The government has asked to consider a construction tax to pay €2.5 billion in redevelopment costs for 100,000 defective Celtic Tiger-era homes

A working group examining the problem of deteriorated homes is urging the government to consider a construction-wide levy to pay €2.5bn in clean-up costs for up to 100,000 deteriorated homes.

Former Minister Darragh O’Brien has received a report from the group set up to examine redress for broken Celtic Tiger apartments.

Between 62,500 and 100,000 homes built between 1991 and 2013 are affected by fire, building safety or flooding.

The total cost of the refurbishments is estimated at €1.56 billion and €2.5 billion, respectively, with an estimated average cost of €25,000 per apartment, according to the report.

The report does not elaborate on how much such a levy would be or who exactly would be levied, other than that it would be levied industry-wide.

Subsequent sanctions against individual builders who are responsible for defects are “not feasible”, according to the working group.

“A general industry levy now imposed would target everyone in the industry, including those who have not contributed to the problem,” it said.

According to the report, the working group considered raising funds through an industry levy, the concept of which “requires careful political, legal and public scrutiny and should be considered as an option, particularly in the context of other similar industry levies being considered.”

The working group presents a number of ways in which the appeal can be funded.

The first is cheap homeowner loans and homeowner support in the form of a tax credit, property tax collection, means-tested grant, or cheap loan.

However, the report acknowledged that this option would be “very difficult” because a low-cost, unsecured loan would first have to be paid to owner management companies (OMCs) that run homes.

Government-funded grants of 100 percent can also be paid to OMCs for the most immediate work. Apartment owners would then have to bear the rest of the costs themselves and the state would offer support.

A government body would have to be set up to implement this financial assistance.

The third option is a combination of the first two options, where the state pays some of the work directly and the rest of the work is performed by some of the other options.

According to the working group, subsequent support should be provided for work that has already been carried out or has begun on damaged apartments.

This support could be provided through a combination of refundable tax credits, grants, concessionary loans, or a mix of tax credits, grants for those outside the tax net, and concessionary loans.

Only a quarter of the apartments are owner-occupied, over 70 percent of which are rented out privately or as social housing.

About 86 percent of landlords who let apartments have only two rental properties in their portfolio.

The Construction Defects Alliance said the report was a “milestone” for owners of defective homes and called on the government to provide support for 34,000 high-risk homes in the 2023 budget.

“The working group has warned that critical remediation work may be postponed or blocked ‘to ensure that a remediation support program can be accessed,'” spokesman Pat Montague said.

“Such a scenario – which they call a ‘moral hazard’ – may pose unnecessary health and safety risks to the occupants of those 34,000 homes.

“The working group has made it clear that giving the owners of these 34,000 homes access to ‘post-financial support could play a very important role in combating this moral hazard’.

“From the point of view of Allianz Baumälgel, access to such subsequent financial aid should be provided for in the 2023 budget and in this year’s finance law.

“Any delay unfortunately introduces the very unnecessary health and safety risks that the working group warns about.” The government has asked to consider a construction tax to pay €2.5 billion in redevelopment costs for 100,000 defective Celtic Tiger-era homes

Fry Electronics Team

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