Pyrite: the spiraling cost of no Local Authority Inspections

by Bregs Blog admin team

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Nessa Childers MEP

The spiraling cost of no local authority building inspections

In an article in the Irish Examiner on 1st October 2014 “CIF to publish supplier list in bid to stop pyrite“, a group representing the Construction Industry Federation indicated that they intend to publish a survey of suppliers, in a bid to stop materials containing pyrite finding their way onto building sites.

Local Authorities are tasked with policing the materials supply chain but due to chronic under-staffing these duties may not have been observed in the past. Recent conversations in the Dáil on 17th September between Clare Daly TD and Paudie Coffey TD regarding property tax exemptions for pyrite affected homes suggest resources are not available even to undertake the tax exemption tests. The government are exploring alternatives at the moment. See discussion here.

In a previous post “The € 64,000 question: Is it really cheaper to have no regulation?” we attempted to establish some ballpark figures for the cost of pyrite remediation. In this post we update that estimate following on from recent confirmation of the Department of the Environment figures by Nessa Childers MEP and Rob Kitchen that those likely to seek remediation will number 12,250:

  • There have been 520 applications so far to the Pyrite Remediation Scheme, but the Department of the Environment has confirmed this number may rise to 12,250.
  • The first 50 homes cost €3.2 m so this indicates an average cost per home of €64,000 each (source: Irish Times article 19.08.2014- see link below).
  • The Pyrite Remediation Scheme EXCLUDES work from 2014 so S.I. 9 cannot be covered. Applications are still being accepted so there may be even more. The SCSI correctly predicted that the eventual figure could be almost 20 times this figure i.e. more than 10,000 homes may be affected by pyrite contamination (source: SCSI- see note below).
  • Based on these figures, to date, 12,250 homes may cost in the region of €784m.
  • The scheme only covers foundations in homes where there is no other means of redress e.g. where insurers refused to pay out or the builder has gone bust. It also excludes pay-outs made by private sector insurers to date for pyrite remedial works.

Under the new building regulations introduced in March 2014 an Assigned Certifier will now certify Part D (Materials & Workmanship) and sign off on, and assume the risk, for pyrites. Given that no additional resources have been allocated to Local Authorities to police materials, we can assume pyrite as a problem will continue to affect construction.

Professional Indemnity Insurance (PII) policies will exclude such claims. With such a weak system of redress, the next building failure will inevitably fall back on the tax payer. Why continue with a system that has little or no independent Local Authority Inspections? Can the taxpayer afford to pay out multiples of the cost of a independent system of building inspection?

*Pyrite remediation at €64,000+ per house and there are 12,250 pre-2012 properties affected (up to €784 million).

Sources mentioned in the above post:

Pyrite Remediation Programme…: 16 Jul 2014: Seanad debates (KildareStreet.com)

Irish Times, August 19th 2014: 6,000 social housing units to be provided this year

Irish Times, August 1st 2014: Supreme Court makes final Priory Hall orders (185 apartments at estimated €27m for repairs)

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