reading into the comments so far.

Ideally I'd still love to buy this one, but all advice seems to say not to. I'll be really disappointed to have to withdraw my offer but looks like I dont have much choice.

I'm a first time buyer who has never lived in an apartment so I'd best go with the advice given.

Thanks again to everyone who has taken the time to reply.

Much appreciated.
 
Hi there,

What did you decide to do in the end?

I own an apartment and have to pay extortionate service charges every year. I then get a blase newsletter suggesting that they get security guards put it! There isn't even a crime problem at the development.

These companies are a rip off. They are an absolute disgrace.

I have been getting bills from a utility company, something to do with water. I can't make head nor tail of it. Surely the local water board should be charging for water not these sharks? But apparently they are something to do with the management company.

I let the apartment out and I get charged by this company when the property is empty. If the tenant doesn't pay their bill, they charge it to me as owner.

I've had enough of this. My hands seem to be tied. If anyone has any experience of taking on these companies or are aware of government legislation, I'd love to hear from you.

Many thanks.
 
Could I jump in and ask are these parts of the service industry regulated in any way?

Perhaps there is a way forward there, :).

ONQ.

PS Oops! Sorry, just read juris excellent post.
 
management fees-apartments

After reading this thread my idea of buying an apartment over the next few years is becoming just that an idea.

I was thinking of putting in a cheeky/what I think is reasonable offer in a year or two when we might have an idea of future expenses connected to property ownership like water charges, property taxes and future energy prices for property owners in this country but this issue of the apparent lack of regulation in this area of management fees was really holding me back too...from this thread asking what future management fees are is like asking how long is a piece of string!!

Feel sorry for the OP though and anyone in a similar position it seems the last few years people in this country dont do their homework before buying though at all is that fair??
 
Grace1974 said:
Hi there,

I have been getting bills from a utility company, something to do with water. I can't make head nor tail of it. Surely the local water board should be charging for water not these sharks? But apparently they are something to do with the management company.
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Sounds like you're not in Ireland? No water boards here...yet. AAM is an Irish based site where advice given is relevant to the situation here.
 
Grace1974 said:
I own an apartment and have to pay extortionate service charges every year. I then get a blase newsletter suggesting that they get security guards put it! There isn't even a crime problem at the development.

These companies are a rip off. They are an absolute disgrace.

I have been getting bills from a utility company, something to do with water. I can't make head nor tail of it. Surely the local water board should be charging for water not these sharks? But apparently they are something to do with the management company.

I let the apartment out and I get charged by this company when the property is empty. If the tenant doesn't pay their bill, they charge it to me as owner.

I've had enough of this. My hands seem to be tied. If anyone has any experience of taking on these companies or are aware of government legislation,
Click to expand...

The main problem with taking on the company is that you are part of the company. Many management companies do not run well but it is usually because the members do not get involved so agents and service providers ride the gravy train. I take it from your post that you do not get involved in the running of the company. From your post I would suggest that you should question whether you have the skills or time to be a competent landlord.

There is legislation working its way through in the Multi Unit Development Act which would be worth a read. In most cases management company fees will rise in the future due to inadequate sinking funds when the cyclical tasks of roof repairs, lift replacement etc arise. Costs like block insurance are also rising significantly at the moment
 
Well said ontour!! At times like this I wish AAM had a "thanks" button like other fora ;)
 
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