Ministers have approved a pilot scheme that will see the first owners of defective apartments reimbursed for fire safety and remediation works which have already been carried out.
In September, the Cabinet approved plans for a €2.5 billion scheme to fund remediation of defects of between €62,500 and €100,000 in Celtic Tiger-era apartments or duplexes. It was agreed at the time that provision would also be made, in due course, for retrospective payment of eligible costs already incurred in the fixing of relevant defects.
Minister for Housing Darragh O’Brien has now presented Ministers with a pilot plan for those retrospective payments, which will see a representative sample of multi-unit developments picked to determine what formula of compensation will be rolled out to the entire group of owners who have already paid out. The Construction Defects Alliance has said that up to 12,000 defective apartments may have already been remediated, with a further 34,000 in the process of remediation.
Mr O’Brien last week received Cabinet approval for the pilot compensation plan, which sources insist will happen “relatively quickly”. The exact number of apartment owners has not yet been set, with stakeholders due to be consulted, but it is understood that a “handful” of multi-unit developments are now under consideration.
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The plan will involve an examination in those apartments of what work has been done, whether that work related solely to defects or included ongoing maintenance, and how much it cost. The formula that is used for determining compensation for these apartment owners will then likely be rolled out to others.
It comes after criticism from Opposition parties earlier this year about the length of time it is taking to roll out the multibillion euro remediation scheme. In July, The Irish Times reported that the owners of nearly 16,000 defective apartments have yet to receive State funding for emergency fire-safety works, despite an interim scheme for emergency works opening last year.
The Construction Defects Alliance has, however, welcomed the pilot scheme approved by Cabinet.
Spokesman Pat Montague said he understands that the purpose of the pilot or pathfinder project is to “help scope out and fine tune a future retrospective payments scheme”.
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“Minister O’Brien’s announcement will be a source of great relief to thousands of apartment owners across the country. The 2022 report of the Working Group to Examine Defects in Housing estimated that up to 12,000 defective apartments had been remediated at that stage, with a further 34,000 in the process of remediation. The estimated costs of around €25,000 per unit have largely been borne by the owners of these units even though they were not in any way responsible for the defects in question,” he said.
“Despite considerable opposition from officials in a number of departments, the Government – rightly in the Alliance’s view – decided in principle in January 2023 that owners who have paid for defects remediation should be reimbursed. This was only right and proper given that the State was partly responsible for the defects as they arose due to the ineffectual system of enforcement of the building regulations. The Government was also following the clear advice of the Working Group to Examine Defects in Housing who warned of the creation of a moral hazard if owners were not reimbursed.
“For many owner-occupiers and small landlords, finding the money to pay for defects remediation was a real struggle as their apartments were in negative equity and money was really tight, especially during the cost-of-living crisis. In some cases owners had to borrow from family members as they were already mortgaged up to the hilt, so getting this money back will make a big difference to them.”
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