8 May 20238 May 2023 derek

Learning lessons from Ireland’s fully funded remediation scheme for apartment defects

Politics

“Really importantly, this gives real hope for people, that they’re going to get their homes back together and they can get their lives back together,” said the Minister for Housing, as he announced that his government would fully fund 100% of remediation costs for construction defects in all apartments across the country.
No, this isn’t a dream. This is Ireland, where a precedent has recently been set – which we are looking for Michael Gove to follow in England and Wales.

We recently met with campaigners from Ireland’s Construction Defects Alliance, and we are grateful for the ongoing mutual support between our campaign groups. We have found much in common between the stories of construction defects in our neighbouring countries.

More than two decades of ‘light touch’ building regulation and a lack of government oversight, starting from the early 1990s, has led to widespread fire safety defects, inadequate compartmentation, water ingress and structural defects in thousands of apartment blocks across Ireland. Blameless apartment owners have been trapped in unsafe, unsellable and sometimes uninsurable homes for years, facing costs in the tens of thousands of euros to remediate defects over which they had no control. It’s a tale that will sound very familiar to leaseholders in England and Wales. 

A history of protecting our citizens in unsafe homes

When the Irish government announced a redress scheme in January 2023 for defective apartments and duplexes, this was in fact their third construction defects remediation scheme since 2014. Schemes had previously been announced to address the widespread use of defective building materials that have caused homes to crack and crumble, including pyrite (mainly on the east coast) and mica (mainly County Donegal). These remediation schemes still have a long way to go and there are still unresolved issues with the level of redress offered – but the prior recognition that the State must step in with funding to support homeowners in these cases helped to set a precedent, which the owners of defective apartments were able to build on during their campaign for justice.

Political memories must stretch further back in the UK, but we do have a similar precedent for the State stepping in with comprehensive support for blameless homeowners affected by widespread construction defects. In the early 1980s, the Conservative government under Thatcher stepped in to fund 90% of remediation costs (or 100% in cases of financial hardship) for defects in Prefabricated Reinforced Concrete (PRC) homes. Leaseholders who are caught up in the current building safety crisis will remember that Conservative backbencher Stephen McPartland tried to build on this precedent in his bid to protect us from remediation costs, during the Fire Safety Bill in 2021.

Cross-party consensus that apartment owners should not pay

In the years leading up to the Grenfell Tower fire in London, defects in Ireland’s apartment blocks had already started to come to light. Cladding is only a minor feature in Ireland, but inadequate compartmentation, fire-stopping and other fire safety defects are estimated to affect 70% of apartment blocks built in the ‘Celtic Tiger’ era. 

By 2018, Ireland’s cross-party housing committee had published a report, Safe as Houses?, recommending a redress scheme with a mission statement that “Ordinary owners who purchased in good faith should not be liable for the costs of remediation caused by the incompetence, negligence or deliberate non-compliance of others.”

It was a statement of principle that would be closely echoed two years later by cross-party MPs in the UK’s Housing, Communities and Local Government Committee. Their report in 2020 similarly called for residents to “bear none of the cost of remediation” and said that it would be “necessary for the Government to provide the funding up front” and then seek to clawback contributions from other responsible parties.

But this is where our national stories diverge, for now. 

Upfront funding on a whole building basis will remove the delays to making homes safe

Ireland’s government finally announced in January that it will legislate for a scheme which provides comprehensive financial support to repair all defective apartments. There are no restrictions based on whether defects are external or internal and no restrictions on eligible building height, although the details about how resources will be prioritised are still to be agreed.

As in England and Wales, there is anger amongst apartment owners at property developers, product manufacturers and others who profited from unsafe homes. Ireland’s government is expected to clawback contributions from other responsible parties, perhaps through an industry levy – some parliamentarians suggest that ultimately there could be a ratio of 1:1 funding between industry and the State to reflect their shared responsibility – but the various mechanisms for that are still to be worked out. In the last few days, in relation to the mica crisis, a member of the Dáil has said that the State will definitely be taking “major legal action” to recover money from defective product manufacturers, so it appears Ireland’s government is prepared to take firm action and use many different routes to recover costs from other responsible parties.

But importantly, Ireland’s homeowners are assured that they will not pay for a collective failure of State and industry; they do not have to wait any longer for an answer to the question of ‘Who Pays?’ or for a detailed apportionment of blame, before their homes can be made safe. 

Ireland’s apartment remediation funding scheme is also retrospective, therefore any costs for work that has already started will be covered, honouring the principle of fairness and equity to all homeowners.

Funding will be on a ‘whole building’ basis, with Ireland’s government recognising that anything less would lead to a moral hazard because the work to make homes safe would be delayed, unnecessarily, while trying to collect funds off individual apartment owners who cannot pay. 

Social landlords and commercial landlords (those with more than two properties) will also be included in Ireland’s remediation funding scheme. A line has yet to be drawn and there may still be specific limitations or exemptions on institutional and large multi-unit landlords; however the ‘whole building’ approach means that they would not have to pay upfront, but some may perhaps need to contribute through the tax system, spread over the coming years. Remediation costs are already tax deductible for commercial landlords or can be written off against capital allowances over a number of years.

In England and Wales, we continue to call for fair and equal treatment of all leaseholders and believe that no leaseholder should pay a penny for a problem they did not cause, no matter how many properties they own – but what this tells us is that our Government wouldn’t have to look very far to find other alternative approaches for how they could mitigate the harm being caused to many thousands of leaseholders who they have deemed to be ‘non-qualifying’ for support. 

Apartment owners in Ireland are rightly still concerned about the long delays for remediation funding to be released, as well as funding for emergency and interim measures, and this must happen far more quickly. 

But the building safety crisis was “a nettle that needed to be grasped” and it appears that Ireland’s government, with cross-party support, has attempted to do so. Leaseholders in England and Wales urgently need our government to catch up or our homes will remain unsafe for years, if not decades, to come.

The UK government should take the place of all innocent leaseholders

We continue to call on the Secretary of State, Michael Gove, and the Chancellor, Jeremy Hunt, to follow the precedent of their counterparts in Ireland and provide full funding for any unsafe building where remediation work is not yet covered by developers or building owners. 

The Government should step into the shoes of all leaseholders, both qualifying and non-qualifying, and take their place at the bottom of the ‘waterfall’ which determines who pays for building safety defects. 

The Government has the resources and ability to recover contributions from other responsible parties over the coming years. It is perfectly able to intervene with essential funding, as it has demonstrated throughout the Covid pandemic, and has frequently been able to find funding in support of other policies intended to give an artificial boost to the housing market, like stamp duty holidays or Help To Buy – yet nothing could restore the housing market more effectively than making our country’s homes safe to buy and live in. The Government is already providing funds upfront for cladding remediation, and recovering these through taxation and industry levies, so to do the same for non-cladding defects would not be a departure from the current approach – it would be finishing the job. Buildings cannot be left half-safe. 

In the context of a widespread national scandal, it also makes no sense – and is simply not proportionate – to expect individuals to take action against those responsible on a building by building basis. 

Guaranteeing that no leaseholder will pay a penny to fix a crisis they did not cause would restore confidence in our housing market and break down the barriers holding people back from their full potential – which our political parties insist they want to do. As manifestos begin to be drawn up ahead of the forthcoming general election, we will be seeking decisive commitments from all parties that want to win the votes of millions of affected leaseholders and their families. 

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