Reduced concrete levy will ‘still add €1,200′ to house costs

The reduced concrete levy will still add in the region of €1,200 to the costs of a typical three-bed semi-detached house, an Oireachtas committee will be told on Wednesday.

The Society of Chartered Surveyors Ireland, which has strongly criticised the imposition of the levy against what it says is an already hyperinflationary backdrop, provided updated figures to the Oireachtas finance committee ahead of scheduled appearance.

It also reiterated previous warnings that the levy, even at a reduced level, “directly increases costs” and will “undoubtedly challenge the viability and affordability of construction projects, including new homes”.

Extra costs

Updated assessments given to the committee suggest a block-built, three-bed semi would cost an extra €1,200 per unit, while for the timber frame construction of a similar house, the cost would be €700.

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For a large regeneration project, consisting of a mixed-use scheme of office and retail, it would add €350,000 to the total cost of the project, and €100,000 to the cost of developing an office of 18,000sq m in Leinster.

Apartment costs are less significant, but it would still add €400 per unit to a development of 275 homes, and €700 for a project consisting of 160 units.

The previous estimate issued by the SCSI was that the levy as announced on budget day would add €3,000-€4,000 to the delivery cost of a three-bed semi built with concrete blocks. It was based on the 10 per cent level announced then, as opposed to the 5 per cent revised levy which is not going to be put on precast concrete elements.

Constructions cancelled

The SCSI will tell the committee that the construction sector is “functioning with huge uncertainty about the pipeline of construction projects” and it has “numerous anecdotal examples of housing projects being paused and in worst-case scenarios being cancelled outright”.

It will say that housing delivery is often undermined by increased input costs which lead to funders pulling support, even if developers want to deliver with a lower profit margin. “As such, housing delivery is intrinsically linked to viability and increasing construction costs that threaten viability can result in projects being paused or even cancelled”.

The finance committee is also set to hear from the Construction Industry Federation and mica campaigners in a discussion on the defective concrete block levy.

The SCSI will reiterate calls for an independent assessment of new and existing regulatory and compliance measures and urge that the Government enter into a dialogue before moving ahead with any other levies on the sector. “It is imperative that [before] any changes that are likely to increase the cost of construction there should be engagement with the sector.”