‘That would floor me’: Homeowners who paid €17,000 to fix apartment defects fear exclusion from State support

Lisa O’Shea had to hold back tears of relief in her office when news of a State scheme to fix defective apartments broke in January.

“I know it sounds a bit dramatic, but it was just such a weight being lifted. Like, oh my God, we’re actually at a point where there’s light at the end of this tunnel.”

Lisa lives in an apartment with her husband Evan O’Shea in Beacon South Quarter in Sandyford, Dublin, where owners have been asked to pay up to €17,000 each to repair issues such as a lack of fire stopping and water ingress.

In January this year, Cabinet approved plans to fund the repair of up to 100,000 defective apartments or duplexes at a cost of up to €2.5 billion to the State.

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Announcing the scheme, Minister for Housing Darragh O’Brien said it should be up and running either late this year or early next year once the legislation and regulations are in place.

He said the Government had “approved in principle” that people who have already had their properties repaired will also be able to seek the full cost of the work as the support would be retrospective.

However, documents released under Freedom of Information laws to The Irish Times earlier this year show strong official resistance within the Department of Finance and the Department of Public Expenditure and Reform to the idea of retrospection.

Emails exchanged between officials in both departments said that “where buildings are now compliant there is no public policy rationale to provide any State support”.

Another email from the Department of Public Expenditure and Reform said the “State’s objective is to ensure the health and safety of occupants, not to offer compensation”.

While these objections were ultimately overruled by Ministers, the exchange has left campaigners and owners nervous.

For people like O’Shea, who has paid in full for the remediation works to her home, it would be “incredibly unfair and quite inequitable” if retrospection was not included in the scheme, she says.

“I think if that were to happen, particularly given the promise has been made that retrospection would be included and if they were to step back on that – that would floor me.

“We have the expectation now that we’re getting it, we’re making life decisions based on that fact. And if all of a sudden 20 grand was taken away again, that would be very challenging.”

While the O’Sheas paid their levy in full over 12 months ago, they are still waiting for work to their block to start. Their home is due to be completed by the end of this year.

Lisa and Evan got married last year and she says they “would have much preferred to be able to put some of that money towards our wedding and our honeymoon”.

For housing charity Iveagh Trust, including those who have already paid for remediation work in the State scheme means being able to best meet the needs of the people who use their services.

The association spent €1.6 million on remediating one particular complex last year, its chief executive Aidan Culhane said.

“That’s money that we obviously aren’t spending on other things like housing people, or improving our own stock and all those things that housing associations do.

“It took a good few months [to remediate] because we had to move people around. There was a lot of disruption for residents as people had to move out for a period of time while the work was being done and that kind of thing dictates the pace you can do the work.

[ Government ‘dragging its heels’ on apartment defect redress details, campaigners say ]

“It’s very hard. You’re asking people to move out of their home, you’re doing things to their homes. We have a higher proportion of mental health and other problems among our tenants cohort than the private market so that would be more stressful all-round as well. But there is a human cost as well. And then the worry that there is a fire risk in their place. That’s a lot as well,” Culhane said.

Apart from the disruption caused by actually carrying out the works, the cost of the remediation meant there were other things the charity could not do: “We funded it from our own resources so there were a lot of other upgrades and things we normally do, like window replacements and the like, had to be postponed.

“The issue is we had to redirect resources, dip into the piggy bank to get the work done,” Culhane said.

“So I guess retrospection is really important so that we have some prospect of reclaiming that.”

For O’Shea, if she and her husband did not get their money back, despite doing what they felt was the right thing to do in paying on time, she said it would feel like the State was “supporting people holding out and not paying for works to be done”.

“I would in that case think very strongly about paying any future levies. How could you not?”

This is where the idea of “moral hazard” arises: if the State does not include people who have already paid to fix their apartments in the scheme, then what is the incentive to continue paying?

Chartered building surveyor Kevin Hollingsworth believes retrospection is important “because those buildings need to be safe”.

“For people who have started and are in the process, we don’t want them to stop because they’re essential works.

“Why should people who have started works, let’s say last November or September, and now they fear they could be excluded from any scheme – what’s stopping them from simply stopping works and leaving the buildings and all the occupants unsafe?

“That is the moral hazard that the working group articulated in their report. By Government not having retrospection, it would leave them open to that moral hazard,” Hollingsworth said.

He has already heard anecdotally of a slowdown in the progression of works, as management companies take a breath to see how the situation develops.

One contractor he spoke to said tenders that were to materialise haven’t arrived, while another property manager told him they had only collected 10 per cent of a levy voted through in January: “20 people flat out said they were not going to pay”.

“There is significant evidence showing things are slowing down and people are pausing to see how things develop,” he said.

The emails released under FOI hint at an awareness of this risk within the departments, with one stating: “In order to ensure that works that need to be commenced are not paused, any communications should be clear that works entered into/commenced from [January 1st, 2022] will be covered by any scheme that may come into existence.”

But where does that leave all of those who started or completed works before January 2022?

The working group established to examine the issue of defective housing estimated in its November 2022 discussion paper that between 28,750 and 46,000 apartments may have already been completed at that stage.

Hollingsworth believes “it would be very, very unfair for those people who were caught through no fault of their own and had to remediate genuine defects that they would not be incorporated into a scheme in the next year and be excluded from the coverage of that scheme”.

[ Leaking windows, mouldy walls and poor insulation: The grim stories of Ireland’s defective apartments ]

However, the resistance within the Government departments to this idea is unequivocal and is outlined in the Inter-Departmental and Agency Group’s final report on the working group’s recommendations: “The Working Group to Examine Defects in Housing considered the request from homeowner representative bodies for financial compensation for those who have already undertaken remedial works.

“The Inter-Departmental and Agency Group noted that this was not a feature of any other defects scheme in the State. Where buildings are now remediated, there is little public policy rationale to provide any State support.

“No liability for the State has been established, the State’s objective is to ensure the health and safety of occupants, not to offer compensation.

“However, the Government may wish to consider this matter further,” one line from a draft of the final report states.

That is exactly what happened. In a response to The Irish Times, a spokesperson for Minister for Housing Darragh O’Brien said he had “listened to calls from homeowner representative bodies and the Government has agreed that remediation costs already incurred or levied prior to the introduction of the scheme will be covered under the scheme once such costs fall within the scope and defined parameters of the scheme.

“The details and mechanics of this will be worked out as the legislation is drafted. Work is under way to draft the required legislation which will include the scope, eligibility and conditions of the remediation scheme which will become operational following implementation of the required legislation.”

Pat Montague, spokesman for the Construction Defects Alliance – which represents affected homeowners – said the “selective approach” to the Working Group’s report “led the Inter-Departmental and Agency Group to conclude that there was no public policy case for retrospection and they effectively tried to present Government with a ‘fait accompli’ on this issue”.

He said the Government had taken the correct approach in including already-remediated apartments in the scheme. How exactly that plays out will no doubt become a talking point as the legislation for the scheme is drafted.