Vast bill faces taxpayer for apartment defects

Andrew Prior's life has been in limbo.

He owns an apartment in Beacon South Quarter in Sandyford, Co Dublin.

When he bought the property, he imagined he would live there for a few years and then trade up.

But he discovered what seemed like a desirable apartment in a good location was riddled with fire safety issues, structural defects and leaks.

Life has gone on and Andrew now has a family.

Due to the defects, he has been unable to sell the apartment.

"A couple of times we have tried to sell, but the potential purchaser has been unable to get a mortgage from either Bank of Ireland or AIB," he said.

The banks considered that lending to the buyer was too risky because of the defects.

Andrew moved out and rented a home for his family.

His apartment management fees in Beacon South Quarter have been inflated to pay for fixing the defects.

So far, he has spent between €25,000 to €30,000 in additional fees.

"What should be €2,000 a year has been €6,000 or €7,000 a year for the past six years," he said.

Andrew is one of 1,000 apartment owners in the development.

It is one of many blocks built during the Celtic Tiger where developers cut corners.

Retired architect Liam Egan, who owns another affected property in Chapelgate in Drumcondra, said: "Light touch regulation that was in place at the time - the focus was on getting apartments built, not on getting them built properly.

"There was very little supervision by the local authorities or anyone else. The developers probably reckoned they could get away with it."

The biggest concern for apartment owners is the fire safety risk.

The Government asked a working group made up of industry experts to examine the issue, which compiled a report in 2022 laying out the enormous scale of the problem.

Its main finding was that between 1991 and 2013, 50% to 80% of apartments or duplexes were built with defects.

That is estimated at between 64,000 and 100,000 units.

The total cost of remediation was projected to be €1.5bn to €2.5bn.

Perhaps the most egregious aspect is that the taxpayer is going to have to pay the bill.

In many cases developers had set up bespoke companies for the construction of apartment blocks.

Those firms were liquidated after the apartments were completed which makes it much harder to pursue builders through the courts.

In other cases, developers went bust or the statute of limitations expired.

This week the Minister for Housing Darragh O’Brien said he was "angry" the State would have to pay.

While he did not rule out action against developers there are no confirmed plans.

In the past the Government has imposed levies on the construction industry to claw back the cost of paying for other issues such as defective concrete blocks.

But that is a blunt instrument which penalises an entire sector and not just guilty parties.

Another aspect is that the State is not entirely free of blame because it failed to enforce building regulations properly.

Cost of remediation may exceed €2.5bn

But it now seems the working group’s projection for how much this will cost may be an underestimate.

One of the authors of the report, Kevin Hollingsworth, president of the Society of Chartered Surveyors, said the final figure could be higher than €2.5bn.

There has been significant inflation in construction costs over recent years.

In addition, some of the work carried out on a number of apartment blocks, in anticipation of retrospective payment from the Government, may not be up to the required standard.

But the limited positive news for apartment owners is that progress is finally under way after a significant wait.

The first two grants, as part of an interim scheme to deal with immediate fire safety issues, will be paid in the coming weeks.

Also, a pilot scheme is getting underway for about 1,000 property owners to be repaid where work is already completed.

But Kevin Hollingsworth said it could be five or ten years before the whole issue is resolved.

Some insurance companies want to see it happening a lot sooner and are threatening to stop offering cover for the defective apartments after one more year.

Then there is the question of whether the same thing could happen again.

Kevin Hollingsworth said that since 2014, new building control regulations have tightened standards in the sector which is a "massive improvement."

But he added there are not enough building control officers in local authorities to enforce the new rules.

In the absence of officers, the responsibility falls on an "assigned certifier", which can be an architect, engineer or surveyor, to sign off on the work and confirm it is up to standard.

But frequently those professionals are paid by the developers.

It means there is a possibility of those professionals being told if they want to receive payment they have to sign off on the development.

While circumstances have improved there is no certainty the same could not happen again.

But for apartment owners like Andrew Prior and Liam Egan the wait will go on.

Many will be in limbo until problems which were not of their making are resolved.