The € 64,000 question: Is it really cheaper to have no regulation?
The BRegs Blog was asked about the scale of the pyrite problem by a reader and we have attempted to establish some ballpark figures for the cost of some of its remediation as follows:
- There have been 520 applications so far to the Pyrite Remediation Scheme (source: Dáil statements 16th July 2014- see link below)
- 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 suggested 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, 520 homes may cost in the region of €33,280,000
In excess of €33 million of taxpayers money will have to be spent to fix one instance of a defective building product (for the 520 applications to date)! In addition 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.
Local Authorities are responsible for market surveillance of building products. However they only react to problems as they arise as they do not have adequate resources to proactively police quarries and suppliers. That may be considered acceptable, for now, because 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 .
Assigned Certifiers may think that their Professional Indemnity Insurance (PII) policies will pay for such claims. One PII policy will never stretch to the scale of another material problem like pyrite* or even a single building like Priory Hall** that will cost in excess of € 27 m** to rectify. With such a weak system of redress, the next building failure will inevitably fall back on the tax payer. Would it not be better to invest in better regulation of the supply and manufacture of building materials?
*Pyrite remediation at €64,000+ per house and there could be up to 10,000 pre-2012 properties affected (up to €640 million).
** Priory Hall refurbishment at €140,000+ per apartment (at least €27 million).
Sources mentioned in the above post:
Irish Times, August 1st 2014: Supreme Court makes final Priory Hall orders (185 apartments at estimated €27m for repairs)
Other posts on this topic: