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Mica scheme: What is the Government planning to do to keep a lid on costs?

New legislation provides for fines of up to €50,000 or five years’ imprisonment if false or misleading information is given

In much of the debate around the multibillion-euro mica grant scheme, the focus has been on both the desperate struggles of the homeowners and the ever-increasing pressure on politicians to do more.

On Tuesday the Cabinet approved the general scheme of the legislation in relation to defective blocks and it reveals, through a raft of new measures, the extent of a third consideration: governance.

Protecting the taxpayer and putting proper checks in place has been a delicate issue which has largely played out behind closed doors. Sources said Minister for Housing Darragh O’Brien had clashed with his officials on multiple occasions and often it was about the scheme constantly swelling in cost.

The estimated cost of the scheme has risen from €1.4 billion to a potential figure of €3.6 billion if inflation runs consistently high.

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The new legislation details for the first time exactly how the Government plans to keep a lid on the costs.

First, homeowners seeking a grant to fix their property will make an application to their local authority and this will include a building condition report put together by a professional; a completed application form; and a statutory declaration that all of the documents are accurate. They will have to consent to further inspection and testing of their home and to whatever information the local authority might ask for.

If any of the information given to the local authority is submitted in the knowledge of it being false or misleading, or is submitted recklessly, the new law allows for either a fine of up to €50,000 or five years’ imprisonment – or both – as well as disqualification from access to the grant scheme.

When the local authority says the application is valid, there will then be another layer of governance as the application will be considered by the Housing Agency, which will take another look at the building condition assessment report and inspections. It will ask if the house has met the damage threshold to get access to the scheme.

A homeowner will also have to give their “irrevocable consent” to the agency to enter the house and carry out any tests it considers necessary, even including extracting samples from the blockwork.

If extra costs emerge beyond what is allowed for in the grant, the homeowner will bear those costs.

Another key point of discussion has been how the budgets for the scheme will be dispersed and how the political system will maintain oversight of the costs.

The plan now is that both local authorities and the Housing Agency will submit financial reports to the Minister by September of each year on the expected spending for the following year. Both local authorities and the Housing Agency will also submit monthly financial reports on what grants have paid out and any administrative costs. Only when the Minister is satisfied will the local authorities be able to recoup their costs.

The Housing Agency will also submit monthly financial reports on the costs of engaging competent building professionals, the testing of homes and the administration of the scheme.

Another question that has come up is around what might happen if a builder recommends work beyond what the grant has been approved for, or if the homeowner decides to get additional work done.

It has been decided that the homeowner can do additional works beyond what is approved by the local authority but they must pay for it themselves.

For example, they may be approved for grant assistance to demolish and rebuild external walls down to the foundation but they then decide to demolish the entire building and rebuild. The homeowner would have to fund the difference between the grant approved and the cost of any additional works.

Furthermore, if a homeowner receives a grant for demolition to foundation level and decides to rebuild a smaller home than that on which the grant amount was determined, the local authority will reduce the grant amount approved.

Separately, there have been questions about what would happen if a homeowner received a grant but then said more funding was suddenly needed, such as if there was an unforeseen deterioration in the homes. The Government has decided that an engineer will have to submit a report with evidence of this to the local authority and that this can be referred to the Housing Agency for determination.