Irish Government approves establishment of defects scheme for Celtic Tiger-era apartments

On 18 January 2023, the Irish Minister for Housing, Local Government and Heritage received approval to draft legislation supporting the remediation of apartments with fire safety, structural safety and water ingress defects constructed between 1991 and 2013. The legislation is intended to provide a statutory basis for the establishment of a remediation scheme aimed at protecting the occupants. A ‘whole building’ approach is to be adopted, ensuring common areas and shared spaces are also remediated where required to the relevant standard.

The government has approved the principle of allowing in-scope remediation costs already incurred to be covered under the scheme. With a view to ensuring that important life-safety works are not put on hold, the government has also decided that remediation works related to fire safety works, entered into or commenced from 18 January 2023, will form part of the remediation scheme, subject to terms and conditions.

The Working Group to Examine Defects in Housing estimated in July 2022 that between 50% and 80% of apartments constructed between 1991 and 2013 may be affected by one or more fire safety, structural safety  or water ingress defects. In real terms, this translates to between 62,500 and 100,000 units. With the average remediation costs per unit estimated at €25,000, the scheme could have a potential cost of the Exchequer of between €1.5 billion and €2.5 billion.

Only defects that are attributable to defective design, defective or faulty workmanship, defective materials (or any combination of these) and were in contravention of the relevant Parts of the Building Regulations in effect at the time of construction will be eligible for inclusion in the scheme. It follows that defects originating from inadequate maintenance or poor management, for example, are out of scope.

The announcement of the statutory scheme is in general terms a welcome development for construction professionals and their insurers. Only time will tell if the scheme will be a cure-all as its precise parameters to include limitations and exclusions have not yet been determined. Of particular interest to construction professionals and insurers is whether the scheme will have carve out clauses. The devil will be in the detail and we will have to wait until the full scheme details are available to see the true impact of this.

Should you wish to discuss in more detail and our views on this and the impact this may have please contact Tara Cosgrove on t.cosgrove@beale-law.com or on 536 9610 or Jackie Cunningham on j.cunningham@beale-law.com or on 536 9628.