24 January 2021 marked the tenth anniversary of the signing into law of the Multi-Unit Developments Act 2011, or “MUD Act”, as it quickly became known. The majority of the Act’s provisions came into force on 1 April 2011. In the intervening 10 years, the profile of the multi-unit development (MUD) or apartment sector has changed significantly. Local government personnel, elected and executive, continue to contend with the complexities of a form of housing still more novel than normal to Ireland. What are some of the significant changes in the sector of interest to local government?
Commercial and institutional landlords have entered the market. Local authorities’ involvement has expanded through Part V, direct acquisition, and leasing. Now statutorily regulated, Approved Housing Bodies purchase or build apartment stock.
Under the Strategic Housing Developments process apartment blocks are a feature of schemes intended to deliver homes at scale. Build-to-Rent is soon to emerge in our largest urban centres.
A mix of owner-occupiers, private renters, and social or public renters presents dynamics, and politics. Tensions must be managed. In conventional MUDs, the owners’ management company (OMC) plays a pivotal role in balancing residents’ rights and obligations. OMC directors are usually unpaid. Most frequently, they are drawn from the wider body of owners. Participation by all stakeholders- residents and landlords (private and public/social)- makes for a successful estate.
Housing bodies and local authorities nominating OMC directors offer tenure expertise. Confidence around tenant suitability can harmonise tensions, perceived or real. The processes of setting budgets, tendering for services, or pricing insurance, benefit from the commerciality of landlords willing to serve as OMC directors. They can engender sound financial management. Owner-occupier directors are perhaps more personally invested in an estate. Certainly, they possess the lived experience of a scheme’s successes and shortcomings.
The advent of the institutional landlord, be that a Real Estate Investment Trust (REIT), international investment fund, or other corporate provider, can bring a level of professionalism to apartment management. The mobile international cohort of a workforce may generate accommodation needs differing from those of residents with stronger or deeper ties to a locality. A variety of tenures, an expanded range of on-site managed services, such as laundry and entertainment, and diversity in home configurations are innovations expected through the Build-to-Rent model. Cost rental schemes including apartment stock are under construction. The way in which new schemes and configurations function in the post-pandemic landscape will be instructive.
Construction defects from the Celtic Tiger period may also have a lasting impact on sustainability and perceptions of apartment living. An independent Working Group on defective housing was recently announced appointed by the Minister for Housing, Local Government and Heritage, to be chaired by Mr. Seamus Neely, former Chief Executive of Donegal County Council.
Funding and governance
In multi-owner arrangements management fees are the lifeblood of the OMC. Failure in timely payment of appropriate service charges is perhaps the chief drag on the success of many estates. OMCs would do well to consider that stock owned by local authorities and AHBs delivers uniquely reliable payers. A corollary is that local authorities might reflect on the extent to which fees are set at a rate sufficient to meet future big-ticket expenses. Is the OMC providing for the cost of lift and plant replacement, roof repairs, and scheme redecoration?
To ensure future upkeep, a funded building investment fund (or sinking fund) is essential from the very start of the life of the estate. Council planning departments will be aware that the current Design Standards for New Apartments – Guidelines for Planning Authorities seek to connect cost information available at the design, construction, and operational stages of the building lifecycle.
MUDs are residential developments of increasing complexity. They can help to level conflicting pressures such as shrinking household sizes and urban sprawl. Planning, housing, transport, and finance are perhaps the principal units within local government invested in the sector’s success.
David Rouse is an advisor with The Housing Agency on the MUD/OMC sector. Webinar recordings, publications, and resources for OMCs and MUDs are available at www.housingagency.ie. The views expressed are those of the author.