18 September 2014
70% of Property Managers report year on year increases in service charge
Increase in the number of Owner Management Companies (OMC) withdrawing
some services as a result of financial issues.
Financial hardship cited as one of key reasons for non-payment of service
Thursday September 2014: A new survey by the Society of Chartered Surveyors Ireland
(SCSI) has shown that there has been a year on year increase in the level of service charge
arrears in Multi Unit Developments.
Seventy per cent of property managers surveyed said there had been a year on year increase
in service charge arrears. Two out of five property managers surveyed said that between 10%
and 20% of units were in service charge arrears at the year end.
The survey, which was carried out by the SCSI Property & Facilities Management professional
group also showed a trend of services being withdrawn by owners’ management companies
due to financial pressures and lack of service charge payments.
Service charges are fees levied on unit owners to cover the cost of providing regular
maintenance and repairs of common areas such as building insurance, fire safety, lift
maintenance, upkeep of the grounds, painting and general ongoing repairs.
Pat Winters, Chairman of the Residential Property Management professional group said the
fact that around 70% of property managers were reporting an increase in arrears in service
charge payments was very concerning.
“The increase in arrears puts significant financial pressure on Owners Management
Companies to continue to provide services. Furthermore, the unit owners who are paying
service charges are effectively subsidising those who aren’t paying, which is most unfair” Mr
The survey revealed that the main reason for the rise in service charge arrears is financial
hardship on unit owners. The outlook remains problematic, with over 60% of property
managers surveyed stating that the arrears issue will most likely remain unchanged over the
next twelve months.
The second most common reason for non-payment of service charges was a lack of
understanding about the purpose of service charges. “The concept of services charges is
relatively new in Ireland compared to other European countries and OMC’s need to ensure
that unit owners fully understand their rights and responsibilities as members of the Owners
Management Company (OMC) as set out in the Multi-Unit Development Act” said Winters.
The survey also suggested that legal fee provisions within service charge budgets were likely
to increase over the next 12 months.
“The difficulty for OMCs is to try to recover outstanding service charges without incurring
significant legal expenses. Under the current system trying to recover outstanding service
charges is very onerous and expensive which can impact the overall service charge levels set
by OMC’s and the cost of which must then be borne by all owners which is unfortunate”,