Buying an apartment in a small development – let the buyer be especially aware!

Smaller developments seem more private, more personal, a bit like owning your own house among friends.
So what can go wrong?

It’s down to the management company and service charges. Maintenance of common areas in apartments tend to attract a minimum charge. Its hard to get a cleaning company to regularly do a job for less that €50 per week using legally hired and insured personnel, common areas need regular cleaning, partly to maintain the value of your investment.

That’s €2500 per year. Then there is ground maintenance, a typical charge would be €140 for a session, 20-25 sessions per annum are the norm, another €2400.

We’re now up to almost €5000 per annum and we haven’t discussed, block insurance, waste removal, painting and decorating, plus a prudent annual contribution to the sinking fund.

At a minimum you are going to end up with a service charge bill of €10,000 per annum, and that’s conservative. If you transpose that to a development that has only 4 units you now have owners paying €2500 per year! A hefty sum for an apartment that only attracts a rent of €10,000 per year before tax.

To add to your woes there could be a bigger issue if the management company is not properly run. The title of an apartment is totally dependent on the management companys status as a company being maintained. This means the holding every year of an annual general meeting and the submission of accounts to the Company registration office.

The company requires two directors, one of whom must take the title of company secretary. Hands up who wants to become a director of a small company that never makes a profit?

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