100% redress for construction defects in Celtic Tiger homes to be proposed

Minister for Housing Darragh O’Brien has said he intends to offer 100 per cent redress to fund repairs to defective Celtic Tiger homes in a scheme that could cost up to €2.5 billion.

While any scheme would be subject to Cabinet approval, Mr O’Brien told The Irish Times that he wanted the State to fund the works. Asked in a pre-Christmas interview if he expects to be able to offer 100 per cent redress to people affected by defective Celtic Tiger builds, he said: “That’s my intention... I want us to help people to fix their apartments and homes and make them safe, and this Government is committed to helping there.

“The average cost [per apartment], as far as we can estimate, is about €25,000 per unit. Some are a lot more, some are less. There’s a range of cost, from about €1.56 billion to €2.5 billion, to be able to rectify the 100,000 or so homes that require remediation,” he said. Mr O’Brien said discussions with insurers and banks regarding the scheme were under way.

Advocacy groups and the Opposition want details of the scheme, which had been due to come to Cabinet before Christmas, published early in the new year. They are also calling for clarity on its scope, pushing for it to cover repairs that have already been completed or are in process – known as retrospection.

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“It is vital that the redress scheme is retrospective,” Sinn Féin housing spokesman Eoin Ó Broin told The Irish Times, warning of a “moral hazard” emerging if repairs were delayed while residents waited for a scheme to come on stream. Sinn Féin have called for industry levies to ultimately fund repairs.

The Construction Defects Alliance, which represents owners, warned of the risk of “zombie” apartment blocks – where works already under way are cancelled if they are not retrospectively included in the scheme.

The last government scheme to fund repairs to defective buildings – the Mica scheme – was subject to a cap of €420,000. However, Coalition sources argued that a cap to the amount to be funded under the scheme was less relevant than in Mica where demolition and reconstruction could run to hundreds of thousands of euros. On average, repairs to defective apartments cost much less. The issue of a cap would ultimately be a decision for Cabinet, but Coalition figures say costs of typical defects would be covered in the scheme.

There are also calls for interim measures brought in to assist homeowners before a full scheme is in place. Government sources indicated that supports would be made available to defective blocks, such as sprinkler or alarm systems, or fire wardens where required.

Mr O’Brien told The Irish Times that “the scheme will be established on a primary legislative footing, and it’ll take time to get that legislation through, but I will be bringing options with regard to interim measures with regard to what we can do in the meantime in advance of the legislation going through the Dáil,” he said. He also said the issue of retrospection needed to be “looked at”.

Mr O’Brien is likely to push for a scheme where owner-occupiers are covered, and landlords will be able to claim for repairs to one apartment. Owners of multiple units are likely to see the cost of repairs clawed back via a mechanism to be introduced in legislation, with the State paying for the costs upfront to enable repair works to proceed.

It is thought likely that defects will be remedied on a “whole block” basis with Owners Management Companies, the corporate entities comprising apartment owners which are responsible for individual apartment developments, being funded.