In April 2017, the Oireachtas Joint Committee on Housing, Planning and Local Government opened a consultation in relation to building standards, building control and consumer protection. Oral and written submissions were made by experts, industry bodies, construction professionals, home owners and representatives from the Department of Housing,
I was asked to address the Committee in light of my PhD research on this topic. I outlined the problems facing homeowners to the Committee, including legal problems including poor legal remedies, lack of adequate defects insurance, and limited enforcement of Building Regulations for shoddy building work.
I explained to the Committee that home owners who find defects usually did not know where to turn for help, received little assistance to help with their problems, and were often left footing the bill to fix defects.
I made a number of recommendations to the Committee, including law reform to improve legal remedies; cost-effective dispute resolution instead of having to resort to the courts or arbitration; improved resourcing of local authorities to facilitate more inspections and better enforcement of Building Regulations, and the creation of a national regulatory authority to monitor and enforce the Regulations, and to have a regulatory role in licensing those involved in construction.
I was again invited to address the Committee in October in relation to the Construction Industry Register Ireland (CIRI); I expressed concerns about CIRI being located within a private body, the Construction Industry Federation, and recommended that the registration system, if it were introduced as a mandatory requirement for builders, should be administered by a national regulatory authority for building.
I am delighted to see the concerns and recommendations expressed in my submissions to the Committee taken on board in the Safe as Houses? Report published today.
The Committee summarised the problems that were highlighted by the various people who made submissions:
– no mandatory inspections of construction works before 2014;
– no comeback for buyers against the many developers and builders who became insolvent after the financial crash;
– long-standing failure to introduce law reform to improve consumer protections, including warranties that would transfer on the sale of a home, a reasonable period in which to bring claims, minimum mandatory contract terms, and improved information for buyers.
– No investigations of the full extent of defective building during the housing boom, particularly in multi-unit developments,
– Low levels of inspection and enforcement of Building Regulations by local authorities.
The 26 Recommendations
The Report’s recommendations are under four headings:
Building Standards and Consumer Protection Agency
I was very glad to see the Committee recommend the creation of a Building Standards and Consumer Protection Agency, to support local authorities and to monitor compliance and enforcement of Building Regulations, as well as providing advice and dispute resolution services to consumers.
The Report also suggests that the Agency would be the home for the Building Control Management System (BCMS). The is the nationwide online portal for all building control certificates and other documents that must be sent to building control authorities for most types of construction; at the moment, the BCMS lives in the Local Government Management Association, but a national body could use it to keep track of building activity and Building Regulations compliance right across the country.
The Agency would also provide an home for Construction Industry Register Ireland that is entirely independent of the construction industry itself; this would promote consumer confidence and make it easier for home owners to seek advice and assistance.
Making BCAR truly independent
The current inspection and certification system for building control is mainly dealt with in a set of regulations from 2014, the Building Control (Amendment) Regulations, colloquially referred to as ‘BCAR’ for those of us discussing them on a regular basis. The BCAR system requires competent registered professionals to be retained to carry out inspections during construction, and to provide certificates of compliance with Building Regulations, for most new construction works (except one-off houses). One significant criticism of the BCAR system is that the person inspecting and signing the certificate is employed directly by the developer, and may be an employee of the developer or be dependent on the developer for a stream of further work.
The Report, therefore, recommends that the certifiers required to be appointed under the BCAR system should be employed or engaged by local authorities, and that developers should pay local authorities directly for inspection and certification. These inspectors and certifiers would presumably work alongside the local authority’s inspectors who are carrying out inspections at present, but it will not necessarily be the same pool of people; there is no requirement at the moment for local authority employees who do building control inspections to be registered professionals, for example.
The Report also interestingly recommends that non-disclosure orders on home owners who resolve their latent defects issues with the developer/builder should be outlawed. Followers of the outcome of the Berkeley balcony collapse will know that Senate Bill No. 465 was introduced in 2016 to require any citations or actions against builders for health and safety breaches to be disclosed to the California State Licensing Board, which is responsible for licensing builders. The Bill stopped short of requiring contractors to disclose civil settlements to the Regulator, but a recent report by the Licensing Board suggested that its regulatory role would be enhanced if it could gain access to information on judgments, arbitration awards, and settlement payments for residential defects, so it is possible that the Bill will be amended in due course to require this. An Irish version of this suggestion might be to ensure that builders/developers who settle claims taken against them would have to report that to the Building Standards and Consumer Protection Agency.
Protecting against Latent Defects
The Report requires Latent Defects Insurance to be mandatory for all new homes, together with transmissible warranties of quality, amendment of the Statute of Limitations to allow proceedings to be brought within two years from discovery of a defect, and mandatory minimum terms in residential construction contracts. (I had suggested to the Committee that the leading home warranty policy on the market would not always be sufficient to meet claims: see the playback here and the transcript here.)
Before you dismiss the idea that you might ever sign a residential construction contract, if you have bought a new house or apartment in Ireland then you probably already have. Whether you were aware of it or not, it most likely contained a number of terms that might have come as a surprise if you had found a defect – the arbitration clause, for example, that appears in the Law Society standard form building contract, or other terms that developers have been known to include in such contracts, such as limiting buyers to one snag list, and/or giving them only 7 days to produce it. So, again, a re-balancing of terms between sellers and buyers of new housing would be very welcome.
The Report also recommends a review of existing sanctions and punishments on developers and builders who breach building and fire safety standards. This is an interesting one, as the sanctions that are in place at the moment are already pretty onerous – fines, imprisonment, and potential personal liability for directors or managers. The main problem, in my view, is that enforcement and prosecution for breaches is so rare that the sanctions don’t deter wrongdoing. A cultural and behavioural problem, and possibly a hard enough nut to crack. Still, good to see it highlighted as an issue.
Addressing the legacy of bad building and poor regulation
This will be the part that anyone dealing with defects today is most interested in; the Committee calls for the Government to establish a redress scheme to help home owners with latent defects, including an information and advice service for people affected.
A number of options are put forward for consideration, including an industry levy matched by Government funding, tax relief for homeowners doing repair works, and an interest-free loan scheme to help home owners fund the cost of remedial works. It certainly seems unfair that a low-interest loan scheme would be made available, as Minister Murphy has announced this week, for people buying homes, but that the money can’t be found for loans to people left dealing with defects through no fault of their own.
I have been researching this area full-time since September 2014 when I started my PhD, and the launch of today’s report is a major milestone for Irish home owners and for anyone living in a defective house or apartment.
It is the first comprehensive review of the problems that people have faced in accessing help and remedies to fix the defects in their homes.
It takes account of input from right across the stakeholders, experts and public servants involved in building regulation and the construction industry.
It is a roadmap for what could be achieved in the coming years.
The Committee made clear today that they are committed to working with Government to implement these recommendations.
It will take political leadership, industry support, and the willingness that this Committee has shown to listen to all sides. It is a very important step in acknowledging the suffering of people who have dealt with the stress of defects for years, in some cases, impacting on their lives, their health, and their finances.