Is Longboat Quay the Next Priory Hall?

Is Longboat Quay the next Priory Hall? That was the question posed by George Hook this evening, the interview can be listened to in full at The Right Hook / 30th September 2015 – (Part 2, first slot).

 

As reported today, some 600 residents within Longboat Quay face an ultimatum this week to rectify fire safety defects or vacate their apartments. This comes on foot of a fire safety notice issued as a last resort by Dublin Fire Brigade. The issue came to light some time ago following an inspection within the development by a bank receiver. The estimated bill for remedial works on the 268 apartments is expected to exceed €4m in addition to works already carried out and paid for by The Dublin Docklands Development Authority (DDDA).

 

Built in 2006 by Gendsong (a company subsequently in receivership), the building is reportedly subject to shortcomings in fire walls, service penetrations, smoke vents and ceilings. All works, mainly concealed post completion and which are extremely disruptive and costly to rectify.

 

So What Went Wrong (again)…

Again, the works were seemingly subject to opinions on compliance based on visual inspection where the architect (certifying professional) was not retained to inspect during the works and in this case was employed by the developing company. Building works require frequent inspections at key stages prior to ‘closing up’ or concealing critical works. To identify such defects post completion often involves invasive opening up works and even this may only expose a very limited portion of work which may exclude defects concealed elsewhere even in the same area. The systematic failure is one of self-certification – the legal acceptance of professionals who are retained by and paid by the developer to sign off and certify upon completion.

Unfortunately the mantra of ‘buyer beware’ applies for owners of such defective apartments. When purchasing they are wholly reliant on the opinions provided by professionals when the building was completed and which forms part of the conveyancing documents. At time of purchase there is very little other than a visual inspection that can be undertaken and this provides little comfort. Again, recourse to those who were negligent is often impossible or at best protracted – meanwhile the defect remains unresolved.

 

So What is the Solution…

Clearly what is required is a Building Control Authority lead inspection regime which offers independent oversight at key stages. This is what happens in the UK and Northern Ireland and which works well. It may involve an extra fee to resource but one which is surely worthwhile. There is also benefit in mandatory Latent Defects Insurance whereby the building owner automatically has the defect remedied without contest and the underwriter follows up for recourse with the negligent professional(s).

 

Are There Others Yet to Come?…

Unfortunately yes. Building Regulations are for the most part fit for purpose but the regulations are no good without compliance and independent policing of that compliance. Apartment blocks built during the boom could not go up quick enough and corners were cut – sometimes intentionally, sometimes not. They would have all gone through a stringent planning and fire certification process but often the standards specified on these documents were not followed and this is often not fully evident in the completed building.

Changes to the Building Control Regulations (S.I. 365 of 2015)

The following is a summary of the main changes to the Building Control Regulations (S.I. 365 of 2015) as discussed on The Right Hook on Newstalk this evening. The interview can be listened to in full at The Right Hook / 1st September 2015 – (Part 1, after first ad break, about 10 mins in).

 

Today sees in the introduction of revised Building Control Regulations (S.I. 365 of 2015) effective from today (1st September). This was largely anticipated following a press release on 31st July from Ministers Alan Kelly and Paudie Coffey :

https://www.environ.ie/en/DevelopmentHousing/BuildingStandards/News/MainBody,42399,en.htm

and a further one today with no new information :

https://www.environ.ie/en/DevelopmentHousing/BuildingStandards/News/MainBody,42562,en.htm

The main problem is that the changes to this legislation does little for consumers and building occupiers who need to be foremost protected. The main changes are prompted by a desire to reduce construction costs but has very little foresight for potential implications. In reality the right solution would be for local authorities to be given more resources to undertake inspections and full independent statutory certification themselves. This is the tried and tested system that operates in the UK (including Northern Ireland) and one which largely works. The current (relatively recent) system of Statutory Certification is still Self-Certification by building professionals which was the main problem at Priory Hall…

Below is a more detailed overview of the situation:

 

Background

Priory Hall prompted a kneejerk reaction from Phil Hogan in relation to certification of building works. S.I. 9 in 2014 brought in statutory self-certification for :

(a) houses

(b) extensions over 40sq.m and

(c) works requiring a fire cert (ie, commercial and apartments).

The introduction of these regulations has lead to increased obligations on clients and professionals alike and has introduced unwanted costs. It is having a real impact on one-off house commencements and completions at a time when there is a well-documented housing shortage. The revised / relaxed regulations coming into effect today is in response to a 12 month review of S.I. 9 of 2014 published in June of this year. Itself quite shortsighted review in its terms of reference and conclusions.

 

The General Problem

Building and regulation of building has become significantly more complex in recent years. Construction cost is increasing due to certification of products, requirements for health and safety and increased standards generally (ie, insulation). All intended to protect interests of the occupiers, worker and environment etc. One-off House Self builders now have to (often reluctantly) employ professionals where they didn’t before. Current legislation places an onerous liability on certifying professionals – less want to do it, insurance is increasing for those who do and costs to client increase. The new role of Assigned Certifier ultimately require certification of specialist areas that are beyond expertise of any one building professional alone to undertake competently and completely. Joint and several liability (ie, 1% blame but 100% liability as you may be the only party carrying insurance) and the need for individuals and not body corporate to sign certificates is crazy. A building is only as good as (a) the client who commissions it (b) the designer or specifier and most importantly (c) the builder who builds it. Builders are not currently subject to any mandatory training or accreditation – anyone can set up a building firm.

 

The Solution (in the eyes of the Government as of today)

Owners undertaking new houses or extensions >40sq.m can now ‘Opt Out’ and instead sign a ‘Declaration of Intention to Opt Out of Statutory Certification’. While this saves the cost of mandatory professional input it will create a two tier system. Banks and insurance companies are likely to insist on full statutory certification if they are underwriting the building. Why wouldn’t they. Furthermore there may be unintended consequences for property values and ease of sale. This measure combined with the option not to have a builder below puts everything back to where it was pre-Priory Hall for houses and extensions which accounts for the bulk of construction work in the country. Building owner may take on the role of the builder. This is good in terms of the self-build option but bad in terms of the question on whether all building standards have been met. This will save immediate short term construction costs but could lead to problems down the line for subsequent occupants and owners. Owners can now sign the required statutory forms. Again I would imagine banks and insurers will have the last word on this. The definition of aggregate extensions has been clarified. Only if the extension being built now is >40sq.m do the regs apply – previously it could be interpreted as including previous extensions which was ridiculous and not the intent of the legislation. This is to be welcomed. Corporate bodies can now sign the forms. This removes the problem of employees signing and being personally liable. This is to be welcomed.

 

The Real Solution (or what the Government should have enacted today)

Increase the role of Local Authorities. Problem is they do not have the resources or expertise to even carry out random spot checks on the current system let alone be the only body responsible for all inspections and certification. Self-certification however does not work whereby the professional, paid by the client, certifies the work.Clear conflict of interest. Look to the UK Building Control model. Certification by Local Authorities is the ideal but not without cost (extra taxes or commencement notice fees). Increase the pool of those who can certify works – currently can only be an architect, engineer or building surveyor. This has potential merit if standards are maintained and quality not sacrificed. Mandatory Registration of builders to deliver a benchmark and guaranteed standard within the industry. Any building is only as good as the skills and experience of those who build it. Mandatory Latent Defects Insurance – a policy that pays out and fixes the problem immediately rather than the consumer having to resort to other means of redress. Without it a consumer must sue their professional whose professional indemnity insurer will do their utmost to defend such a claim. Ultimately the consumer is left with a long road to addressing their defect despite having paid for a professional service.

These changes are a reaction and not a solution. A guide for homeowners undertaking one-off houses or extensions has been published today by the Department of the Environment and can be found here.

Note: The above is a preliminary review of this new legislation and should not be relied on as a legal opinion or advice on these matters.