A SIMPLE GUIDE TO PLANNING ISSUES, MANAGEMENT COMPANIES AND TAKING ESTATES IN CHARGE Catherine Murphy TD February 2015
Introduction Over that past decade or so, economic events in Ireland have been tumultuous to say the least. The construction industry effectively crashed and as a result some of the largest casualties were homeowners and prospective purchasers who began to see problems emerging with housing developments across the country. The result was that many people were left in a form of limbo, many in unfinished estates that are a far cry from the glossy brochure dream that they bought into, and many continue to be unsure of their rights and what steps to take next.
Exempted Properties: When the Household Charge was imposed back in 2012, there was a clause that exempted unfinished estates. The Local authorities were directed by the Department of the Environment as to what constituted an unfinished estate. In Kildare, a total of 58 estates where deemed to be unfinished and were exempted from the Household Charge. However with the imposition of the Local Property Tax came a whole new, more stringent, set of criteria from the Department of Finance as to what constituted an unfinished estate. As a result, only 19 of the original 58 Kildare estates that had been exempted from the Household Charge were now exempted from the Local Property Tax.
This, understandably, has caused huge resentment. People are now paying a property tax, yet if there estate has not been taken in charge then they will not be eligible for any services in their estate from the local authority. Some of these people are also paying Management Fees to a Management Company (See section on Management Companies, pg. 3). Many people feel they are being charged twice for what should be essentially the same service.
1
This is set out in Secondary legislation SI 91 of 2013
The level of consumer protection within the planning and development system is a major source of concern. In December 2013, to address these concerns, I published a piece of legislation with the consumer, rather than the developer, at the heart of it. My Bill; The Planning and Development, Consumer Confidence and Transparency Bill 2013 was published and debated in the Dáil at second stage in December 2013. As it stands, The Government are due to proceed with their Planning No. 2 Bill this year and I will be tabling amendments to try and ensure that the premise of my Bill is reflected in the Government Bill.
You will find further references to this Bill throughout the document.
This brief booklet aims to lay out, in straightforward language, the various definitions, issues and processes that are relevant to homeowners living in an estate style development.
How is an Estate commenced? When a developer applies to build an estate s/he must submit a planning application to the Local Authority. This application, once granted, must, in theory be followed to the letter and an estate is considered unfinished until the developer has ticked everything that was laid down in the planning permission.
Once an estate is commenced, the Council, ‘in theory’, are supposed to closely monitor the progress and engage in on-going dialogue with the developer to ensure that the criteria laid down in the planning permission are being met. The planning permission sets out the standard required of the developer. It is a legal process and it includes the payment, by the developer, of a development contribution and also requires the developer to put in place a bond (either a monetary bond or an insurance bond) in order to provide for instances of noncompletion of the public spaces by the developer. In theory, the process from planning permission to satisfactory completion should be smooth but in reality, the problems are many. There are three types of Developer; Category 1 is the ideal developer who is 100% compliant, Category 2 is the developer who needs to be coaxed along to finish the estate as per the planning permission and Category 3 covers the rogue developers who leave a trail of destruction in their wake.
2
See section on Bonds – pg. 5
Category 1: My developer is ideal and my estate is fully completed as per the planning permission – what next? The developer is deemed to have completed an estate once the Council agree that all requirements of the original planning permission have been fulfilled. When the developer is deemed to have satisfactorily completed an estate, s/he can apply to the Local Authority to have the estate ‘Taken in Charge’ by the Council and their Bond is released back to them. Once the Council agrees to take the estate in charge, it can be viewed, essentially, as a clean bill of health for the estate thus making it easier for homeowners to sell in the future etc. It is in the interests of homeowners in the estate to have it taken in charge.
See section on ‘Taking in Charge’ – pg. 4
Category 2: My Developer requires coaxing to complete the estate – what next? The developer in this scenario will drag their feet, the estate will be largely finished but things like the final wearing course on the road, some parts of the landscaping etc. may not be completed. Often, the developer will not have handed the ‘as constructed’ drawings to the Council or may not have ‘vested’ ownership of the green spaces to the Council to protect those spaces from further planning applications that might allow for new developments on those spaces. Usually in these cases the threat of action by the Council and perhaps the first stage of that process can be enough to encourage the developer to complete the estate. Pressure from Residents’ Associations is sometimes helpful in this scenario.
‘As Constructed’ Drawings: These drawings lay out the fundamentals of the development including things like where the pipes are located and other crucial information about the infrastructure.
Category 3 -My developer has not completed the estate according to the criteria set out in the original planning permission – what next? This developer takes short cuts wherever possible and eventually leaves key infrastructure unfinished. The trail of destruction left behind can be devastating for those people left living in the unfinished estate. This developer can be refused planning permission in the future but that fact is very little comfort to the people who are living with the effects of the developer’s actions now. Planning Permission is legally enforceable and the Council can take enforcement proceedings against a developer. The first stage of this process gives the developer some time to put things right but if s/he 3
There is no national register that identifies Developers who have had a troublesome history – instead it is isolated to individual Local Authorities. My Planning & Development (Consumer Confidence and Transparency) Bill 2013 seeks to establish a national register.
does not comply then the Council can take the enforcement proceedings to court. In theory, this should work well but in reality it is arduous and is heavily dependent on the resources available to the Local Authority to pursue the case. Trying to get the Council to take an unfinished estate in charge can be a long, drawn-out process that can possibly leave homeowners in limbo for up to 17 years.
Taking in Charge What does ‘Taking in Charge’ Mean? When a housing estate is ‘Taken in Charge’ the Council will assume responsibility for the maintenance of all common public areas including roads, footpaths, public lighting, and usually ownership of the green spaces will be vested to the Council in order to avoid potential future developments on those spaces and the ‘as constructed’ drawings will be handed over to the Council. Whilst some Councils take on responsibility for the maintenance of grass verges and green areas once an estate has been taken in charge, Kildare County Council do not provide that service.
Why would you want your estate ‘Taken in charge’? When an Estate is not taken in charge, responsibility for all general upkeep and maintenance issues falls to the original developer yet often it can be extremely difficult to either contact the original developer or convince the developer to address an issue. Once an estate is taken in charge, responsibility for these maintenance and general upkeep issues lies with the County Council, and as of January 2013, Irish Water, and this makes it easier for residents to seek remediation of general problems with public spaces.
When can an Estate be ‘Taken in charge’? What if my Developer does not apply to have the estate ‘Taken in Charge’? The Planning and Development Act, 2000 stated that for an Estate to be ‘Taken in Charge’ the planning permission originally granted for the 4
In practice, the Residents’ Association tends to take responsibility for the maintenance of green spaces etc., but maintenance issues become problematic when things like a burst pipe occur – this is where the residents will need the assistance of the Council.
Once an estate is complete the stage, to have the estate ‘Taken in Charge’.
development (5 years) must have expired. After this expiration a further period of seven years must have elapsed before an estate can be considered so a total of 12 years as per the 2000 Act. However the Planning and Development (Amendment) Act came along in 2010 and allowed for a further extension of the duration of the original planning permission of 5 years. The Planning Permission application must be live when an extension is sought. In cases where there are difficulties with the developer, this essentially means a possible timeframe of 17 years before an Estate can be considered for taking in charge.
My Planning & Development (Consumer Confidence & Transparency) Bill 2013 sought to reduce the possible timeframe from 17 years to a total of 7 years.
What are the impediments to having an estate ‘Taken in Charge’? There are a number of conditions which must be met before an estate can be considered for taking in charge
If a majority of the homeowners in an estate do not agree then the estate cannot be considered for taking in charge.
If an estate has not been completed by the developer, in line with the planning conditions that were laid down in the original planning permission
Bonds A bond is required to be provided by a developer before development commences. This bond is, in theory, supposed to provide the safety net in any instance where a developer, for whatever reason, cannot complete the open, public spaces in an estate. It is, in essence a fund to ensure that the estate can be completed even if the developer is unable or unwilling to finish the estate.
In the event of there being a problem, it should be the case that the Council can simply ‘call in the bond’ but in practice there can be major difficulties with this. The vast majority of bonds are insurance bonds, i.e. they are taken out for a specific period of time (usually 7 years) it is then up to the developer to renew the bond. It is only after the bond has expired that the Council can pursue the developer to renew the bond and ensure s/he is in compliance with the terms of the original planning permission.
5
Banks or insurance companies are often unwilling to renew the bond, particularly in the current environment. My Planning and Development (Consumer Confidence & Transparency) Bill 2013 seeks to give greater consumer protection in this area by making it more difficult for the original bond to lapse.
In Kildare, for example, we have had several cases where the bond has lapsed and therefore the facility of ‘calling in the bond’ has not been open to the Council, leaving residents with no recourse to this supposed security net i.e. the Bond.
Bonds can be held in cash or insurance however the only ones that were held in perpetuity tended to be held by Anglo Irish Bank – which has now been wound up.
6
‘Taking in Charge’ -The Legal Advice
Statutory Provision: Section 180 of the Planning & Development Act 2000 as amended by Section 59 of the Planning & Development (Amendment) Act 2010 sets out that the Council is obliged to take an estate in charge if requested by the Developer or a majority of the owners of houses in an estate which has been completed to the satisfaction of the Council. (The term ‘house’ in Section 180 includes an apartment and therefore Councils are required to take in charge the public parts of apartment developments.
Case Law: A majority of house owners of each estate is entitled to write to the Council pursuant to Section 180 and make a request for the taking in charge of the estate and the Council must comply with this request, provided the estate has been completed to the satisfaction of the Council if the estate has NOT been completed to the satisfaction of the Council and enforcement proceedings are statute barred If the estate has NOT been completed to the satisfaction of the Council then the Council may take the estate or some of the estate in charge. If the two conditions set out above apply and the Council fails to take the estate in charge then High Court proceedings may be brought against the Council seeking to compel the Council to take the estate in charge. There is an obvious risk for a homeowner bringing such proceedings and if the case is lost then costs would fall on the homeowner. There may be safety in numbers however the legal advice suggests that a Management Company would not have the required standing to bring proceedings under Section 180. The legal advice we received suggests that even the threat of legal action may be enough to encourage the Council to engage with homeowners and crucially, may also spur the Council into taking any required enforcement proceedings against a Developer who has failed to complete and estate or has allowed the bond to lapse.
The Minister’s View: In July 2013 I asked a Parliamentary Question to the Minister for the Environment, Community and Local Government asking him if he intended to issue regulations to Local Authorities that would enable them to ascertain the wishes of the majority of residents in estates yet to be taken in charge. The Minister replied that “The ‘Taking in Charge” policies adopted by local authorities require them to have in place procedures for the actual process of ‘taking in charge’ a residential development in response to a request from either a developer or the majority residents. Further regulations have not been made in this regard, and I have no plans to do so at present.”
7
Management Companies: The existence of a Management Company may or may not be a condition of the original planning permission. In the case of apartment blocks, a Management Company will always be required – for the upkeep of internal public spaces but in the majority of mixed developments (i.e. Developments with a mixture of traditional houses, apartments and duplexes) the public spaces are generally open to being taken in charge by the Local Authority.
The existence of a Management Company within an estate can be an impediment to the estate being taken in charge; Kildare County Council, for example requires, the Management Company to be reduced to cater for internal spaces (e.g. Stairwells of apartment buildings etc.) before they will take an estate in charge. I have sought legal advice on this and both that legal advice and advice from the Department of the Environment is that Kildare County Council would find their position on Management Companies legally unenforceable if challenged, but until challenged, their position stands.
We now have a situation where many people are paying a property tax in addition to management company fees and increasingly people are beginning to feel that this is an unfair duplication and it would seem appropriate, in many cases, that residents of an estate would seek to have the estate ‘Taken in Charge’ and avoid the necessity of having a management company and the associated fees.
The Residents have agreed to seek to have the estate taken in charge – how do we go about dissolving the Management Company? As previously stated, the official line from Kildare County Council is that they will not consider taking an estate in charge where a management company exists. However, it would appear that this position may not be legally enforceable although it would require a legal battle with the council in order for them to change their stance. Assuming that the dissolution of the management company is the most realistic option for residents wishing to have the estate taken in charge, then the most straight forward method would be to have all
8
The legal advice we have received is that Kildare County Council are not entitled to cite the existence of a Management Company as a reason to refuse to take an estate in charge. Further, a circular from the Department of the Environment, Heritage and Local Government (PD 1/06dated 25th January 2006) states quite clearly that “The existence of a management company to maintain elements of common buildings, carry out landscaping, etc. must not impact upon the decision by the authority to take in charge roads and related infrastructure where a request to do so is made.”
of the directors and the company secretary resign and have the company struck off the Companies registrar.
_________________________________ Catherine Murphy TD February 2015
9
APPENDICES
The following pages contain copies of some of the legislation and official documents referred to within the document.
10