Massive increase in Management Fee

Johnnio13

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

ted1

Johnnio13 wrote: »

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

Did you go to the AGM? Have you seen the books? Is there a sinking fund?

The_Morrigan

Johnnio13 wrote: »

Dublin 15 - Management company increasing the management fee by €500. From 1400!! This will really stretch us and put us under severe financial pressure. Does anyone know if there is anything that can be done to stop this increase?

Your chance would have been at the agm when finances are discussed with all the owners. Was an AGM held?

MarkAnthony

Simply underscoring the above. You are the management co. If you couldn't be arsed to turn up at the AGM it was rightly assumed you were abdicating your decision to the people that did.

If there was no AGM held or you believe there was impropriety get on to a solicitor and get an EGM called.

I'm sorry to be harsh but there is no one to blame for crappy management in apartment complexes but unit owners.

Drop the Ball

Sounds like a very excessive increase in management fees, request a copy of the AGM minutes from the Management Agent and see if they were voted in...assuming there was an AGM which from my understanding is a legal requirement.

Johnnio13

ted1 wrote: »

Did you go to the AGM? Have you seen the books? Is there a sinking fund?

My bad I didn't attend AGM. It was held just before Christmas 23rd I think.
I have seen the books. There is a healthy sinking fund.
There was no major expenses last year - previous year all reserves were used fixing burst pipes etc.

MarkAnthony wrote: »

I'm sorry to be harsh but there is no one to blame for crappy management in apartment complexes but unit owners.

You are dead right Mark, not harsh at all. My question was just if there was anything that could be done now. As the decision has been made by those that turned up we will have to suffer it and attend next year.

Valetta

See if you can get a copy of the minutes of the meeting. The increase would have been discussed and you may get a better idea of the reasoning behind it.

If you say that the reserves were used for fixing leaking pipes etc., then it may be the case that they want to replenish those reserves, and if there are no unexpected items this year then you can push for a reduction for 2016.

Lantus

Actually your first chance would of been at least 21 days BEFORE the AGM. Every member would of received a full budget breakdown and the service fees for the next period. At this point you had almost a month to review these documents, compare them to last years and identify where the uplift is which I wouldn't imagine would take more than 20minutes.

You could of contacted the company at any point before that to talk out or clarify any issues and of course you would of ben 21days notice of your AGM at which you could attend and vote on your budget. The MUD act even allows for modifications to be made on the night assuming 60% of the members vote in approval and the changes are quantifiable and do not compromise the companies ability to operate (you cannot vote to reduce your service fees to €1!)

There could be a very good reason for the fees including essential repairs, insurance premium increases or other costs.

A good sinking fund is a very variable thing. Have you calculate the replacement cost of every major item (Lifts, gates, roofs, doors, alarms, lighting systems, fire safety etc.....over the next 20+years against the income and current funds available?) Most sinking funds are woefully inadequate. A tiny lift could cost €30k to replace. They have an expected lifespan of 15 years.

The short answer is after all that NO you cannot suddenly change this after such a lengthy and thorough process. If approved it is now the legal service fee for the year and every member is contractually bound by it. You could still look into where the extra money is needed though for your own peace of mind.

Santa Cruz

Unfortunately many Irish people are not aware that when buying an apartment they become shareholders in a management company with the right to attend A.G.M.s become elected as a Director, have full access to all financial records, have a vote on the level of management fees etc. Until they get more involved in the running of their management company problems will continue and managing agents will continue to make big profits

MarkAnthony

OP there are quite a few technicalities that get ignored if the management co is taking a slap-dash approach. It may be possible to force an EGM or overturn the decision in regards to the fee. However it may simply be a case that for OMC has been forced into the decision to comply with the MUD Act.

Really there's no where near enough info to go on. That said I'm a director of a very well run city centre complex and our management fee would be in around 1100/1200 a year (one bed) so €1400 isn't completely bonkers.

Best of luck, I hope you get it sorted.

Paulw

MarkAnthony wrote: »

That said I'm a director of a very well run city centre complex and our management fee would be in around 1100/1200 a year (one bed) so €1400 isn't completely bonkers.

The OP said it was increasing by €500 from €1400 ... so a €1900 fee for this year.

I'm a director of our management company, and a 3 bed unit is around €1500 a year, while a 1 bed is about €900.

If there is a massive jump in fees, then there should be a serious reason, and it should have been discussed and voted on at an AGM.

MarkAnthony

Paulw wrote: »

The OP said it was increasing by €500 from €1400 ... so a €1900 fee for this year.

I'm a director of our management company, and a 3 bed unit is around €1500 a year, while a 1 bed is about €900.

If there is a massive jump in fees, then there should be a serious reason, and it should have been discussed and voted on at an AGM.

Sorry misread that. That said that could be very easily explained by a proper sinking fund not having been maintained.

€1900 is still not beyond the pale for city centre, although that's only because the majority have piss-poor managing agents and OMC directors.

Fkall

€1800 to €2500 is typical for 2 bed apartment in Dublin city centre.

padd b1975

I pay just over 1600 for a three bed ground floor apartment in Lucan, the building doesn't have lifts.

blacklilly

Request a copy of the minutes. It's unlikely that the OMC decided to increase service charges by €500 for no reason. The sinking fund may not be adequate, there may be planned future expenditure which the OMC want to start providing for now (they may have arranged for a building investing fund survey during the year and this may have altered them to various items that require attention).

Also to add, it is quite possible to have two separate developments of the same size which have substantial difference in service charges. Reasons for this may be down to insurance (claims history), number of lifts, gates, plant, sf etc. It's important to always compare like with like

jd

blacklilly wrote: »

Request a copy of the minutes.

These may not be available - aren't they normally circulated with notice of next agm, and then read/voted upon at that agm?

blacklilly

jd wrote: »

These may not be available - aren't they normally circulated with notice of next agm, and then read/voted upon at that agm?

The minutes should be circulated shortly after the AGM. The Board of Directors will review them prior to being issued to ensure they are accurate. They are then put forward for approval by the members at the following AGM.

If the minutes are not ready for circulation, the Managing Agent should be able to advise the OP on the matters discussed at the AGM and the reason for the increase in service charges. I would also be surprised if a letter of information regarding the increase was not circulated along with the notice of the AGM

Mr Frog

What's a sinking fund?

Victor

Johnnio13 wrote: »

There is a healthy sinking fund.

previous year all reserves were used fixing burst pipes etc.

How do you reconcile these two statements?

Greenmachine

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

The_Morrigan

Greenmachine wrote: »

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

It goes into things like security, general maintenance & repairs, cleaning, insurance , bin charges, utilities for communal areas, pest control, landscaping and sinking funds.

athtrasna

Greenmachine wrote: »

Jaysus can't believe what people are paying in mangament fees. Where does all that money go. Would apartment owners not have their own insurance etc to cover flood damage etc.

No. You can't insure what you don't own. You take a long term lease on an apartment, several hundred years, the management company own and insure thebuildings.

shruikan2553

Mr Frog wrote: »

What's a sinking fund?

Some money that can be accessed when something gets broken or needs replaced.

MarkAnthony

OP sorry I've rather failed at reading your OP correctly. That amount out in D15 is on the high side. You folks need to make sure there is high attendance at the AGMs.

As for a health sinking fund - ours currently stands at around €250k IIRC. If yours has been exhausted fixing pipes you can bet your bottom dollar this is where the majority of the rise is from. Again IIRC there is a recommended minimum contribution of €250 per unit per year.

OP make sure everyone is going through the accounts line by line. See if you can get some input from friends in well managed complexes. We pay a lot for our agent but it pays for itself twice over in cost reductions elsewhere. A €1900 fee out in Blanch to me seems nuts.

blacklilly

MarkAnthony wrote: »

A €1900 fee out in Blanch to me seems nuts.

I cannot for the life of me understand your logic here. Service Charges have no correlation to property prices/rental prices/location,

We know little or nothing about the development the OP lives in. The block insurance premium could be huge due to previous claims. There could be 20 lifts in the development, costing a considerable amount to maintain yearly, the blocks may require re-roofing, so on and so forth.

Drop the Ball

MarkAnthony wrote: »

OP sorry I've rather failed at reading your OP correctly. That amount out in D15 is on the high side. You folks need to make sure there is high attendance at the AGMs.

I agree, management fee differ from depending on the location and services offers/required. From my knowledge of D15, management fees range from the low end of about €600-800 to €1200-1400 at the high end. Attend your AGM, review the forecasted budget and compare with current/previous year budgets beforehand, challenge the directors on any increases and they should be able to provide you with justification for these increases.

Heisenberg.

This post has been deleted.

blacklilly

Heisenberg. wrote: »

This post has been deleted.

You're not at the mercy of some corporate company. Anyone who owns a property in a managed development becomes a member of the management company and thus has voting rights.They can also put themselves forward to become a Director of the Management Company if they so wish.
There's no such thing as a Mgt Co increasing Service Charges "willy nilly", the management company is not there to make a profit.
The biggest problem is a lack of understanding of how Management Companies operate and a total lack of interest from many members

markpb

Heisenberg. wrote: »

This seems to me like a major deterrent to buying an Apt.
Forever at the mercy of the Mgmt. Company who can raise their annual fee willy nilly.

That's only partially true. Apartment owners are at the mercy of a company they themselves are a member of. They have the right to elect directors, a right to vote in anything raised at an AGM. They also have aright to put themselves up for election as a director.

But other than that, they're helpless...

MarkAnthony

Heisenberg. wrote: »

This post has been deleted.

Not really, the unit owners are the 'management company'. The issue arises because owner occupiers rarely turn up, directors probably get a discount and landlords write off the management fee on tax so don't really care.

With the low numbers at AGMs it's easy for a quorum of residents to have an impact on the way the complex is run and that works both ways. For the sake of about 2 hours once a year it seems crazy to me that people don't turn up. There are rules on where, when and with what notice an AGM is held so it's not as if they're 20 miles away 2pm on a Tuesday with 24 hours notice.

A properly run OMC shouldn't cost much more than insurance, maintenance and upgrades. It should certainly be cheaper than owning a house in the long term. You can also have the advantages of a proper community, we've got a little 'neighbourhood watch' effort, a gardening group and various other little projects.

P. Breathnach

blacklilly wrote: »

...
The biggest problem is a lack of understanding of how Management Companies operate and a total lack of interest from many members

That lack of understanding sometimes extends to the directors.

Drop the Ball

Heisenberg. wrote: »

This post has been deleted.

That's not a fair comment. if you own a property within the development ran by a management company then you are part of that management company and can influence management company decisions and budgets. The problem is not many owners turn up to AGM's or get involved in the running of the management company's and decision making such as budgets & management fees, etc...and then only complain when the receive the receive their annual management fees notice.

MarkAnthony

markpb wrote: »

That's only partially true. Apartment owners are at the mercy of a company they themselves are a member of. They have the right to elect directors, a right to vote in anything raised at an AGM. They also have aright to put themselves up for election as a director.

But other than that, they're helpless...

As helpless as someone who finds a structural issue with their house that's not covered by insurance? In apartments it's (or should be) a drip, drip relatively fixed outlay every year. In a house it's potentially tens of thousands of euro on a idle Tuesday.

blacklilly

MarkAnthony wrote: »

. The issue arises because owner occupiers rarely turn up, directors probably get a discount .

Directors are there in a voluntary unpaid capacity. I'm going to discount everything else you say in your post because of your ridiculous statement above

blacklilly

MarkAnthony wrote: »

Directors can and do claim legitimate expenses (I know I do), in some cases that's a straight discount on their management fee, whether correct or not.

Please feel free to discount what ever you like but your naivety helps no one. If you don't think that there aren't directors out there looking after themselves at the expense of other residents you are out of your mind.

Please save me, you have no idea of my professional background. As per the Memoardum and articles of association Directors can claim associated expenses (however not many do) This is entirely different from the statement you made if your previous post;

MarkAnthony wrote: »

The issue arises because owner occupiers rarely turn up, directors probably get a discount

and does absolutely nothing to aid others in their understanding of how a management company operates,

davo10

MarkAnthony wrote: »

Directors can and do claim legitimate expenses (I know I do), in some cases that's a straight discount on their management fee, whether correct or not.

Please feel free to discount what ever you like but your naivety helps no one. If you don't think that there aren't directors out there looking after themselves at the expense of other residents you are out of your mind.

I'm secretary of OBM and have never heard of a discount on fees for directors. Yearly fees are laid out at the AGM and voted on, any owner is entitled to speak at the AGM and many do. But if you don't go, you can't blame the other owners/board for the decisions made by the majority.

The two main reasons out fees have gone up over the last 2 years are the sinking fund and non payment of subscriptions by a significant number of owners who claim they can't/won't pay.

blacklilly

davo10 wrote: »

I'm secretary of OBM and have never heard of a discount on fees for directors.

I would like to see the what issues this creates for the auditors of the accounts.

davo10

blacklilly wrote: »

I would like to see the what issues this creates for the auditors of the accounts.

They are voluntary, unpaid positions, I'm not an accountant, but what issues?

davo10

MarkAnthony wrote: »

Again if you think that directors in complexes with exceptionally high fees aren't up to something I have to doubt your competence.

.

You are trolling. All subscriptions/expenses are discussed at the AGM, and all members are free to question the figures so how does this sweeping statement apply? The high fees may be due to a multitude of reasons, all of which are explained at the meeting or afterwards by requesting minutes of the meeting/answers from the chairperson.

MarkAnthony

davo10 wrote: »

You are trolling. All subscriptions/expenses are discussed at the AGM, and all members are free to question the figures so how does this sweeping statement apply? The high fees may be due to a multitude of reasons, all of which are explained at the meeting or afterwards by requesting minutes of the meeting/answers from the chairperson.

Okay fair point on a sweeping statement, it may be simple incompetence. The fact is though that in many cases very few people are attending AGMs, a small cabal of landlords own large parts of the complex and are directors themselves.

There is no reason why one complex should have drastically different management fees from a similar one down the road. That comes down to either poor management in the past (including the collection of fees) or something more sinister.

I also resent the accusation of trolling. If you have a problem with my posts please report them. Better yet why not simply engage with the issues?

blacklilly

davo10 wrote: »

They are voluntary, unpaid positions, I'm not an accountant, but what issues?

Sorry my comment was not in reference to your comment. It was in reference to the comment made regarding directors getting their service charges discounted.

I'm not an accountant either but it is my understanding that all service charges billed to and paid by Directors must be noted in the audited accounts.

MarkAnthony

blacklilly wrote: »

Sorry my comment was not in reference to your comment. It was in reference to the comment made regarding directors getting their service charges discounted.

I'm not an accountant either but it is my understanding that all service charges billed to and paid by Directors must be noted in the audited accounts.

You're absolutely correct but a discount can be applied if also shown in the accounts, its the way we used to go about it. It was questioned last year and changed to a mechanism where amounts are claimed back. Frankly I prefer it that way but it has no issue passing the OMC for a number of years and was completely out in the open. The auditors never had an issue with it. For the sake of clarity we are talking about a stipend here of less than €100 for phone calls, stationary etc. in a pretty active board.

Something less 'above board' should absolutely be caught by the auditors and I hope it would be. However whether you agree with me or not I simply refuse to believe that in some cases some directors aren't doing some sort of fiddle probably through the manipulation of the agent fees.

Any way I'm sorry to have bit back as hard as I did but frankly you could have looked for clarity on my comments, especially as you seemed to take issue with a single word. It wasn't my intention to upset people it's a subject that annoys me as so many people are getting ripped off.

blacklilly

MarkAnthony wrote: »

You're absolutely correct but a discount can be applied if also shown in the accounts, its the way we used to go about it. It was questioned last year and changed to a mechanism where amounts are claimed back. Frankly I prefer it that way but it has no issue passing the OMC for a number of years and was completely out in the open. The auditors never had an issue with it. For the sake of clarity we are talking about a stipend here of less than €100 for phone calls, stationary etc. in a pretty active board.

Something less 'above board' should absolutely be caught by the auditors and I hope it would be. However whether you agree with me or not I simply refuse to believe that in some cases some directors aren't doing some sort of fiddle probably through the manipulation of the agent fees.

Any way I'm sorry to have bit back as hard as I did but frankly you could have looked for clarity on my comments, especially as you seemed to take issue with a single word. It wasn't my intention to upset people it's a subject that annoys me as so many people are getting ripped off.

Thanks for explaining further.

My apologies if my post came across as attacking you. I took umbrage to your comment because there are so many people who literally know nothing about OMC's and a comment such as the one you made could cause even more confusion/distrust.
However your explanation above about how you claim back your expenses makes more sense.

If some Directors are manipulating figures, that is wrong and is in breach of company law. If any member of an OMC suspects that this is occurring they should report it.

MarkAnthony

blacklilly wrote: »

Thanks for explaining further.

My apologies if my post came across as attacking you. I took umbrage to your comment because there are so many people who literally know nothing about OMC's and a comment such as the one you made could cause even more confusion/distrust.
However your explanation above about how you claim back your expenses makes more sense.

If some Directors are manipulating figures, that is wrong and is in breach of company law. If any member of an OMC suspects that this is occurring they should report it.

No I totally understand, complete over reaction on my part. At least there's two (and now the OP!) with a passion for it. It's just a shame more people don't try and get involved, it pays dividends in one's living situation and pocket.

Larbre34

I'm a director myself of the mgmt co. of a small development in D15, live in an own door apartment, and my own fee is dropping from €800 to €640 this year, with a pro rata drop across the estate.

The reason this happened is because we did the leg work and sacked the previous agent 2 years ago, brought in a property management co with big resources to reduce services costs and chase debtors and we also tied things like car parking permission to payment of management fees. It caused some discontent in the short term but now everyone is paying less and getting the services.

Simply speaking, property management companies are getting free money from residents who are not willing to commit a small amount of time to ease their own burden. Even leaving aside insufficient sinking funds, there has not remotely been the kind of inflation is services since 2008 to justify the increases in costs, expect perhaps energy.

It astounds me that people are going on marches against €160 of water charges or 2-300 of property tax when there are annual increases 30-40% being lumped on management fees in private developments, which is the one thing they can actually do do something about!

Lantus

There is a very real lack of general and specific knowledge regarding OMCs which is very much supported by many of the general and wholly incorrect statements being made on this thread.

This in itself and peoples apathy in seeking out and obtaining such knowledge (which can be a lengthy process) gives rise to the same old rumours and false statements that do the rounds time after time. Its a major headache for directors who are being undermined by ignorance from their own members.


Service Fees
These can vary hugely. They are totally dependant upon the specific elements which make up that development and its overall size. Green areas, electronic gates and access control systems, lift(s), fire alarm systems, electricity for lighting, carpet, cleaning, painting, water systems, staircases, doors, block insurance (very expensive!) and car parks

A development may have none or some or all of these (or more not listed). It may comprise of 6, 60 or 600 units between which these costs are spread. It may have inherent building faults thanks to a kind builder which may cost €500, 5000 or in the case of one OMC a bill of around €1.2 million.
The developer may of failed to maintain a sinking fund account.

Subject to the area there could be a greater or lower proportion of people who can readily afford to pay. Subject to the management there could be a greater or lesser amount of people getting away without paying. (they are only hurting themselves in the long run.)

Directors
Some developments may still have the developer as the directors but the majority are now resident run. Directors are typically nearly always unpaid volunteers who take on a real legal responsibility for the building and the entire development. That means they can be prosecuted if fire safety systems or lifts are not maintained properly and someone gets hurt. Most people would not like to be paid to do that! They also set service fees, enforce collection and tackle all the micro minute queries and paperwork and letters and accounts and organising tenders and works projects. Its a huge job with severe responsibility and all done by unpaid volunteers. The vast majority of directors are honest hard working people who are motivated beyond money and usually have a deep passion and caring approach for their communities.

In return they are often pilloried and attacked based on rumours and myths. Very sad.


There is no substitute for knowledge.

The_Conductor

Guys- I appreciate that the tit-for-tat name calling etc- a few posts back, along with accusations of trolling etc- has died down. Lets keep it that way.

Victor

MarkAnthony wrote: »

There is no reason why one complex should have drastically different management fees from a similar one down the road.

But the things is, the one down the road is rarely similar.

About 15 years ago, I worked on the budgeting of an 500-apartment development. The first design (2 apartments per floor) had 40 lifts. A re-design (4 apartments per floor) saw the number of lifts drop to 20. No extra walking distance from apartment door to lift. €1m+ knocked off the cost of the project in one feel swoop.

That is one lift per 25 apartments. There was another development that only had 5 apartments, but still had a lift. That can make a real difference.

Similarly, some apartment developments have on-site security / concierges, which can cost an arm and a leg to run.

Lantus

Victor wrote: »

But the things is, the one down the road is rarely similar.

About 15 years ago, I worked on the budgeting of an 500-apartment development. The first design (2 apartments per floor) had 40 lifts. A re-design (4 apartments per floor) saw the number of lifts drop to 20. No extra walking distance from apartment door to lift. €1m+ knocked off the cost of the project in one feel swoop.

That is one lift per 25 apartments. There was another development that only had 5 apartments, but still had a lift. That can make a real difference.

Similarly, some apartment developments have on-site security / concierges, which can cost an arm and a leg to run.

I would say that was to save on construction costs first and foremost although it would of directly affected future maintenance costs as well.

The buildings future in 5, 20, 50 years is rarely ever thought of and certainly not from a management companies perspective. Lifts (which are cash extractors) for developments with a little as 10 units is really bad planning.

Victor

Lantus wrote: »

Lifts (which are cash extractors) for developments with a little as 10 units is really bad planning.

Lifts are mandatory in apartment buildings with more than 6 apartments or 3 storeys - there is no choice. How far would you carry a wardrobe / bed / pram up stairs?

MarkAnthony

Victor wrote: »

Lifts are mandatory in apartment buildings with more than 6 apartments or 3 storeys - there is no choice. How far would you carry a wardrobe / bed / pram up stairs?

TBH all the furniture I've had delivered wouldn't fit in the blasted thing so they (I) had to carry it up the sodding stairs.

Given a properly run and vigilant OMC I can't really see them being cash extractors for anyone but well paid lift engineers.