An independent report into apartments with defects built during the Celtic Tiger-era has found that interim measures to address potential safety issues “need to be identified as a priority” pending the completion of full remediation works.
The Working Group to Examine Defects in Housing, established by Minister for Housing Darragh O’Brien last year, estimates that of apartments, duplexes and associated common areas constructed between 1991 and 2013, the number that may be affected by one or more defects is likely to range between 50% and 80%.
This equates to between 62,500 and 100,000 apartments or duplexes.
It is estimated that 12%, or between 7,500 to 12,000 of these apartments or duplexes, have had remedial works completed worth up to 300 million euro, and that work may be in progress for up to 34% of apartments.
The independent report published by the working group on Thursday estimated that remediation costs would “likely” be worth around 25,000 euro per apartment/duplex, which is based on 2022 construction costs and includes professional fees and VAT.
Based on these estimations, the overall remediation cost is likely to be within the range of 1.56 to 2.5 billion euro.
Seamus Neely, chair of the working group, wrote in a letter to the Housing Minister: “Given that the overall potential scale and estimated cost of fixing the problem is so considerable, the working group recognises that it will take many years to address all buildings affected, and resources and works will therefore need to be prioritised.”
Mr O’Brien welcomed the findings of the report, saying “this was a nettle we had to grasp” and that he is “committed” to helping those affected.
Fire safety defects were found to be the most prevalent defect, with responses to the online survey indicating they may affect as many as 67% of the apartments.
The survey responses also indicate that – considered in combination with other defects – water ingress defects may affect 49% of these apartments/duplexes.
On the basis of the consultation responses, structural safety defects appear to be the least frequently occurring defect in the apartments. Responses to the online survey indicate structural safety defects may affect 25% of these apartments.
The working group warned that the actual cost of remediation will vary greatly between developments and types of apartment, and will depend on the type or combinations of defects that may be discovered in the course of remediation.
It warned of a rise in costs when remediation works get under way if further issues are discovered during the process.
It cited an example of removing a ceiling while dealing with a water ingress defect in an apartment and discovering deficiencies in fire separation between the apartment and a common area.
It also warned that the report did not receive data relating to the cost of relocation during the period of works during the consultation process.
It stated that where remediation to timber-framed units is required, the work may be significantly more intrusive and “relocation may therefore be necessary”.
The working group defined the defects as being attributable to defective design, defective or faulty workmanship, defective materials or a combination of these, and as being in contravention of building regulations.
It concluded it is not “feasible” to retrospectively impose penalties on individual firms responsible for the defective builds, but added that owners’ management companies “must be central to the remedial works process”.
The working group suggested a number of ways in which remedial works could be funded, including an industry levy, state-funded grants, low-cost loans and taxation measures.
The report noted the introduction of an industry levy “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”.
This refers to a Government decision on November 30 to consider a number of actions to help address the mica defective blocks issue, which included a proposed levy on the construction sector in order to raise in the region of 80 million euro a year.
The working group also said such a levy would apply to everyone in the construction industry, that it would require primary legislation, and the funds would not be ringfenced.
It said: “The working group understands that it is not feasible retrospectively to impose a penalty on the individual firms that were responsible for the defects, and a general industry levy imposed now would target all those in the industry, including those who did not contribute to the problem.
“The funds raised by any such levy are likely to be collected centrally and not exclusively ringfenced for one purpose.”
It said of the state-funded grants that “this funding option should be fully considered from a policy and cost perspective taking into account the tenure-type mix in existing apartment/duplexes” set out in the report.
Of the apartments and duplexes affected, 56% are rented accommodation, 25% are owner-occupied, 11% are rented from a local authority, 4.7% are rented from voluntary bodies, 1% are rent-free and 2.3% did not state their ownership.
The report recommends that interim measures should be carried out where necessary by owners’ management companies, pending the implementation of full remedial works, so the apartment or duplex building can still be used.
The working group noted that construction defect remediation had been financed in Ireland to date through schemes like the Pyrite Remediation Scheme and the Defective Concrete Blocks Scheme.
Reacting to the report, Mr O’Brien said it “confirms what we already know” about defective Celtic Tiger-era apartments.
“The evidence gathered by the working group along with the options for potential supports contained in the report will be of considerable assistance in informing Government’s next steps.
“This report provides a very useful set of recommendations that I will now examine in detail. I will also give this report full consideration, in consultation with Government colleagues, and in developing a plan to address the situation that many homeowners find themselves in through no fault of their own.
“Upon my appointment as minister I said that this was a nettle we had to grasp and I am very much committed to helping those whose lives have been impacted by this issue. I believe this report will help us do just that.”