Finbarr Malone, MSc in Real Estate candidate at DIT, has kindly shared his recent Thesis, entitled “Financial Planning in Multi-Unit Developments” which is available at the link below.
Finbarr’s research conclusions are independent evidence of the huge funding problems in the apartment sector. Recommendations for reform are put forward. Changes suggested are urgently needed, and are in keeping with our own outlook.
Finbarr’s main conclusions include
• Owners Management Companies (“OMC”) examined are maintaining sinking funds at a 60% deficit to MUD Act recommended levels
• Funds that should be set aside as sinking funds are being eaten up by day-to-day costs
• Significant levies on top of current service charges are inevitable for underfunded OMCs
• Volunteer OMC directors doing their best with limited resources and no training
• Wide lack of knowledge/wilful ignorance of problems among apartment owners
• No or only ad-hoc planning by OMC boards for major capital works
• Inevitable deterioration in property values ahead for underfunded estates
• Property Management Agents’ (“PMA”) advice on sinking funds unheeded by OMC members
• Support among PMA and OMC directors for compulsory building surveys, mandatory sinking funds, and an enforcement regime
• Support for legal changes to allow more effective and cost-efficient service charge collection
• Regulatory body for OMCs to monitor and enforce sinking funds, etc.
• Five year compulsory building surveys
• Financial & structural “BER-style” certification regime for MUD estates
• Mandatory sinking funds based on reported capital expenditure needs
• Independent qualified director for every OMC
• Better information for OMC members on the practicalities of managing their estates
• OMC director training
We are very grateful for Finbarr’s permission to share his important work. We note also his recognition of the contribution of the AON participant base in responding to his survey.