Ministers defend concrete levy as construction industry warns of rising costs

The levy will come into force from next April and is expected to bring in around €80 million per year, however, construction industry experts have warned that it will add between €2,000 and €3,000 to the cost of building a typical house.
Ministers defend concrete levy as construction industry warns of rising costs

Vivienne Clarke

Tánaiste Leo Varadkar described a 10 per cent levy on concrete blocks announced in Tuesday's Budget as “the least worst way” to raise funds for mica and pyrite redress schemes.

"This levy will help pay part of the cost," Mr Varadkar told Pat Kenny on Newstalk radio.

The levy will come into force from next April and is expected to bring in around €80 million per year.

However, construction industry experts have warned that it will add between €2,000 and €3,000 to the cost of building a typical house.

Minister for Housing, Darragh O'Brien also defended the new levy, describing it as a sustainable funding stream.

The levy had been "flagged" last November by Paschal Donohoe, Minister for Finance, as a sustainable aspect of the remedial schemes, Mr O'Brien said, speaking the RTÉ News at One. It will raise €80 million of the €2.7 billion remedial scheme which includes apartments with defects.

Mr O'Brien acknowledged that he did not know how the cost of the levy would be borne or paid for and if house purchasers would bear the cost ultimately.

The "workings" of the levy would be given by the Minister for Finance in the Finance Bill, he added. "It's about trying to create a sustainable funding scheme."

In a statement, the Society of Chartered Surveyors Ireland said the new levy will "challenge the viability and affordability of new homes".

"For many years we have been urging the Government to tackle the soft and hard costs of new home construction. In this budget no measures aimed at tackling soft costs were announced while the introduction of the levy will drive up hard costs.

"The Minister said that planning permission has been granted for 44,000 new homes this year but the introduction of this levy in April next year has raised question marks over the future viability of those homes and their affordability for first time buyers," the society said.

The Irish SME Association also criticised the levy. "The 10 per cent levy on concrete products will severely impact the cost of construction at a time when construction input prices are already high," the association said.

Meanwhile, Mr Varadkar said he would like to see firmer action taken against those responsible for defective building materials. Ultimately, it was a matter for An Garda Síochána and other authorities such as the corporate enforcement authority.

"It is a matter of frustration and I feel that frustration that there may have been people who didn’t do this by accident, that, actually, there was malfeasance involved and there hasn’t been any consequences – I hear that, and I feel that," he said, speaking to Newstalk.

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