Mica compensation must be fair and reasonable

Cantillon: Suggestions €350,000 cap would exclude 40% of homes seem a bit cracked

A spokesman for the mica redress campaign says  a cap on compensation of €350,000 would exclude 40 per cent of the 6,000 or so homeowners. Photograph: Joe Dunne

A spokesman for the mica redress campaign says a cap on compensation of €350,000 would exclude 40 per cent of the 6,000 or so homeowners. Photograph: Joe Dunne

 

People have a right to assume that their homes are properly built. It is the responsibility of the State to ensure measures are in place to ensure building regulations and materials standards are observed by suppliers and by developers.

That this did not happen in Donegal, Mayo and, we suspect, other parts of the State, is not in dispute. As so often happens, day-to-day responsibility for maintaining standards was passed by central government to local authorities – but not the resources required to ensure it could be delivered.

So it is correct that the State bears the cost of putting things right. In the case of homes built with defective mica blocks, more often than not it appears that will involve demolishing people’s existing properties and rebuilding on the same site, while accommodating the families affected in rental property.

The figure is inevitably substantial and the draft report of the mica working group is understood to say that the cap under existing arrangements of €275,000 is not sufficient. That sounds reasonable.

Rebuilding costs

No new upper threshold has yet been disclosed. However, a spokesman for the mica redress campaign said a rumoured cap on compensation of €350,000 would exclude 40 per cent of the 6,000 or so homeowners affected.

According to the most recent Society of Chartered Surveyors Ireland (SCSI) report on rebuilding costs, the cost of building a home in the northwest to current regulations, BER standards etc, is €1,491 per sq m, or €139 a sq ft.

That includes the cost of demolition and rebuilding, including professional fees and VAT, a driveway, fencing and regrassing.

At the SCSI “standard size” of 118 sq m (194 sq ft)for a detached four bedroom home, that’s a bill of €175,938. Even allowing for bigger homes – up to 190 sq m/2,050 sq ft – the SCSI cost is €283,290.

Wriggle room

That doesn’t include contents – though most of these are presumably transferable from the existing homes – nor fittings, such as carpets and curtains. It also doesn’t include putting the family up in rental accommodation while the house is rebuilt but, ballpark, assuming a one-year project, that appears to come in below €20,000.

But it still leaves decent wriggle room with a €350,000 threshold. There will be exceptions, with some very large homes built to very high specs . . . but 40 per cent?

People should not be out of pocket as a result of the government’s failure to properly regulate the building industry during and before the Celtic Tiger bubble but, equally, compensation must be reasonable and proportionate.

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