Category Archives: BC(A)R

“30 % of self-builds in 2014 have been postponed or abandoned” | IAOSB

self-build10 January 2014

The Irish Association of Self-builders (IAOSB) conducted a survey of its members in 2014 and found that one third of self-build projects including one-off houses and extensions had either been abandoned or postponed. This figure could represent almost a quarter of the total for house building in Ireland. We reproduce below an interview Shane McCloud, of the IAOSB,  gave recently on this issue outlining some of the reasons for this collapse in self-build housing figures.

 1) What is your own background, are you a self builder, where are you from and when did you set up the Irish Association of Self Builders website?

I have built three houses here as a self builder on direct labour and project management route. Before that, I was a Civil Engineer graduated in USA and have previous experience in this field in the UK. Irish Association of Self Builder was officially launched on 1st of January 2004 and has constantly been ranked number one with all major search engines for “Building a house in Ireland” or similar phrases. Iaosb.com was never started as a business and the aim has always been to help and assist new self builders to understand the whole process from start to finish. The whole operation of the website is run by a team of volunteer self builders who have gone through the experience themselves and want to help others going through the process now.

2)  Did you get any response from Minister Alan Kelly following your letter calling for changes to the building regulations?

We have written to Minister Alan Kelly twice and have received no replies. Recent comments from Minister Alan Kelly mentioned amending SI9 to reduce impacts on self builders. The RIAI at an EGM on 4th November mentioned that they had been tasked with “sorting out” the self-builders. R.I.A.I President said at his meeting with Alan Kelly in early September he was asked for help in resolving the self-build problems under the regulations. We don’t know if the RIAI have proposed technical solutions to the minister in the last 3 months. The RIAI president raised this issue on SixOne in February when Phil Hogan was the Minister and nothing was ever done about it.

 3)  Can you provide details of the survey you did, which found that  1/3 of all self-builds this year have either been postponed or abandoned and could have led to up to 1,000 houses not being built? Was it an online survey?

Out of a representative sample canvassed  we had 40% replies. Based on membership profiles, we believe 30 % of self-builders in 2014 have been postponed or abandoned. The breakdown of respondents were as follows:

  • 1/3 at the upper end were able to assume 22%+ increased costs. These are at the upper cost end of the spectrum.
  • 1/3 in the middle band were still able to undertake projects but were reducing their scope to accommodate increased costs. For many this means reducing size, specification etc.
  • The bulk of respondents who have indefinitely postponed or abandoned self-builds (last 1/3) are at the lower cost end. Many here were hoping to build cheaper than speculative built housing. Normally savings to self-build at this end are around 30% on the sales price of similar standard spec- built housing. Quite a few self-builders are either on housing lists or in rental accommodation at this level.

We believe Bank lending has become much tighter this year , borrowing extra for more  ‘consultancy fees’ is very difficult.

We believe out of 8,300 completed housing units in 2013 around 1,300 were developer built housing units (CSO source). This means that 85% of the new homes built in Ireland in the last few years were ‘custom build’ or ‘self build’??

4) Is the problem right across the country, or is it more prevalent in rural areas?

Our membership is diverse and most individual self-builds are rural. However a significant proportion of members undertake significant extensions and alterations managing projects themselves. Direct labour is not limited to house building. Lots of small businesses in retail, hospitality, tourism and services sector do work through direct labour.

 5) Has the association had a meeting with the Department of the Environment on this issue and what was the outcome?

We have had no meeting with DECLG on this issue . We found out that Minister Hogan stated in a Seanad debate that he consulted with the IAOSB but this is incorrect (Link to Seanad speech). We have also noted the transcript of this debate has been altered to remove this factually incorrect statement. Senator Paschal Mooney has requested more information on this. Self Builders would welcome a meeting to propose solutions.

6) Have you been contacted by people complaining about the fees they are being quoted for having their self-build signed off under the new building regulations, and can you give any examples?

Yes many members have contacted us. One you could talk to is Amanda Gallagher. An RIAI architect (with a quantity surveyor) self-has completed a detailed breakdown of additional costs for SI.9 due to increased professional fees and increased costs to use a main contractor registered for a typical 1,350 4 bed detached house in suburban Dublin- see link here [SI9 costs for a typical dwelling]

The problem is that the regulations are very demanding- it’s understandable that someone won’t risk their own livelihood- if the regulations were clearer the cost would drop. The following is an extract from a member asking for help this morning:

“ To put into perspective I have received three quotations of €4,500, €12,000 and €32,000 all exc VAT for work. This has scared me immensely. I am open to admitting I know nothing about construction but I have two builders both of whom I trust having witnessed them build homes for my friends and family over the past 15 years. Either will do a great job for me with my families best interests at heart. I cannot engage either of them until I have a certifier picked who will need to re-draw my plans to meet their needs and start this process but how can I tell which is the right one to go with especially when each are saying ‘we are all learning about this process and trying to get our heads around it’. Am I really to pay up to €40,000 for something that my neighbour who started work in February (one month before the new regulation launched) is not having to do at all?”

The quotations are based on the work being done by a Building Contractor.

7) I’ve seen the statistic that 60 per cent of houses are self-builds- is this an old statistic because it seems very high?

It varies between 40- 60%. This excludes extensions many of which are self-built. Based on CSO figures for 2013, 8300 dwelling units (including apartments) were built in the year. Approximately 3,000 were once-off houses. Only 1,300 units were registered with house-building guarantee schemes (speculative WITH HOMEBOND) so the bulk of dwellings built were either commissioned or built by individuals rather than house building companies.

Private individuals and businesses with no experience commission buildings and extensions all the time- that’s normal in every country, it doesn’t mean shoddy work. Cowboys are more likely in speculative building where cutting corners can bring big profits,

A quick look at sites like link2plans (we think they may overestimate the number slightly) and the BCMS website (Department site where new commencements are recorder) to verify the extent.

In the UK self-building is very big, and the UK recently have launched a co-housing initiative, to supply low-cost sites to self-builders and decided that there’ll be no development levies for self-build. UK government see self-building this as a big part of solution to the housing crisis- sustainable well built homes, no cost or risk to tax payer.

8) Are the new building regulations having any impact on extensions (from the building regs forum, it seems that extensions under 40sqm are not affected)?

Apparently the Department have recently come back to recommend that many extensions previously under 40sqm that were considered exempt are no longer. The advice is very confusing and we believe the RIAI have written to the department to clarify. It is remarkable that professional architects currently are uncertain and in the dark as to whether extensions under 40Sqm are exempt or not. The BRegs Blog has written extensively on this. In the meantime many small extensions aren’t viable as the cost for inspections is more than the build.

If you need links to any of the statics or sites/ topics listed I can provide them for you.

As you can see from the attached Department of the Environment information there is little to suggest a  housing boom.

Bruce Shaw Annual Review for information on costs, trends and the construction industry:

http://www.bruceshaw.com/knowledgecentre/chapters/ireland

All our information are gathered by a self-build research team and if you have any further technical queries please do not hesitate to let us know and our team will endeavour to answer all your questions.

Kind regards,

Shane McCloud

Other posts of interest:

Self build: How to make your dream home come true

What is Cohousing? | Homebuilding & Renovating

Lobbying in the Construction Industry – Part 1

CorkCityAerialView_large

8th January 2014

In Tuesday’s Irish Examiner Rory Hearne suggests the housing market should serve the interests of all not just the few (Link to article). He also writes:

“We need a national debate about who really benefits from the current housing and property market based around home ownership, and spiraling house prices and rents.

The big beneficiaries remain the banks, developers, estate agents, solicitors, landlords, and increasingly, international capital and vulture fund investors who are buying up huge swathes of Irish residential property (often from and with Nama).

They all have a vested interest in a rising property market.

There has been widespread concern and criticism of some of the same vested interests being involved in the negotiations for the new building regulations, SI.9, introduced in March 2014. Seen as a paper exercise and ‘a political solution’, SI.9 creates a complicated ‘red-tape’ exercise in hands-off private regulation which is resulting in massive costs to consumer and industry. SI.9 was introduced by the former Minister for the Environment, Phil Hogan,  with little public or professional back-ups being in place, and no consumer input.

Following on from a public consultation in 2012 only a small circle of key stakeholders were invited to participate in the formation of SI.9.

The organisations invited to participate were representative bodies for architects, engineers and chartered surveyors (RIAI, ACEI and SCSI respectively) along with the Construction Industry Federation (CIF). Most of these bodies now have statutory roles and operate self-policing registers. The CIF register, CIRI, is due to be put on a statutory footing in March 2015.

Critically no consumer groups were involved.

Many consumers share this view and many perceive that the government has conveyed vested interest groups with a monopoly on various statutory roles within the construction process. This is most visible in the self-build sector, where owner/ builders legally are unable to build their own houses without the involvement of a contractor, preferably a Construction Industry Federation/CIRI registered one. This has resulted in significant cost increases, particularly for housing (see links below). The industry has observed a significant fall-off in new self-built homes being undertaken this year.

With Local Authorities already chronically under-resourced, with no additional training or staff allocated to operating the new system, problems such as rogue or cowboy builder/ developers and serious materials issues such as pyrite are set to remain with us for some time.

All these representative bodies are now set for a windfall in income as a result. In order to operate as a registered professional under the new SI9 one must be on a register, and a hefty registration fee must be paid annually to these representative/policing organisations. With 60,000 operatives involved in various roles in the construction sector annual registration fees represent a bonanza for these key stakeholder bodies.

A significant reason for all these organisations to be supportive of SI.9, even though most agree that the regulations bring little or no additional consumer protections to owners.

BRegs Blog Admin. Team

Other posts of interest:

Legal perspective: consumer benefit? BC(A)R SI.9 

€ 5 billion | The extraordinary cost of S.I.9 self-certification by 2020 

Government Reports + Professional Opinion Ignored in SI.9 | look back 5

Summary of Legal Posts- BC(A)R SI.9 

Pyrite legal dispute referred to European Court | Independent

World Bank Report 2015 | UK v Ireland the real cost of “Dealing with construction permits”

World Bank Report 2015 | Ireland’s poor construction regulations are the biggest drag on our ranking | BRegsForum

What’s happening with the RIAI? | Village Magazine

Village Cover

What’s happening with the RIAI? | Village Magazine

The Royal Institute of the Architects of Ireland (RIAI) has published a link on its website to the December 2014-January 2015 edition of Village Magazine containing a scathing critique of the organisation, one of the main stakeholder groups involved in negotiations on SI.9. In a no-hold barred two-page spread, the Village Editor Michael Smith, depicts a professional organisation in crisis with a series of allegations being made in relation to the CEO, President and members of Council of the RIAI.

These allegations include concerns regarding:

  • The additional regulatory and insurance implications of SI.9 on “economically traumatised” professional design firms seemingly ignored by the RIAI Executive;
  • The lack of transparency and accountability with the CEO “lobbying the Government behind the scenes”
  • The CEO involved with “too many, sometimes conflicting powers”
  • The potential conflict of interest for the CEO through the crossover engagements between his son’s website consultancy firm and other stakeholder organisations involved with SI.9.

The above allegations are refuted by the RIAI President, Robin Mandal in the article. The matters raised by the onerous imposition of SI.9 would appear “to be a side issue in the debate over propriety” at the RIAI. However the above items raise a legitimate concern for the professionals being represented by this body and whether those tasked with renegotiating SI.9 have their eye on the ball when there appear to be so many other fires to be put out. The RIAI President, writing in its official journal last month, said that he looked “forward with relish to 2015, the year of change” without actually identifying what specific changes he envisaged. It would appear, if the allegations in Village Magazine are correct, that a top-down change is urgently required at the RIAI.

The 2000-word article referred to above is available online on the RIAI website in the “RIAI in the News section”- Link: here. (Jpeg is attached below).

BRegs Blog Note: The 2-page December ’14/ January ’15 feature referred to above is now available on the Village website- for full article click title Hackles RIAIsed. | Village

Village Magazine is also available from most newsagents (€3.95).

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Other posts of interest:

John Graby – RIAI, CEO | “Phil Hogan did not bulldoze through SI.9′

RIAI Complainee investigates IAOSB Complaint

Radio Clips: RIAI and CIF differ on Building Control (Amendment) Regulation (SI.9 of 2014)

Legal perspective: consumer benefit? BC(A)R SI.9

RTÉ Radio- CIF: professionals to Guarantee under BC(A)R SI.9

Assigned Certifiers facing jail? BC(A)R SI.9

Alarming Legal opinion: BC(A)R SI.9

Should the Architectural Technology Profession stay within the RIAI?

The future for Architectural Technologists is outside the RIAI | Joe Byrne

10,500 housing units completed in 2014

Bubble-Burst

It would appear from recent media comment that some industry sources are trying to hype up a “construction housing boom”. Figures for 2014 released from the Department of the Environment (DECLG) confirm that housing completions remain at depressed levels. There are many factors affecting housing supply but the figures clearly indicate that one of the unintended consequences of the new building regulations introduced in March 2014 is additional “red-tape” costs and legal uncertainty which is further inhibiting new housing starts.

The following is a summary of residential completions from the DECLG. It lists monthly completions since 1975, from January to October 2014 inclusive. Data for November and December 2014, traditionally a low for completions, is unavailable at time of writing.

Based on the table below one can assume there will be approximately 10,500 houses completed in 2014, similar to the 2011 recession level.

8,796 housing units (houses and apartments) were completed for first 10 months of 2014. Although this figure exceeds the total for the previous year (8,300 dwelling units), it should be recalled that 2013 was the lowest ever residential completion total since records began in 1975.

monthly house completions 1975-2014 (oct)

TABLE: Monthly House Completions 1975-2014 (Oct)

An initial analysis of information, available from the DECLG and other sources, suggest that NAMA and ‘ghost estate’ completions account for a significant amount of the increased supply in 2014. These are likely to be apartments already completed or part-completed and vacant for some time that only obtained ESB live connections this year (this is the criteria for the DECLG completion statistics).

The ESRI estimate 12,500 units will be required in 2015. Based on information available from the the BCMS Building Register, Commencements to December 2014 were still down 25% year on year directly following the implementation of the new Building Control system in March. The ESRI 2015 target may not be achieved with consequences for consumers, affordability of new housing and rental prices adding to the current housing crisis.

A review of the impact of the new building regulations is to take place shortly.

Download pdf here: monthly house completions 1975-2014 (oct)

Housing Completions

House Completions 1975-2014 

Other posts of interest:

BCMS Commencement Notices | Nine Months On

CSO | Construction output increased by 0.1% in Q3 2014

Developer-Led projected Sales Price for a Typical House

So What is an Independent Building Inspector and How Can they add value?

Central Bank | More turbulence in housing market?

“House building costs are 17% more than 2003 despite recession” – Bruce Shaw

Soaring house prices and rising rents could damage economy | National Competitiveness Council

Ivan Yates | Vulture capitalists won’t build the 25,000 houses we need!

ivan-yates

 Ivan Yates

Writing in the first edition of the Independent newspaper for 2015, Ivan Yates clearly spelled out that he believes Ireland needs “real developers” to sort out the housing crisis and that it is naïve of the Government and others to believe that the problem will be sorted by the short-term thinking of vulture capitalists. He adds that if you are depending on the international vulture capitalists who invested €35bn in 2014 in Irish property to provide finance for new construction activity, you’re sadly mistaken as “these ‘bottom feeders’ aren’t interested in long-term Irish development or its society; they’re after a fast buck and a quick exit”.

He also writes:

“In Ireland, once we’ve articulated a problem, declared it a crisis, called a summit and announced the government package, we think it is resolved. It’s implementation where we repeatedly fall down.”

“Governments are great at big pronouncements: 110,000 homes will be in place by 2020; Nama will build 22,000 homes over the next five years; Nama will convert the Docklands into Canary Wharf. The reality is less exciting. In 2013, beyond Dublin City Council, how many new houses were completed on average by each council? Three!”

“Costs of building a new house are greater than existing ones, even if the site is for free. It’s a no-brainer therefore that there will be zero construction requirements in these areas, as no profit margins are attainable.”

Yates makes some valid points in the Independent article but he is proposing the ‘spec-build’ business model that has failed spectacularly in the past without addressing the core problems. A developer’s business is about driving building costs (and quality) as low as possible and controlling supply to sell into the market as high as possible.  Neither problem has been fixed…………yet.

You can read the full article here: (Link:)

Look forward to SI.9 review in January 2015 | Minister Paudie Coffey

paud

Minister Paudie Coffey pictured. December 24th 2014.

The BRegs Blog Admin Team are optimistic that both Ministers at the DECLG have been listening. Minister Kelly and now Minister Coffey have signaled an industry-wide review of the new building regulations for early in the new year. We hope that the key stakeholders are prepared and will make informed representations concerning the unintended consequences on consumers as well as impacts on their respective members in their submissions. A comprehensive review of SI.9 that includes some of the consumer groups overlooked in the drafting of the original legislation would indeed be a super Christmas and New Year present for consumers and professionals alike who are subject to numerous unintended consequences at present.

“Early in the New Year, the Department will commence its review of the first year of operation of the regulations in conjunction with local authorities and industry stakeholders. The impact, particularly in relation to cost, of the regulations on one-off housing will be a key element of this review which will inform future regulation in this critical area.”

Minister Paudie Coffey in answer to Barry Cowen TD last Thusday 18th December 2014 in the Dáil. Link to Dáil exchange here.

The initiative to improve building standards in Ireland was welcomed by all sides. There is general  agreement that almost 25 years of Building Control and self-certification has not been a success- there are many reasons for this but the political will to make improvements is to be applauded.

After 10 months of the new system, all sides acknowledge that changes need to be made. There is an urgency about dealing with this because construction is a driver of the economy- we need houses and schools, more importantly we need jobs.

The challenge for 2015 is to deliver a robust system that doesn’t compromise on standards with the resources available. Let’s all look forward and not loosing this opportunity to change the current regulations and create a proper system that delivers real consumer protection.

We look forward to presenting contributors’ workable and practical solutions to the current problems of SI.9 in the new year.

We will resume normal transmissions after a short break on the 5th January 2015Best wishes for the new year from all here in the BRegs Blog Admin team. 

Extract of Dáil exchange:

___________

Written answers

Thursday, 18 December 2014

What are written answers?

Department of Environment, Community and Local Government

Building Regulations Amendments – Written answers 19th December 2014

Barry Cowen (Laois-Offaly, Fianna Fail)

541. To ask the Minister for Environment, Community and Local Government the new proposed changes to building regulations for one off houses introduced in March 2014; and if he will make a statement on the matter. [49090/14]

Barry Cowen (Laois-Offaly, Fianna Fail)

542. To ask the Minister for Environment, Community and Local Government the cost benefit analysis of the building regulations undertaken prior to them being introduced in March 2014; if a cost-benefit analysis has been undertaken for the proposed changes; and if he will make a statement on the matter. [49091/14]

Paudie Coffey (Waterford, Fine Gael)

I propose to take Questions Nos. 541 and 542 together.

The amendment s to the Building Control Regulations introduced through S.I. No. 9 of 2014 have greatly strengthened the arrangements in place for the control of building activity by requiring accountability for compliance with Building Regulations in the form of statutory certification of design and construction, lodgement of compliance documentation, mandatory inspections during construction and validation and registration of certificates. I am satisfied that this key reform of the regulatory framework represents a reasonable and appropriate response to the many building failures that occurred in the past decade and will lead to improved quality within the construction sector.

The main concern of families intending to build their own homes remains the question of cost. A number of cases have been brought to my attention whereby consumers have been quoted exorbitant charges for professional services in relation to residential construction projects. While the new regulations support improved competence and professionalism and while I believe it is worthwhile for homeowners to have the home they invest in checked and inspected, I do not believe that they should be faced with inflated charges or excessive inspection services.

An extensive public consultation process was undertaken in 2012 to inform the development of the new regulations. Comprehensive consultation documents were published including Strengthening the Building Control System – A Document to inform public consultation on Draft Building Control (Amendment) Regulations 2012which sets out the context in which the new regulations will operate and their impact with particular relevance to cost on building owners and industry stakeholders.

In summary terms, the consultation document identified the key cost impact of the new regulations on owners as being the requirement to assign a competent registered professional to inspect and certify the works. While costs are ultimately determined by market forces, it was considered that this particular requirement would add approximately €3,000 to the overall building cost of a dwelling.

While compliant design and construction was a statutory obligation under the Building Control Act 1990, this obligation may not always have been honoured to the full extent in an under-regulated market. On this basis, it was recognised that the revised regulations may result in additional design, inspection, ancillary certification and, possibly, insurance costs which must ultimately be borne by the building owner. In return for such additional investment owners would be assured of an enhanced quality of design and construction of the building project concerned. It was also noted that the statutory inspection and certification process would reduce the incidence of defective works and the resultant associated costs of carrying out remedial works would reduce accordingly.

In response to the concerns about the prices being quoted to consumers, my Department, in conjunction with the Housing Agency and the construction professional bodies, is preparing additional guidance on an appropriate inspection plan for a typical one-off dwelling. Such guidance will be helpful in better informing the market in relation to offering realistic and appropriately priced professional services for such work.

Early in the New Year, the Department will commence its review of the first year of operation of the regulations in conjunction with local authorities and industry stakeholders. The impact, particularly in relation to cost, of the regulations on one-off housing will be a key element of this review which will inform future regulation in this critical area.

Other posts of interest:

SI.9 Review.. “early in the new year” | Minster Alan Kelly

Dáil | Minister Kelly may take steps to control SI.9 ‘exorbitant charges’

‘Onerous’ Building Regulations must be amended – Minister Kelly

Is the UK ‘approved inspector’ model a more transparent system, with better outcomes? | The Engineers Journal

BCMS Commencement Notices | Nine Months On

CSO | Construction output increased by 0.1% in Q3 2014

SI.9 stops Summer Works for schools in 2015!

Developer makes 27% profit in 6 months: warns against state housing.

Engineers Journal | BCMS 9 months on

SI.9 | Where’s the accountability?

Top Dozen Posts | 2014

2015
Happy New Year to all of the BRegs Blog readers. This may be a time of reflection and one way to do this may be to have a look back over the Top Dozen posts for the past year, the BRegs Blog’s first year, in terms of the highest viewing figures registered.
The most viewed post was written by a Self-Builder followed closely by a Building Surveyor contributor. Two of the top six posts were written by Architectural Technologists.
We look forward to receiving your contributions in 2015 and thanks for the support.

Christmas Present(s)| We are where we are | Christmas Future

presents

Christmas Present(s):

The initiative to improve building standards in Ireland was welcomed by all sides as there is general  agreement that almost 25 years of Building Control has not been a success. There are many reasons for this but the political will to make improvements is to be applauded. After ten months of the new system, all sides acknowledge that further changes need to be made. There is an urgency about dealing with this because construction is a driver of the economy – we need houses and schools; more importantly we need jobs.

The challenge for 2015 is to deliver a robust system that does not compromise on standards with the resources available. A comprehensive review of SI.9 that includes some of the consumer groups overlooked in the drafting of the original legislation would indeed be a super Christmas and New Year present for consumers and professionals alike.

Christmas Future:

The Minister for the Environment, Alan Kelly T.D. has signaled recently an industry-wide review of the new building control regulations for early in the new year. Only last Thursday the Minister of State at the same Department, Paudie Coffey, replied to Barry Cowen TD in the Dáil that:

“Early in the New Year, the Department will commence its review of the first year of operation of the regulations in conjunction with local authorities and industry stakeholders. The impact, particularly in relation to cost, of the regulations on one-off housing will be a key element of this review which will inform future regulation in this critical area.”

We hope that the key stakeholders are prepared and will make informed representations concerning the unintended consequences of SI.9 on consumers as well as the impacts on their respective members. Over the holiday season the elves here at BReg Towers will continue working away on solid, workable, cost-effective solutions for the implementation problems of SI.9. We hope to report on these shortly.

Have a safe and happy holiday,

BRegs Blog Admin. Team

Other posts of interest:

SI.9 Review.. “early in the new year” | Minster Alan Kelly

Dáil | Minister Kelly may take steps to control SI.9 ‘exorbitant charges’

‘Onerous’ Building Regulations must be amended – Minister Kelly

Is the UK ‘approved inspector’ model a more transparent system, with better outcomes? | The Engineers Journal

BCMS Commencement Notices | Nine Months On

Developer-Led projected Sales Price for a Typical House

gchomeplansIn a previous post “House building costs are 17% more than 2003 despite recession” it was suggested that when VAT, SI.9 costs and developer’s profit is added, the sales price of a typical 125 sq.m. house is currently in the region of €300,000 excluding the site purchase costs.

Typical site values for houses in the country would suggest we are well over €350,000 when the site cost is taken into account. As the average sales price for a typical house is in the region of €250,000, this would suggest that it is still cheaper to buy than to develop.

Here is a breakdown of these figures. In an earlier post we noted an architect’s assessment of additional SI.9 costs for a typical house (see below). The following calculation was confirmed by a development finance specialist and a builder-developer as being an accurate assessment of the cost of a speculative house in a larger scheme. We note the developer suggested cost savings may be made on the administration of the new building regulations by availing of the pilot HomeBond scheme.

Here is the breakdown received:

Developer-Led projected Sales Price for a Typical House

Base build cost= €1271 x 125 = €159,000

plus 13% for professional fees (+€20.7k)*= €180,000

plus SI.9 Professional + specification Costs (+€21k)*= €201,000

plus legal, marketing, sales and other costs of 5% (+€10k)= €211,000

plus developer’s net sales profit of 20% (+€42.2k)= €253,000

plus vat @ 13.5% on sales (+€34.2k)= €287,000

plus planning levies (+€10k)= €297,000 Projected sales price

(The above cost calculation excludes site purchase costs.)

Notes:

  • Bruce Shaw cost range for new build €1000- 1250 per sq.m. (av. €1125) excluding VAT. It recommends adding in  13% for additional development costs= €1271 per sq.m. Exceptional or once-off site development or infrastructure costs may be higher.
  • For the purposes of this calculation we will assume a typical 3-4 bed house size is 125 sq.m.
  • Once-off individual sites will be higher in urban areas like Dublin, Galway or Cork.
  • The costs exclude upgrades due to increased performance (Part L etc) required to reach net carbon zero targets, and other changes to regulations.
  • The costs exclude 10% social and affordable costs [Part V] recently introduced. This will likely result in higher site costs and consequent higher sales prices.
  • The following calculation excludes site costs. Assume average site prices of between €40,000 up to €80,000 per house for larger sites excluding VAT. Profit normally would be factored onto sales price so following calculation is at lower end of estimated costs.

This cost, along with other factors such as availability of finance, may well be determining the pace of residential supply currently.

The average house sales price nationally is around €250,000. The above calculation suggests that it is still cheaper to buy than build notwithstanding recent increases, and will remain so until sales prices increase significantly (or the cost of building is lowered).

One can see that the additional cost of the new regulatory red-tape bureaucracy is €21,000 when VAT is added  (consultants fees plus specification costs). Developer’s profit is at €48,000 when vat added on to consumer. The cost in the base-build use a main contractor is in the region of €21,000 incl. VAT. So the additional costs  to a self-builder in buying a speculative built house when vat, SI.9 costs and developer’s profit is added, is in the region of €90,000. An additional 30% cost increase.

If the government adopted incentives, like in the UK co-housing initiative, to stimulate the self-build sector and reduced regulatory costs with the introduction of a low-cost independent inspector system similar to the UK, the cost of once-off housing could be significantly reduced.

*Breg Blog note: for additional SI.9 costs for a typical house see below

 Other posts of interest:

*SI.9 costs for a typical house

€ 5 billion | The extraordinary cost of S.I.9 self-certification by 2020

How much would 100% independent inspections by Local Authorities cost?

Homebond | Assigned Certifier + defects liability policy for €2,000?

SI.9 Cost for 2014 = 3 x Ballymun Regeneration Projects

Ronan Lyons | Regulations pushing up the costs of homes

CSO- Dwelling units approved down 16.6% in one year

World Bank Report 2015 | Ireland’s poor construction regulations are the biggest drag on our ranking

12,000 social + affordable houses at no cost to taxpayer?

Ghost estates and public housing: BC(A)R SI.9 | look back 6

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Ghost estates and public housing: BC(A)R SI.9 | look back 6

In this post from March 11th 2014, we explored the undue complexities that SI9 brings to many legacy projects of the celtic tiger years. Local Authorities may find out pretty soon that public housing/ghost estate projects may encounter similar problems to those that generated the SI.105 deferral for hospitals and schools. As the hoarding is up and works start on Priory Hall we wonder how remedial works that come under BC(A)R SI.9 will be completed.

BC(A)R SI.9 may add considerable costs to planned social housing completion of vacant units.

Original post below:

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Ghost estates and public housing: BC(A)R SI.9

The recent deferral SI.105 introduced on 7th march for schools and healthcare buildings appears as a result of issues relating to additional costs, unavailability of professionals as certifiers, time delays due to industry readiness and no revised form of building contract (both private and public sector versions) that incorporates new Building Control (Amendment) Regulation SI.9 of 2014. One would suspect recent robust submissions by the architect’s representative body (RIAI) to Minister Ruairi Quinn, himself an architect and well briefed on the technical complexities of the new regulation, were a factor in getting to grips with the issues earlier than others.BC(A)R SI.9 affects social housing, capital spend by Defence, Social Welfare (employment exchanges in old-fashioned words), Arts/Heritage (Arts Centres but not work to National Monuments), and OPW (State offices but not Garda stations). SI.9 and SI.105 suggests two main issues:1. The State looking out for its own interests: GCCC Form for public contracts but ignoring the fact that the private sector forms and clients are equally affected (self-builders, SME’s and other private non-residential)2. Helping only half of the State spenders (admittedly the larger half) but completely overlooking Govt agencies who have not made representations (other departments that are unaware of implications of SI.9 on annual budgets).

For other departments that may not be as well briefed the same issues may well apply. Here is a link to a recent statement by Minister Jan O’Sullivan on 10th March 2014 regarding public housing:

http://www.environ.ie/en/DevelopmentHousing/Housing/News/MainBody,36875,en.htm

Government spend on public housing  from 2010 to 2012 dropped from €969m to €384m. At an average government spend of €675m per annum (source: Forfas report table 2.12 p 16 below), and assuming 3/4 qualifies under BC(A)R SI.9 this would suggest an annual extra cost (based on official industry estimates) of SI9 to be in region of €40m (8%). This figure is for the design and assigned certifier roles only, and excludes additional costs for ancillary certifiers, increased insurance costs and defensive specifications. The latter could be as much as an additional 5% extra on top of the construction cost of a project. This could bring the additional cost figure to over €70m, a huge impact on the department’s annual budget.

Notwithstanding direct costs, the implementation problems associated with hospitals and schools may apply to public housing and indeed completion of ghost estates. Due to vague wording of the Code of Practice it would appear that personal liability for certifier roles may require individual employees to take out individual professional indemnity insurance separate to companies that they work on behalf of (possibly including employees of local authorities). This early criticism of the Code of Practice appears to remain in the final version. This may result in delays for local authority projects where certifier roles are assumed in-house, as well as outsourced projects.

Many part-completed residential projects require multiple commencement notices. Current and future remaining phases will come under the remit of SI.9 as a result. Extended planning permissions may require material alterations to comply with current revised technical guidance documents (Part L for example). As a result they may require commencement notices and trigger compliance with SI.9.

This is an issue that affects completion of ghost or incomplete housing estates. Professionals and local authorities tasked with completion of these could discover  the legally “loose and vague” language of S.I9 may incur liability for previous stages completed (e.g. drainage or structural infrastructure). Currently there is inadequate provision for exclusions on the certificates issued under SI.9. Future legal actions may well determine these certificates are guarantees for entire developments, even though certifiers may only have been part-involved for works to finish out projects.

Given the technical complexity of SI.9 and the vague liability boundaries in the Code of Practice, Local Authorities may find out pretty soon that public housing/ghost estate projects may encounter similar problems to those that generated the SI.105 deferral for hospitals and schools.

How long will it be before BC(A)R No. 3 of 2014 appears? Deferral for ghost-estates and public housing?

Link to Forfas report: