Concrete levy cut ‘will still add €1,200’ to home costs – The Irish Times

The reduction in concrete levy will still add around €1,200 to the cost of a typical three-bedroom semi-detached house, an Oireachtas committee was told on Wednesday.

The Society of Chartered Valuers Ireland, which has strongly criticized the introduction of the levy amid what it sees as an already hyperinflationary situation, presented updated figures to the Oireachtas finance committee ahead of a scheduled appearance.

He also reiterated previous warnings that the levy, even at a reduced level, would “directly increase costs” and would “undoubtedly challenge the viability and affordability of building projects, including new homes”.

Additional costs

Updated estimates provided to the committee show that a block three-bedroom house would cost an extra €1,200 per unit, while a timber-framed home of a similar size would cost €700.

For a major regeneration project consisting of an office and retail mixed-use scheme, this will add €350,000 to the overall project cost and €100,000 to the development cost of an 18,000 sq m office in Leinster.

The cost of apartments is less significant, but it will still add €400 per unit to a development of 275 houses and €700 to a project consisting of 160 units.

A preliminary estimate published by the SCSI was that the levy, announced on Budget day, would add €3,000-€4,000 to the cost of delivering a three-bedroom concrete block semi-detached house. It was based on the 10 percent level announced then, as opposed to the 5 percent revised levy, which is not going to be levied on precast concrete units.

Buildings are cancelled

The SCSI will tell the committee that the construction sector “operates with great uncertainty about the pipeline of construction projects” and has “numerous anecdotal examples of housing projects being put on hold, or at worst cancelled, entirely”.

It will say that housing supply is often undermined by rising investment costs, leading to financiers withdrawing support even when developers want to deliver at lower profit margins. “Housing supply is therefore inextricably linked to viability, and increases in the cost of construction that threaten viability can lead to the suspension or even cancellation of projects.”

The finance committee is also set to hear from the Construction Industry Federation and mica campaigners in discussing the defective concrete block tax.

SCSI will reiterate calls for an independent assessment of new and existing regulatory and compliance measures and urges the Government to engage in dialogue before moving forward with any other charges in the sector. “It’s a must [before] any changes that are likely to increase the cost of construction must interact with the sector.”