Buying And Living in a Multi-Unit Development Property in Ireland
3. Service Charges
3.1 Introduction
The management company must decide what services are required for the common areas to be maintained in a state of good repair.
To pay for these services, unit-owners pay a fee on an annual basis known as a service charge. The service charges of all owners are used to pay for services required to maintain and manage the common areas.
The payment of an annual service charge is not optional if it is set out as a term and condition of your contract to purchase the unit.
You should ensure that your solicitor explains your contractual obligations in this regard.
3.2 What should the service charge be used to pay for?
The range of services required will depend on the individual development.
However, service charges should not include costs incurred by the developer in relation to the original design, construction and snagging of the development.
The following are typical services that a service charge may be used to pay for (they therefore only refer to items in common areas):
Cleaning
- Internal/ External common areas;
- Windows;
- Carpets/mats.
General Repair and Maintenance
- Repair of Lifts;
- Lift inspections and consultancy.
Landscape and Gardening
- Lawn Mowing;
- Landscaping internal/external;
- Pest Control.
Security
- Servicing and maintenance of internal locks and doors;
- Intercom system;
- Access control (external doors and gates);
- Smoke alarms, fire extinguishers.
Waste management
- Refuse collection;
- Recycling Services;
- Skip Hire;
- Gutters & Drains Cleaning.
Utilities
- Electricity to common areas excluding units direct consumption;
- Lights external/internal.
- Fabric repairs & maintenance
- Internal/ External common areas;
- Painting;
- Car park;
- Footpaths and roads.
Professional Charges
- Legal-management company may employ a solicitor;
- Financial-management company's auditor;
- Bank charges;
- Insurance e.g. block insurance, public liability;
- Other e.g. surveyors, health and safety.
Sinking Fund Provision
- Refurbishments;
- Refitting/replacement;
- Major repairs.
3.3 Apportionment
Apportionment refers to the method in which the percentage of the overall service charge for the development is attributed to individual owners.
The calculation may be based on a number of factors, for example the size or type of unit; the services availed of by a unit or the total number of units in the development.
In general, in a new development, the developer will set out the apportionment method under which each category of unit owner shall be required to pay their annual service charge/sinking fund contribution.
Details of the basis on which your service charge contribution has been apportioned should be set out in the contractual documentation to purchase the property. Your solicitor should explain the basis on which the service charge has been apportioned to you.
The service charge should be apportioned among owners based on a transparent methodology applied consistently throughout the development. Information on apportionment should outline the costs for each type of unit within the property.
Specific services provided to only some owners should be set out in additional specific schedules. The management company should regularly review the apportionment methodology and report on any related issues at the company's Annual General Meeting (AGM). More detailed information on the AGM is set out in section 12.
3.4 How much should the service charge be?
There is no set amount as to what the overall service charge should be.
The amount paid by owners will vary from development to development and will depend on the type of services the management company decides to undertake.
You should be aware that the more elaborate the fixtures and fittings of the common areas are, the more services may be needed to maintain them.
This may affect the size of the service charge you have to pay. If the common areas are designed to a very high standard or contain elaborate features such as ponds, fountains etc it may cost more to maintain them.
Another significant determinant is the number of lifts, pumps, fire systems or electronic gates in the development.
The size of the development in terms of grounds and landscaped areas together with finishes i.e. if walls are painted or rendered is also a factor.
Services such as the provision of 24-hour concierge/security services will also affect the service charge level.