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Calls for industry levy to pay €2.5bn bill for defective apartments

Up to 100,000 ‘Celtic Tiger' apartments are affected by fire, structural safety or water ingress issues


Housing Minister Darragh O'Brien. Photo: Niall Carson

Housing Minister Darragh O'Brien. Photo: Niall Carson

Housing Minister Darragh O'Brien. Photo: Niall Carson

The Government is being urged to consider an industry-wide levy to pay €2.5bn remediation costs for up to 100,000 defective apartments throughout the country.

Housing Minister Darragh O’Brien has received a report from a working group set up to look at redress for defective Celtic Tiger apartments.

There are between 62,500 and 100,000 apartments affected by fire, structural safety or water ingress issues that were built between 1991 and 2013.

The total cost of remediation is estimated to be between €1.56bn and €2.5bn, according to the report, at an estimated average cost of €25,000 per apartment.

However, the working group said it would not be feasible to put in place retrospective penalties on individual builders who were responsible for defects.

“A general industry levy imposed now would target all those in the industry, including those who did not contribute to the problem,” it said.

The report said the working group had considered raising funds through an industry levy, the concept of which “requires careful policy, legal and public scrutiny and should be considered as an option in particular in the context of other similar industry levies under consideration”.

The report does not go into specifics on how much such a levy would be or who exactly would be levied, apart from saying that it would be industry-wide.

The working group lays out a number of options of how the redress could be funded.

The first option is low-cost loans for apartment owners, as well as support for them in the form of a tax credit, a local property tax levy, a means-tested grant or a low-cost loan.

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But the report acknowledges this option would be “very challenging” because a low-cost unsecured loan would have to be first paid to owner management companies (OMCs), which operate apartments.

Any delay in doing so will, unfortunately, lead to the very unnecessary risks to health and safety

State-funded 100pc grants may also be paid to OMCs for the most immediate works.

Apartment owners would then have to pay for the rest of the cost themselves and the State would offer supports.

A State agency would have to be set up to carry out this financial assistance.

The third option is a combination of the first two options, where the State would pay directly for some of the work and the rest of the work would be carried out by some of the other options.

The working group said retrospective supports should be put in for works that had already been carried out ,or had been started, on defective apartments.

These supports could be through a combination of refundable tax credits, grants, low-cost loans or a mixture of tax credits, grants to those outside the tax net and low-cost loans.

Only a quarter of apartments are owner-occupied, with more than 70pc rented out privately or as social housing.

Some 86pc of landlords who rent out apartments have only two rental properties in their portfolio.

The Construction Defects Alliance said the report was a “landmark” for owners of defective apartments.

It called on the Government to put in place supports in Budget 2023 for 34,000 apartments that have high fire-safety risks.

“The working group has warned that the deferral or stalling of critical remediation works may occur ‘in order
to ensure the ability to avail of a remediation support scheme’,” said spokesperson Pat Montague.

“Such a scenario – which they refer to as a ‘moral hazard’ – ‘may give rise to unnecessary risk to health and safety’ to those living in these 34,000 apartments.

“The working group has stated plainly that access for the owners of these 34,000 apartments to ‘retrospective financial assistance could play a very important role in tackling this moral hazard’.

“In the view of the Construction Defects Alliance, access to such retrospective financial assistance has to be provided for in Budget 2023 and this year’s Finance Bill.

“Any delay in doing so will, unfortunately, lead to the very unnecessary risks to health and safety the working group is warning about.”

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