OWNERS IN TIGER ERA CELTIC APARTMENT PROJECTS have called for better access to credit to help finance work on their homes.

It is estimated that tens of thousands of apartments built during the Celtic Tiger era are affected by construction faults, largely linked to shortcomings in fire safety such as a lack of fire breaks between apartments or water infiltration causing leaks and dampness.

Owners are being asked to pay bills between €15,000 and €20,000 and some have complained of having had little time to find large lump sums.

They are asking the government to make it easier to access the loans so that they can cover the lump sum and then pay it back over several years.

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An owner, Kevin*, who spoke to The newspaper said loan applications to help cover the €15,000 bill have been turned down by five different banks, including the bank that holds his mortgage.

He said he had missed a small number of mortgage payments several years ago, but had been fully aware of his payments for a long time.

Kevin said he tried, unsuccessfully, to find another form of payment with the management company.

“I had hoped to pay the lump sums, but in my situation, that’s just not possible,” he said.

“They ask for €5,000 in the first phase, then €10,000 in the second.”

He said the landlord’s management company – essentially an entity that legally owns all the common areas in the developments – backed off a bit during Covid and there wasn’t as much pressure, “but the number of letters from them has increased in recent weeks”.

Kevin said that as a last resort, he tried to go through his bank’s arrears process so he could just pay the interest on his mortgage and use the money to pay the repair bill, but that request went wrong. been refused.

“I understand that the management company has a responsibility to make sure everything is safe and we have a fire safety certificate issued to get insurance, but my complaint is about the lack of understanding from the financial institutions and it doesn’t seem to be there. have great urgency from the government to solve this problem.

Another landlord, Mark*, who has a flat in the Beacon South Quarter complex in Dublin, said he managed to secure a loan through Ulster Bank, which holds his mortgage, around three years ago when had to pay to fix the fire safety flaws. .

“It was a pretty simple conversation at the time because I told them that if I didn’t pay for this it wouldn’t be fixed, I couldn’t rent it out and they would be sitting in toxic debt,” he said. said.

In addition to fire safety deficiencies, his building also has water infiltration issues, which he says are causing leaks as well as damp and mold problems in his apartment.

An insurance claim is pending, but even the maximum insurance payout will likely only cover around half of the €20m bill, he said. He expects to have to raise €20,000 to cover these repairs.

He worries what Ulster Bank’s exit from the market might mean for its access to credit for this new bill and what it will mean to take on that extra level of debt.

Mark rents the flat to tenants and said the rent is enough to cover the mortgage payments, but after taxes he still makes a loss.

He said the apartment, which he bought in 2008 in the hope that it would provide an additional pension fund in retirement, is now still in negative equity of over €100,000 and would be difficult to sell anyway until these issues are resolved.

“It was my long-term investment and it’s costing me an arm and a leg,” he said. In addition to the mortgage, I will have invested an additional €130,000 in it between the tax on the rent and the fire safety and water infiltration repairs.

Mark said one way the government could help would be to change tax rules to allow homeowners to amortize costs over a period of time.

He also said consideration should be given to allowing owner management companies to take out a low-interest loan to allow for a longer-term repayment schedule for owners.

“I’m not looking to have all of this written off – although that would be nice – but it would be helpful to be able to spread it out somehow over a longer period of time.”

High interest rates

The Construction Defect Alliance, the campaign group for affected homeowners, has about 30,000 affected properties in its database, but estimates that up to 120,000 properties may have one or more of these types of structural deficits.

Talk to The newspaperspokesman Pat Montague said homeowners generally have to take out personal loans because their banks won’t give them a top-up on their mortgage to cover those costs.

“So you have to get a personal loan from, say, a credit union or your bank and it’s expensive, the interest rates are higher,” he said.

You’re talking about terms of three to five years, you’re paying interest rates around 10%, so that’s a big ask. If you borrow €18,000, you pay several thousand euros more in interest, whichever way you look at it, it’s a tax. And people feel very strongly, they ask; ‘Why am I paying this? I am not responsible, I did not cause this, I bought in good faith, I brought in my expert, there was a fire safety certificate, so why am I affected? “.

He said the campaign had offered a number of options for solutions, including a grant scheme similar to those set up for homeowners affected by mica or pyrite. Montague said the administrative work on such a program could be greatly reduced in this case if the owner’s management companies applied for grants for the full amount of the cost, rather than asking each individual owner to go through the application process.

Another option, he said, would be to provide concessional loans – a loan at no interest or at a lower interest rate than the market – either directly to the owners or to the owners’ management companies. , which would then charge the owners. He said this would only be acceptable to landlords if they could recoup 100% of the costs through the tax system.

Responsibility

There is “no effective legal route to reach builder developers”, he said, because of the six-year statute of limitations and the way developers build their businesses. Montague said he was aware of only one instance in which the original developer contributed costs.

Montague said the government must also consider how to prevent this situation from happening again. Regulations have been tightened to ensure that a qualified professional signs the work at several stages of construction – during the Celtic Tiger years this certification was only carried out once the building was completed.

However, he pointed out that these certifiers are still employed by developers.

“There could be a conflict of interest sometimes, so we think you still need the ‘big stick’ of the possibility of external inspection in the way, for example, that there is a threat of inspection by the tax authorities or the Food”. Safety Authority and it makes people fear Jaysus,” he explained.

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“That’s what you need to help change the culture – you’re not going to inspect every development in the country, but the possibility of an audit encourages compliance.

“And then if a developer has a history of non-compliance that’s taken into account when they apply for planning permission for their next development. At the moment it’s of no consequence to builder developers, people who have built in a faulty way continue to build and nothing stops them.

The Department of Housing has set up an independent task force to examine fire safety and structural safety flaws in apartments and duplexes built between 1991 and 2013.

The group, which has been meeting monthly since March last year, will report to Housing Minister Darragh O’Brien on the extent of the problem as well as the costs associated with repairs later this year.

In response to a request from The newspaper, Minister O’Brien’s department said the task force is consulting with a wide range of relevant stakeholders.

“The information gained through engagement with stakeholders as well as the results of the online consultation inform the ongoing deliberations of the working group,” he said.

“Minister O’Brien is confident that the task force is working effectively and efficiently on this complex issue and will need sufficient time to complete its work. He looks forward to a report later this year following the completion of their consultations and deliberations. Once received, the Minister will fully review the contents of the report.

* The owners did not wish to be named, so we have used different first names here. Their identities are known to the Journal.

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