03 November 2015
COSTS OF BC(A)R SI.9 FOR MULTI-UNIT DWELLINGS
The following is an assessment of BC(A)R SI.9 costs for a multi-unit apartment project. In the following calculation it has been assumed that a typical 2 bed apartment in a scheme of 22 will cost €200k each to build including parking (excluding vat, developer’s profit, legal/marketing and site costs). The total build cost for the residential element is therefore approx. €4.4m. Where possible detailed project-specific quotations from specialists have been obtained. The calculation below is for one apartment. [Blog note: For detailed breakdown of costs see detailed costs to follow]
BC(A)R SI.9 Additional Costs for a multi-unit Dwelling (since March 2014)
BC(A)R Statutory Certifier Fees € 6,500
BC(A)R additional Contractor & specification costs €12,000
BC(A)R Part L (fRsi/Wufi) Certification € 1,300
BC(A)R Acoustic testing for Part E € 1,300
Multi-unit BC(A)R Phasing Costs € 6,000
BC(A)R SI.9 COSTS for multi-unit dwelling €27,100
Part V costs (social and affordable since 2015) €10,000
Additional Development costs since 2015 €37,100
(Note: The cost of Building Control for a single dwelling in Northern Ireland system is just €236 (£175)(1), on mainland UK it’s €772 (£572)(2)
MULTI UNIT ISSUES
BC(A)R SI.9 has brought very specific challenges to the speculative multi-unit residential sector for both estate houses and apartments. There is a wide body of thought in professional and specialist legal minds that suggest that SI.9 affords few additional consumer protections to purchasers of multi-unit dwellings, the specific sector that SI.9 was introduced to address following Priory Hall (3).
A recent Ministerial Review focused on the unsustainable SI.9 Assigned Certifier fees for once-off housing. However, as we have seen there are a raft of other additional costs associated with SI.9: Ancillary Certifier (technical specialist) fees for mechanical and electrical engineers, structural engineers, fire engineers, acoustic specialists along with energy (Part L) compliance and assessment costs. For multi-unit developments there are party-wall and floor acoustic tests and new phasing/financing carry-costs, and a newly introduced Part V social and affordable housing provision. No cost exercise, Government review or audit has been undertaken to examine SI.9 impacts on multi-unit housing.
A recently report “Policy options for supporting the provision of Housing at Affordable Prices” by Anthony Foley (DCU Business School) on behalf of the SCSI lists costs for a typical 3 bedroom house p 27 (4). The SI.9 costs included of only €2,200 has no industry basis and is a fraction of costs quoted from other sources. The study specifically excludes “additional supervision” even though these other SI.9 “additional supervision” costs are significant. There is no reference to new financing concerns of developers and carry-costs associated with SI.9 phasing issues which will be discussed below.
“Removing” development levies is not a saving, it means that the Local Authority pay for services and amenities to the site: it is just a subsidy to the developer. “Reducing” BC(A)R SI.9 costs, cutting administration and streamlining systems could be a real saving.
‘Nothing is complete until everything is complete’: Multi-unit SI.9 Phasing issues
An SI.9 certificate of completion validated by the Local Authority online Building Control Management System (BCMS) is necessary before any building may be legally occupied. There has been delayed online availability of online BCMS Certificate of Completion lodgments and validations. The BCMS did not know how to deal with a certificate of completion for a multi-unit development (residential, retail, office etc.) because no allowance was made for phasing certificates in the regulations. An industry call-out for assistance was issued in December 2014 by the Local Government Management Agency (LGMA)(5). The LGMA identified unintended problems with the requirements of BCAR which will impact on phasing and will delay the occupation of early tranches of housing in a phased estate or apartment development.
BC(A)R SI.9 requires each unit to have a separate completion certificate even if lodged under once commencement notice. However an entire structure (including common areas and ancillary siteworks) must be complete to allow a certificate of completion to be issued for an individual unit. The BCMS confirmed that ”each phase of the development must be compliant and not have outstanding compliances in other phases even if this requires completing all the development works in advance”. The BCMS clarification suggests that completion of larger mixed-use projects and multi-unit residential schemes may be more onerous than was realised under the new regulations. ‘Nothing is complete until everything is complete’ and that might mean house sales delayed in an estate sale while waiting for a permanent drainage connection or a CHP boiler certificate.
Financing of larger projects may rely on phases being completed and sold on in stages while some common areas, basements areas, roads and drainage may still not be 100% complete. For apartment schemes or mixed-use high density schemes BC(A)R SI.9 requires that adjoining and dependent structures must be 100% complete before occupation by end users. This has cash-flow implications for developers of larger mixed-use projects with commercial fit-outs and high-density multi-unit residential projects: extra time and carry-costs at completions stage. This lack of clarity may result in differing interpretations by Local Authorities at validation stage, with resulting risks and financial exposure for developers and institutions.
If a certificate of completion is refused by the Local Authority, a new application will result in a delay of at least 21 days. The system already has a ‘3 week’ admin period for the Local Authority before a building can be occupied and SI9 gives them unlimited (open-ended) timescales for the administrative processes. For large multiples and shopping-centre fit-outs this has contractual implications, where penalties exist (for landlords of anchor tenants) of up to €100k per week or delayed possession during fit-out stage. It is only now that some of these issues are coming to light and adding unexpected cost at a time when many developments are already very tightly balanced.
Detailed cost breakdown:
In the following calculation it has been assumed that a typical 2 bed multi-unit apartment in a scheme of 22 will cost €200k each including parking (excluding vat, developer’s profit, legal/marketing and site costs). Build cost for the residential element €4.4m. Where possible detailed project-specific quotations from specialists have been obtained.
Additional Regulatory Costs and Fees for typical apartment (since 2012).
Health & Safety Regulations €300*
- Prelim H+ s plan: €500
- PSDP: 16X 350= €5600
- Safety file handover= €450
- total €6550: for 22 units = cost per unit €300 (assumes 12 month construction period)
BC(A)R Statutory Certifier Fees (since March 2014) €6,500
- Statutory Assigned Certifier cost (assume lower cost range- current estimates from €3,000
- Statutory Design Certifier Fee €500
- Ancillary Certifier costs (3 engineers @ €1,000 each)= €3,000
BC(A)R additional Contractor & specification costs (traditional procurement- since March 2014) €12,000*
- Defensive specification costs (branded, certified products to ensure compliance with regulations. 5% appears average estimate at this point)= €10,000
- Contractor additional insurances, administrative overhead and co-ordination (lower end cost for documentation, CPR-2013 etc)= €2,000
BC(A)R Part L (fRsi/Wufi) Certification (Since March 2014) €1,300**
- Separate Part L Energy certification- less than 10 people are NSAI registered for this work
- average estimate for simple 22 unit apartment building: fRsi models is between €11,070 to €13,530 (average cost €12,700); Wufi interstitial condensation models cost between €7,380 to €18,450 (average cost €12,915)- minimum cost assumed here
- BER Certificate cost €100 per unit
BC(A)R Acoustic testing for Part E Sound-proof between apartments (since July 2015) €1,300
- cost between €1300-1500 per room (see post here)[Blog Note: this cost is per room]
Irish Water Connection Charge (introduced 2014- 2015) €500
Multi-unit BC(A)R Phasing Costs (since March 2014) €6,000***
- Phasing costs are adding an average of 3-5% to the cost of larger multi-unit schemes. €6,000***
Part V costs (social and affordable since 2015) €10,000****
- Part V social and affordable provision: For projects over 10 units approximately 10% of all units must be made available as social and affordable units. It is assumed that these are cost neutral to build but site costs will increase due to units located in development- +5%. (Source SCSI)
SUMMARY: Multi-Unit SI.9 regulatory costs (since 2012) = €37,900; The SI.9 costs are €27,100
- Planning Permission costs, development levies and contributions are not included in the above.
- Commencement Notice fee of €30 to the local authority is not included.
- Additional printing, filing, future archiving costs for the paperwork associated with BC(A)R not included.
- *Health + Safety costs exclude contractor’s costs for separate PSCS inspections. Costs noted costs are based on project-specific quotes received from specialist
- **Part L costs are based on project-specific quotes received from specialist
- *** Phasing costs: entire joined structures must be completed at same time. This is adding an average of 5% to the cost of larger multi-unit schemes. Developers consulted for this presentation consider this cost element to be conservative and for larger mixed-use schemes where tenancies are required by “drop-dead” dates, carry costs may be higher.[Blog Note: other contributors have reported defensive specification costs up to +25%]
- ****Part V costs have been estimated based on multi-unit examples by both a developer and architect. These costs are similar to those recently published by the SCSI “Policy options for supporting the provision of Housing at Affordable Prices”
The above post is based on an extract of a paper “Is red tape killing our housing sector: Building Control Regulation Costs for multi-unit housing” by Maoilíosa Reynolds MRIAI at the Dublin Economics Workshop 2015
Other posts of interest: