‘Hot topics’ from February meeting

Presentation Thanks – Service Charge Collection and Debtor Management

We wish to express our appreciation to Setanta Landers of Reddy Charlton Solicitors for his presentation on Wednesday 6 February 2019.

A full house in Wood Quay, followed by a spirited Q&A session, stressed the importance of the topic for owners’ management companies.

Combined with sinking funds guidance from John Duffy in November, the Network continues to supply essential knowledge to OMC directors and apartment owners.


Property Management Agent Licensing

Responding to a ‘hot topic’ from our last meeting; providers of property services for reward must hold a licence from the Property Services Regulatory Authority.  In fact, it is a criminal offence to operate for reward without a licence.

Check the register of licensees to ensure your agent is in good standing.  Use the Authority’s complaints process to deal with problematic situations.


ODCE Handbook on Company Law for OMCs

This is the ‘go to’ publication for Company Law queries in relation to OMCs.  Rules on voting, AGMs, board meetings, company membership, etc., are all explained.

While the Handbook remains to be updated for the provisions of the Companies Act 2014, the principles and guidance are largely unchanged.


Next meeting

For details of our next meeting (late March/early April), keep an eye on the website, Twitter @ApartmentOwners, and Facebook.

HBFI and Owners’ Management Companies – a new source of finance?

Home Building Finance Ireland (“HBFI”) was established by law in early December 2018.

We think it offers a potential funding source for OMCs.

The commentary below is based on the information on the HBFI website, our review of Oireachtas debates/PQs, and our interpretation of the legislation.

It should be stated that HBFI is only in its very early stages of establishment, and we have no information over and above that already publicly available.

1.       What is HBFI?

HBFI is a State company established to provide funding on a commercial basis to small and medium size residential development projects (€2m to €35m) on commercial terms.

2.       Can HBFI lend to OMCs?

In principle, yes. In response to Parliamentary Question 50195/18 from Joe Carey T.D., the Minister for Finance Paschal Donohoe T.D. stated-

HBFI is being established as one of a number of measures to address the housing crisis. It will provide a source of funding for small to medium-sized residential developments on a commercial basis. The Home Building Finance Ireland Act passed remaining stages in the Oireachtas two weeks ago and was enacted in the past few days. Much progress has been made in preparing HBFI for launch and it is expected that HBFI will commence receiving funding applications towards the end of January 2019. HBFI will be in a position to consider applications from apartment owners and management companies for such funding at that time.

It is important to emphasise that in order for HBFI’s activities to comply with State aid rules it must operate on a commercial basis. This means, for example, that HBFI will not be in a position to offer cheap or subsidised credit. Any funding provided by HBFI will be backed by appropriate security and normal banking terms and conditions will apply.

It is important to recognise that the funding of remediation works are complex and high risk projects and pose significant issues for lenders in relation to access to appropriate security etc. While HBFI will be open to considering all residential development construction related activity, it is the responsibility of all applicants to ensure that their applications for funding are commercially viable and allow HBFI to remain compliant with State aid rules.

Section 7 of the HBFI Act refers to lending for “residential development”.

Section 2 defines “residential development-

means a development solely or primarily for residential purposes;


“development” has the same meaning as it has in the Planning and Development Act 2000;

Development” in the 2000 Act is very widely defined, and seems it would cover most if not all works by an OMC-

3.—(1) In this Act, “development” means, except where the context otherwise requires, the carrying out of any works on, in, over or under land or the making of any material change in the use of any structures or other land.

3.       How much equity must a borrower provide?

A minimum of 20% equity.  In other words, HBFI will fund up to 80% of the LTC (Loan to Cost) of a project.

4.       What is the maximum term for which HBFI will provide funding?

The maximum term is five years.

5.       How will HBFI operate as a lender?

HBFI is not a bank, however it will operate in a similar way to a bank.  It will charge a commercial rate of interest.  It will take security to support sums loaned.  In the event of a borrower defaulting, HBFI will take all reasonable and legal courses available to it, to recover any outstanding amounts.

6.       What will be the interest rate on the loan?

The rate will depend on the risk profile of the project, the quality of collateral, the creditworthiness of the borrower, and the track record of the borrower in delivery of residential development projects. HBFI will lend on commercial, market-equivalent terms and conditions.

7.       Other important considerations

  • The project must have planning permission, or at a minimum a planning application must be submitted.  The common areas of a multi-unit development are part of the original grant of planning permission for the estate.
  • As security for a loan, HBFI will require a first ranking full fixed and floating charge over the assets of the entity.
  • Funding will be provided to corporate entities only, HBFI will not lend to natural persons.
  • HBFI may apply an entry and exit fee on any facility provided. In addition, any professional fees accrued in providing a facility will be for the account of the borrower.
  • An OMC that does not currently meet all of the criteria as set out should consult with its relevant advisors to establish if it can meet the criteria before making an application.
  • The eligibility criteria are indicative only, and subject to change.  HBFI will assess each transaction on its own merits and any transaction entered into will be subject to terms and conditions.

Where may we find out more?

The HBFI website is www.hbfi.ie.


The above should not be considered to amount to legal advice, and formal legal counsel or other relevant professional advice should be obtained in relation to individual circumstances. 

December update

We are very grateful to John Duffy of Noel Larkin & Associates for his presentation at our meeting of Tuesday 27 November.

John’s presentation provided guidance on the preparation of sinking funds for apartments and multi-unit developments.  The consequences of inaction were shown to be very costly.  A lively question and answer session followed, where attendees had many queries for John.

Event Notification – Marking 1st Anniversary of “Safe as Houses?” Report

Thursday 13 December marks the first anniversary of the completion of the “Safe as Houses?” report by the all-party Oireachtas Committee on Housing, Planning and Local Government.  This report recommended that the State establish a redress scheme for homeowners who find themselves having to pay for the remediation of latent defects in their properties, arising through no fault of their own.

We have been asked to share details of an event to mark this first anniversary.  It is organised by Beacon South Quarter (Sandyford, Dublin) owners, to highlight their demand that the proposed redress scheme be set up, as proposed a year ago.  A dignified protest will be held outside the Kildare Street Gate of Leinster House, between 12.30 pm and 2.00 pm on this coming Wednesday, 12 December.  Further details are available on request.

Academic study of apartment law demonstrates the need for reform

Roisin Byrne, Real Estate MSc candidate at DIT, has kindly shared her recent Thesis, entitled “An Examination of the performance of the Multi-Unit Development Act 2011”.

Roisin’s research conclusions are further independent evidence of the urgent need for reform of the MUD Act.  Many of her recommendations are broadly in keeping with our own analysis, and suggestions for improvements in the sector.

Roisin’s main recommendations include:

  • Tenants in MUDs should be permitted to pay landlord service charges directly to the OMC, and offset the payments against rent due. This attempts to minimise the instances of service withdrawals affecting tenants with landlord owners in arrears.
  • In certain estates, there should be no requirement for an OMC. Co-management between residents and local authorities is suggested.
  • Training should be provided to OMC directors.
  • Where an owner is in arrears, in order for a valid sale to proceed, the vendor must raise a MUD requisition to produce a service charge receipt from the OMC.  The OMC should be permitted to withhold such a receipt until it is agreed that sales proceeds will discharge arrears.
  • OMCs should be a priority creditor, ranking ahead of other unsecured creditors.
  • Every purchaser in a MUD should be required to sign a separate document, indicating their understanding of service charge payment obligations.
  • OMCs must make adequate annual provision for sinking funds.
  • Receivers should be compelled to honour service charge arrears owing to severely underfunded OMCs.

We are very grateful for Roisin’s agreement to share her work.  She kindly recognises the contribution of Network members in participating in her research survey.


We take this opportunity to thank all our participants and supporters for their contributions to our advocacy work over 2018.  We wish you a peaceful Christmas and a Happy New Year.