Introduction of concrete levy set to ‘severely impact’ cost of construction
Finance Minister Paschal Donohoe has introduced a Defective Concrete Products Levy in this year’s budget which will come into force from April 3 next year.
The new levy on concrete blocks, pouring concrete and certain other concrete products will be applied at a rate of 10pc.
The measure follows the introduction of a comprehensive redress scheme earlier this year for those impacted by the use of defective products in the building of their homes.
Minster Donohoe said the provision of the mica redress scheme comes at “a significant cost” and expects the levy to raise €80m annually.
The Society of Chartered Surveyors Ireland (SCSI) said the introduction of the levy would would add approximately €3,000 to €4,000 to the overall delivery costs of an average 3 bed semi, the most common house type in Ireland.
“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,” said SCSI president Kevin James.
This was echoed by Tom Parlon, director general of the Construction Industry Federation. He said the federation is concerned that the levy will increase cost of all construction, including “all public infrastructure, commercial, office developments, and housing projects.”
“This is further contributing to inflationary costs in the sector and will increase the costs borne by home buyers,” he concluded.
The Irish SME association said it also expects the levy to “severely impact the cost of construction at a time when construction input prices are already high.”
The additional levy was not welcomed by estate agents, with the charge described as “counterintuitive in the current environment” by Sherry FitzGerald managing director Marian Finnegan.
“At a time when affordability is the biggest barrier to home ownership, introducing a levy that will further increase the cost of construction is counterproductive,” added Savills director and head of new homes David Browne.
The redress scheme, which was passed by the government in July, provides financial support for homeowners whose properties were damaged due to the use of concrete blocks that contain excess amounts of pyrite or mica, a sponge-like mineral which is found in concrete blocks.
The scheme offers 100pc redress, with affected homeowners able to avail of up to €420,000 per home.
The expanded scheme is available for affected homeowners in Donegal and Mayo, as well as Clare and Limerick at an additional cost of €500m.