Developer asks buyers to pay €60K more than agreed to complete new houses

A property developer is looking for people who put down deposits and signed contracts on houses in Co Meath a few years ago to each pay €60,000 more than agreed in order to fund their completion, blaming construction costs and interest rate increases.

“Meathamatic Ltd is suffering significant financial difficulty due to matters well beyond its control,” the company‘s solicitor, Pauline Fitzgerald, of Fitzgerald solicitors Dublin, told The Irish Times. “Everyone recognises that this is an awful situation, but this is an effort to get people into their houses.”

Chief among the causes of the financial difficulty are increases of up to 40 per cent in the cost of construction materials and dramatic increases in the cost of funds from institutional lenders over the past number of years, she said.

“There are many developments in similar circumstances across Ireland. Today’s increase in the rate of borrowing by the ECB [0.25 per cent] will exacerbate the issues for yet more developments and indeed homebuyers.”

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The Ringfort development in Rathmolyon, Co Meath, consists of 16 three- and four-bedroom houses, most of which were sold three years ago, with deposits paid and contracts signed. However, the developers say that in the period since then they have seen construction costs increase by 31 per cent and funding costs increase by more than 50 per cent, affecting their ability to complete the development.

The houses are at different stages of development, and overall site completion works have still to be carried out. The additional money being sought from the purchasers of the houses is to be used to complete the project.

The company would be insolvent by now if it had not been “salvaged” by a company associated with one of its shareholders, Ms Fitzgerald said. This money is being used to pay off the primary lender and interest is not being charged. “There is no money left in the company.”

Records in the Companies Registration Office (CRH) show Home Building Finance Ireland (Lending) DAC (HBFI), a State-owned company set up to provide funding to “commercially viable” residential developments, issued loans to Meathamatic in 2021 and 2022.

In June of this year the company registered a loan from Spudmuckers Ltd, of Ferns, Co Wexford, which is a related company because of the involvement of shareholder Michael Joseph Elias in both Spudmuckers and Meathamatic.

In a document filed in the Companies Office, it is stated that the loan will be used to complete the houses in the Rathmolyon development.

[ Pain of 10 interest rate hikes will be felt across Ireland for a long time to come ]

“The purpose for which the company is entering into the transaction or arrangement is to ensure the continuance of the development at Rathmolyon,” according to the document, which is signed by Mr Elias and his fellow Meathamatic director Mark Flynn, of Roundwood, Co Wicklow.

“The transaction is regarded as beneficial to secure the company’s long-term profitability and its ability to repay its debts to the lender and the HBFI,” the document says.

The company and Ms Fitzgerald have been holding a series of meetings individually with the people who had contracted to buy the houses to explain the situation, and a meeting of the would-be homeowners is to take place on Thursday evening, according to local Fine Gael councillor Joe Fox.

“The developer is saying he has no money to finish the houses and he is looking for €60,000. The contracts are actually signed by both parties, but he’s saying he can’t finish them, he has no money.”

Cllr Fox, who has been in contact with the would-be homeowners, said the houses were sold for “around the €290,000 mark” and are probably worth more now. The prospective homeowners “are not at all happy, as you could expect. They have been waiting, and they all have their plans, kids in schools, and scenarios like that.”

It is understood that the €60,000 figure is based on an estimate of how much it would cost to complete all the houses and the site work, though houses within the development are at differing levels of completion. The purchasers are being told that even with the additional payment, the houses would still be worth more than they will pay for them.