Oireachtas Joint and Select Committees
Wednesday, 1 May 2024
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Defective Concrete Blocks: Discussion
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
In this session the committee will engage with Insurance Ireland, BPFI and Engineers Ireland. On behalf of the committee I welcome from Insurance Ireland Ms Moyagh Murdock, CEO; Mr. Michael Horan, manager of regulation and policy development; and Ms Ruth NicGinneá, advocacy and public affairs manager. From BPFI I welcome Mr. Brian Hayes, chief executive, and Ms Michelle Bryne, head of consumer banking. From Engineers Ireland I welcome Mr. Damien Owens, chartered engineer and director general; Mr. John Garrett, chartered engineer; and Mr. Cian O’Dowd, head of public affairs.
The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to the Constitution and statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against a person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity they will be directed to discontinue their remarks. It is imperative that they comply with any such directive. Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person or official outside the House, either by name or in such a way as to make him or her identifiable. I remind members attending remotely of the constitutional requirement that members must be physically present in the confines of the place which Parliament has chosen to sit, namely, Leinster House, in order to participate in public meetings.
I invite Mr. Hayes to make his opening remarks.
Mr. Brian Hayes:
I thank the committee for the opportunity to be here today. I am joined by my colleague Ms Michelle Byrne, who is head of consumer banking in BPFI.
I will begin by acknowledging the appalling situation faced by homeowners, through no fault of their own, due to the presence of defective concrete blocks in their homes. The BPFI and its members reiterate their commitment to supporting these homeowners, where possible, and to continue to engage proactively on issues where the banking sector has a role to play and where we believe we can make a positive contribution.
At an industry level, the BPFI has been working on an ongoing basis with our members and stakeholders to consider any constructive solutions that might be appropriate. In the past 12 months in particular, we have engaged with a wide variety of external stakeholders, most importantly, from our perspective, with homeowners, especially through the redress focus group on banking and insurance, which we have met eight times in the past 11 months. We greatly appreciate their engagement and hard work as a voluntary group in putting all of these issues on the table for us. We have also cited in our submission all of the other stakeholders we are involved with.
We were asked to do four things by the homeowners. The first was to bring some certainly from an industry perspective on mortgageability, the second was to clarify what we would describe as the damage default clause and the third was to submit a proposal for interim funding to the Department of housing. We have hosted an information session for elected representatives, some of whom have attended our head office to discuss the proposal.
On the fourth issue, in July last year, the BPFI requested the establishment of an oversight committee by the Department of housing to oversee implementation of the enhanced defective concrete blocks grant scheme and to address any issues that might arise. In a very welcome development, the Department of housing hosted the first meeting of the implementation steering subgroup in January and a follow-up meeting last week. This forum is of the utmost importance to the implementation of the grant scheme and to provide a forum for all stakeholders to engage in one group. We believe it is of critical importance that the Department of housing continues with the subgroup to give assurances of its commitment to continue engagement through the forum.
I will now deal with the three specific issues which the committee asked us to address. Last December, the BPFI made available to relevant stakeholders its position on mortgageability. This confirmed that the members, that is, AIB, EBS, Haven, Bank of Ireland and PTSB, have a willingness to lend based on the certification and professional opinion provided by others in the conveyancing process, as per the standard process by which mortgages are approved. This position is confirmed in respect of all of the remediation options, Nos. 1 to 5, under the grant scheme. It also applies to the future sale of remediated properties, to the switching of mortgages attached to remediated properties and to future top-ups.
Considering a recent statement by the Mica Action Group and the publication of a research update regarding the review of IS 465, the BPFI and our members await a formal response from the Department of housing in relation to this aspect of the scheme. We note the content of the update and the concerns raised in relation to the impact of defective materials on the foundations and in retained blockwork. Concerns have existed for some time regarding the review of IS 465. We respectfully suggest to the committee that the work of the National Standards Authority of Ireland in this matter is now critical.
The second issue concerns bank financing. During the engagement with our friends from the redress focus group, a potential challenge was identified with funding the commencement of remediation works prior to receipt of the first grant payment. Last September, the BPFI and its members submitted a proposal for an interim funding mechanism to the Department of housing for its consideration. In the proposal, we outlined an approach whereby a certain percentage of the amount approved under the grant scheme would be made available to the homeowner to fund upfront costs.
Last week, we were informed by the Department of housing that it is working to finalise the details of a process that would allow for earlier access to funds approved under the grant scheme. We very much welcome the Department’s work to permit earlier access to funds, which is a more effective solution for impacted homeowners. We understand a commitment was made by the Department of housing to bilaterally discuss this new approach directly with affected residents and we welcome this engagement.
The third issue is in respect of properties impacted by defective blocks. There is a clear desire across Ireland’s lenders to support and work with customers to find solutions. It should be noted at this point, however, that, to date, the volume of customers coming forward to our members remains quite low, with just over 370 having engaged with the three retail banks. Examples of how members have supported customers include the establishment of dedicated specialist teams which have been designated as points of contact, both centrally and at a local level, and concentrated in the counties that are currently within the scope of the grant scheme. Specific procedures are in place to ensure that impacted homeowners are supported in line with their individual needs. Our members are ensuring that front-line staff are fully and sensitively trained to work with impacted homeowners, which has included the training of front-line staff by vulnerable customer experts. They are also working with customers on a case-by-case basis and mindful of their individual circumstances. Members have provided credit to fund remediation works.
We recognise the significant challenge for affected homeowners and believe continued engagement and constructive dialogue between stakeholders is imperative to move this issue forward. The banking sector is just one player of many in the overall process, which includes the National Standards Authority of Ireland, solicitors, valuers, surveyors, the construction sector, local authorities and others. We urge the committee to consider seeking the view of all those who have a role to play in getting the best possible outcome for impacted homeowners. We would be happy to take any questions.
Ms Moyagh Murdock:
I am pleased to attend to contribute to the examination of mortgageability, bank financing and the treatment of mortgage holders with respect to properties impacted by defective blocks. I am the chief executive officer of Insurance Ireland. I am joined today by my colleagues, Michael Horan, manager for regulation and policy development, and Ruth NicGinneá, manager of advocacy and public affairs.
Insurance Ireland is the representative body for the Irish insurance industry, representing over 130 members who are providing cover to more than 25 million customers in over 110 countries. The insurance industry plays a vital role in the Irish economy and makes a substantial contribution both socially and economically. The sector employs some 35,000 people and contributes in excess of €2.7 billion annually to the Exchequer.
Insurance Ireland and its members have the greatest sympathy for all those whose homes have been affected by defective concrete blocks and we stand ready to assist affected homeowners as many of them embark on the arduous journey of rebuilding their homes and their lives. We acknowledge the efforts of this committee, the banking and insurance focus group and the wider redress group and individuals to help these homeowners. We were pleased to meet with the banking and insurance focus group in August last year and we have had continued engagement with the focus group.
When it comes to the provision of insurance, it is important to note that household insurance policies cover damage caused by insured perils, such as fire, storm, flood or theft. Defective materials such as defective concrete blocks are not and have not been an insured peril. Furthermore, household insurance policies exclude claims arising from faulty workmanship, defective design and the use of defective materials.
Looking at the issues faced by the affected homeowners, the commencement of the enhanced defective concrete blocks scheme, which provides for the repair of properties that have been damaged by the use of defective blocks, should help to restore affected houses to good repair. Under this scheme, a homeowner must obtain a certificate of remediation signed by the contractor and a competent building professional in order to secure the final grant payment. This certificate of remediation essentially acts as proof that the house has been repaired under the enhanced defective concrete blocks scheme.
While our members will make their own individual underwriting decision, the position of Insurance Ireland members in relation to defective concrete blocks is that in cases where a property has undergone remediation works, this certificate of remediation would be required to take out cover and will ensure the house is treated in the same way as a non-impacted property.
Receipt of this certification would enable our members to underwrite these risks under household insurance policies using normal market underwriting factors and at terms and conditions applied to non-impacted properties, as the contractor and a competent building professional are confirming that the affected house has been restored to good repair. The scheme should help to alleviate matters over the longer term and our members will engage with the certification process for remediated properties.
Insurance Ireland recognises that customers require support at what is a very difficult time. We encourage all customers impacted to contact their insurer in relation to their insurance policy with any cover questions that they may have. Insurance Ireland is not in a position to state a single underwriting approach to these various risks for non-remediated properties. The extent of cover provided is determined on a case-by-case basis and varies depending on the individual risk presented, in particular the current state of repair and condition of the property and extent of any remediation or risk mitigation if applicable.
Insurance companies will continue to engage with their customers when contacted to ensure that they are aware of and understand the level of home insurance cover being provided. Insurance Ireland welcomes the work carried out by the Department of Housing, Local Government and Heritage with regard to the ongoing sub-group discussions, at which Insurance Ireland has represented members alongside colleagues here today from the Banking and Payments Federation of Ireland and Engineers Ireland. We have appreciated the engagement with affected homeowners in this forum and we will continue to engage in these meaningful discussions as they progress.
As we have noted in our previous communications with this committee and with impacted homeowners, we cannot begin to understand the toll this issue has taken on the lives of those impacted. We hope a solution can be found that brings them some closure as soon as possible. Insurance Ireland is happy to continue our strong engagement as a representative for the insurance industry on this matter and I will close by reiterating that when a property has been remediated and the required certificate is held to certify the remediation has been carried out to the required standards, our members are willing to provide full cover to home insurance customers, subject to the normal market underwriting factors and terms and conditions applied to non-impacted properties.
I thank the committee for this opportunity to present our position and I look forward to answering any questions.
Mr. Damien Owens:
I thank the committee for inviting Engineers Ireland to the meeting. I am a chartered engineer and the director general of Engineers Ireland. I am joined by Cian O’Dowd, head of public affairs, and John Garrett, a chartered engineer and a member of the Engineers Ireland IS 465 register. He is an independent practitioner and is not an employee of Engineers Ireland. We have submitted an opening statement and I will present an abridged version to save time.
Engineers Ireland has supported the scheme since 2019 when we set up and established the IS 465 register of chartered engineers. In the years since, we have provided feedback on the operation of the scheme much of which has been taken on board by the various stakeholders.
We wish to raise four key issues today. One is mortgageability. Engineers Ireland is aware that for owners of remediated homes, the ability to later sell that home on the property market is an important consideration. The members of the BPFI have confirmed their willingness to lend informed by the advice, certification and professional opinion provided by others in the conveyancing process. This is a restatement of the standard process by which mortgages are approved. This position is held by BPFI members in respect of all remediation options, Nos 1 to 5, inclusive, under the grant scheme. Where a chartered engineer has satisfactorily designed and inspected the remediation works on a property, pursuant to an approved remediation option under the grant scheme, that engineer will issue a certificate of remediation relating to that work. A remediated building has been, according to the rules of the scheme, subject to an assessment, survey, sampling, testing and categorisation by the Housing Agency’s framework chartered engineers, in accordance with the national standard IS 465, through which the agency has determined the remediation option it believes is appropriate, for the affected property. The certificate provided by an engineer, in such instances, will relate only to the work completed pursuant to a determination by the Housing Agency.
The BPFI has confirmed that its members will accept certification by engineers of remediation works carried out on properties within the grant scheme and that these owners of buildings may thereafter apply for home loans, mortgaging these properties, through the standard process applied by lending institutions to such applications. Engineers who are members of Engineers Ireland’s IS 465 register, having completed remediation works in line with the determination of the Housing Agency, will be able to provide a certificate of remediation as described.
The second area relates to later surveys of properties. When a remediated property is sold at a later date, a prospective purchaser is normally advised to have a prepurchase survey at that time. If a property has concrete blocks containing excessive amounts of deleterious materials, it may be unlikely to exhibit the durability or robustness of a block without excessive amounts of these materials and therefore future performance of these blocks is unpredictable. This leads to uncertainty for both the relevant professional attempting to complete a survey as well as a homeowner or prospective purchaser commissioning a survey. This is a challenge for all professionals working in this area. IS 465 is now under much-needed review by the National Standards Authority of Ireland, NSAI. While it is important that the outcome of this review should not be pre-empted in this response, it is nevertheless the view of many engineers that the existing standard is no longer fit-for-purpose and developments in the scientific understanding of this issue must be appropriately considered. The completion of this review is both essential and urgent, especially given the requirement of engineers employed by the Housing Agency to address an “indication of the potential for future deterioration of retained blocks in their current state” within their reports on recommended remedial options. Engineers Ireland is calling on the Government to divert all necessary resources to the NSAI to ensure that a revision is completed by the end of this year. The completion of this revision is necessary to provide clarity and confidence to all those affected by this issue, including building professionals.
Turning to transitional arrangements, we are in the transition phase between two schemes. In the first scheme, a homeowner typically engaged with an engineer to undertake a survey of a property, which required taking samples and testing. Something that has arisen under the new scheme is that recommendation of the home-owners engineer has been challenged by the determination of the Housing Agency engineer.
A survey conducted in March 2024 of members of Engineers Ireland’s IS 465 register has shown that 75% of engineers employed by homeowners have experienced having a recommendation for option by a framework engineer employed by the Housing Agency, with respect to the same property. This has given rise to some understandable concern on the part of members of Engineers Ireland’s IS 465 register, who may question the rationale for the revision of original recommendation of a specific remediation option. This is particularly so, given that the initial recommendation arose on foot of in-person inspection and testing of the property by a member of the register, while a revised determination by the Housing Agency is often based on a desktop assessment and reports. It is submitted that, given the research on a review of IS 465 has not yet been completed, that where a discrepancy exists between the recommendation of a member of the IS 465 register and the Housing Agency, that the higher option, or the more conservative option, of the two should be adopted.
Finally, on the indemnification of engineers. A chartered engineer providing an opinion on the condition of a building will have professional indemnity insurance. There is evidence that some insurance providers are excluding work with deleterious materials from their cover. Given the quantum of remediated properties and the total sum of grants awarded under the scheme may exceed €2 billion, it is unreasonable to expect a relatively small number of professionals to shoulder the potential indemnification costs for very long periods, potentially up to 40 years. Such concerns were evidently considered by the Oireachtas when enacting the legislation governing the scheme. Section 45(1) of the Remediation of Dwellings Damaged by the Use of Defective Concrete Blocks Act 2022 provides indemnification for certain persons. Notably one category of relevant person, described in subsection (d) “any competent building professional as described in section 12 and carrying out their duties under this Act.” This section was not commenced. We recommend that subsection 2(d) should be commenced immediately to address this lacuna indemnification. This is vital to provide protection to professionals working in the area where the scientific understanding of the issue continues to evolve.
I thank members for their attention. My colleagues and I are happy to take questions.
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I now throw the debate open to the floor. The first speaker is Deputy Pearse Doherty. He will be followed by the other members of the committee and then Deputy Joe McHugh, who is not a member of the committee but has come here to represent his constituents.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I welcome all the witnesses. I am glad the committee agreed to my proposal to have these hearings because this is a very important issue, as many of the witnesses have outlined. At home, in my county, people will be looking in at this meeting and they are looking for very simple and basic answers. There are a lot of technical issues here as regards assessments, and we understand that we need to deal with the technicalities.
I will address my first question to Engineers Ireland. Is Mr. Owens an engineer?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
He heads up Engineers Ireland. He has that position. Where there is a recommendation for an outer leaf replacement, which means that the outer walls are replaced because there are deleterious materials, and a recommendation that the inner leaf and the foundations are sound, despite growing evidence that this is not the case, can Mr. Owens tell the committee he is 100% sure that those properties, after only the outer leaf being remediated, are structurally sound?
Mr. Damien Owens:
The engineers will undertake to carry out the remediation option as determined by the Housing Agency and will certify that work as complete. The remainder of the property may contain deleterious materials, and that is provided for in the standard, but they may not exhibit evidence of damage, which is what is required under the standard.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I appreciate Mr. Owens's answer but I am not asking about the standard. As regards the houses we go into, the householders are not worried about the standard, IS 465s or other standards the Government has. They want to know whether the house is structurally sound. We have before us the head of Engineers Ireland, and I ask him that question on their behalf. When the Government tells them, through the scheme, that only the outer leaf must be replaced, as the head of Engineers Ireland, can Mr. Owens tell me that if they do that, despite deleterious materials being present in the inner leaf and, potentially, the foundations, the house will be structurally sound? Hand on heart, can he tell the families watching in at home that that is the case, or do we have a problem? In fairness, his opening statement really questions this because he draws attention to the science, does he not?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Can Mr. Owens, as an engineer, guarantee families at home that if they replace just the outer leaf, the house will be structurally sound? That is the gamble they are being asked to take.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
What is Mr. Owens's belief, given what the science tells him and given what all the international research now tells us as to how the deleterious material affects the blocks and over what time span? What does he believe as an engineer?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
A conservative approach would be option one, which is demolition and rebuild. At the minute, demolition is demolition down to the foundations, and the foundations are left in. As a senior engineer in this country, if it were his house, and if he were approved for option one, demolition, would he leave the foundations in, wearing his engineer's hat? Would he build on the foundations?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
As an engineer, Mr. Owens believes, as regards the quarry that created the blocks and also poured the concrete into the foundations, and despite the fact that the house has to be demolished and rebuilt completely, that there may be a chance that the foundations are okay. Is that his view?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The composition is, but the aggregate material that goes into both is the same. Mr. Owens knows this better than I do. The strength of the concrete will be different in terms of the mix, but is the aggregate material and the deleterious material not present in both?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
In a lot of cases, however, these are self-built homes. People build their houses and order concrete to pour into the strip foundations and it comes from the same quarry and the same company that provided the blocks, which the engineers have now told them contain deleterious material. They tell them their houses need to be knocked down and rebuilt. Mr. Owens's response stretches credibility. He might not want to say it, but no engineer to whom I would speak privately would say he or she would build his or her house on foundations that came from the same company that provided the blocks. Hand on heart, I genuinely do not think any engineer in the country would say that if he or she were in that position, he or she would do that. The risk is too high. Is that not the case?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Mr. Owens says we should take a conservative approach. Given the fact that the science is evolving and he said that the impact we see in the blocks will happen in the foundations, albeit at a slower rate, is a conservative approach, in his view, to get rid of the foundations as well? Would that not be the conservative approach?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
One of the reasons we asked for this hearing was the excellent work the redress focus groups have done, and I really appreciate the fact that all the groups before us are interacting with them on this. The scheme does not work for so many people, but today we are not really going into that level of detail. We are talking about the existing scheme and the fact that some people are trying to demolish and rebuild and the obstacles they face, so I will just focus on that part of it. The big question is whether the house can be sold after remediation.
I will go to Mr. Hayes of the BPFI. If I look at the statement the federation released and then a clarification statement and then read from what Mr. Owens has put on the record here and the statements that have been produced, I really would not know, and I am used to reading statements. Again, putting themselves in the shoes of somebody who has an outer leaf replacement done on his or her house, what Mr. Owens will tell us is that the engineers will certify the work, which is the outer leaf and only the outer leaf. Is that not correct?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
In the case of a house in Buncrana, say, where it is an outer leaf remediation option, they will certify that the replacement of the outer leaf is now structurally sound. The question then is whether the bank will allow somebody to come along, let us say Bernard, and purchase that house knowing that the property has not been deemed structurally sound. What has been deemed structurally sound is the outer leaf, and all the science tells us that there are issues with deleterious materials in the inner leaf and the foundations. What people want to hear is, very simply, an answer from BPFI that says the banks will absolutely provide finance on exactly the same terms as everybody else for anybody who wants to buy those homes. Is that the case or not?
Mr. Brian Hayes:
I will be very simple and straightforward. If there is no certification, there is no mortgageability. One is dependent on the other. This is one of the first issues the group in Donegal asked us to clarify, which we did with lenders.
Each regulated entity will take a different view on mortgageability, but we, as an industry body, have produced a definitive statement on certification. If there is not certification, a property will not be mortgageable.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is fair enough. That is very clear. It is where there is no certification from the engineers. However, what is being said is the engineers will provide the certification but only for the remediated works. In other words, they will provide a certification for the outer leaf, but not the house. If the Leas-Chathaoirleach wants to buy that house, the question is whether he go to the bank and get a mortgage to do so.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
This is what I am hearing back home. They want this really simplified. I am outlining a scenario here where Engineers Ireland has certified the work. The remediation work was on outer leaf because that was all that was appropriate, although maybe another engineer was overruled on that. It was on the outer leaf, the certification is there but it is not a certification for the entire building. The structural soundness of the entire building has not been certified. It is just the work under the Housing Agency scheme. Will a bank lend to somebody to purchase that property on the same commercial terms as an unaffected house?
Ms Michelle Byrne:
What we have said in the statement is if the certification is in place, if the property can be insured, then it is mortgageable. We are reliant on others in the process to sign off on the remediation. We are trusting the process. It is a process involving Housing Agency engineers whereby they determine the option that is necessary and a remediation works plan is put in place. The certification of remediation is based on what is set out in that plan, and we will take the professional opinion of the engineers in terms of the certificate of remediation. There is also that letter of assurance in the scheme.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is fine. When the bank is informed that there is deleterious material but it is not showing signs in the inner leaf, the fact there is certification solely for the outer leaf allows the banks to fully mortgage that property, that is, to fully provide a loan for that property. Is that what the BPFI is saying?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is something the banks are not doing at the moment. Is it what Ms Byrne is suggesting?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Okay.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We have scenarios at present where people are looking for loans from some of the BPFI's members in the banks. It is option 1, which is full demolition and rebuilding and it is stated very clearly by one of the main street lenders that people need to rip out the foundation as well. That is not part of the scheme, but at least one bank is demanding that in these circumstances and I do not believe it is unique. Why would that be the case?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Okay.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
For a remediated house, Ms Byrne is making it clear to this committee the banks do not require certification on the entire property. The banks, therefore, will be willing to lend to a person to purchase an affected house that still has deleterious materials in the foundations or inner blocks provided the outer leaf was replaced and certified. She is saying the BPFI's members are happy to lend on the same commercial basis.
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I think Ms Murdock would like to come in on that as well.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I have a question for her on the insurance aspect of this. At present, some homeowners cannot get their homes insured despite the fact deleterious material is not a peril under the insurance, so they would not be able to claim anyway. Maybe Ms Murdock can explain why that is and why insurance companies are now only providing contents-only insurance for some affected houses. In the context of what we have just heard from Engineers Ireland and the BPFI, will Insurance Ireland members be willing to insure the house fully on the same commercial terms as an unaffected houses on the basis of a remediation certification that is not for the entire house? That would include, for example, inner walls having deleterious material that could potentially affect the fire resistance. That would be in the context of party walls and issues like that.
Ms Moyagh Murdock:
I thank the Deputy. To clarify, home insurance covers perils such as fire, storm, flood and theft. Deleterious materials are not and have never been covered by home insurance. That will not change with this scheme. However, on receipt of the certificate of remediation from the homeowner signed off by the engineers, the insurers, although they will all make their own underwriting decision themselves, will insure that home under those normal terms as if it was a home in Louth, Meath or wherever. We are quite clear on that, but we, as part of that chain, also depend on receipt of that certificate of remediation. The question of something happening down the line because the foundations were not removed or whatever would not have come into it before the certificate or after because defective material or defective design is not an insurable peril under normal home insurance cover. The insurers have committed to treating it no less favourably than a normal homeowner and it covers fire, theft, flood and other insurable perils.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Is Ms Murdock aware of any of her members not renewing or removing insurance from affected properties currently that are not remediated?
Ms Moyagh Murdock:
I am not aware of any specific cases. We met the focus group. They raised concerns about the questions asked when they getting a quote or an application. Under the Consumer Insurance Contracts Act, it is obviously up to the insurer to ask the appropriate questions and for the homeowner to volunteer the information. When it comes to specific cases, we recognise it is a very onerous time for homeowners, but I am not aware of individual cases where they have been denied normal home insurance. The whole defective concrete block issue is a completely separate matter.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It has not then been brought to Ms Murdock's attention that impacted households are in some cases being provided with contents-only insurance and cannot get their homes insured because there is defective material present.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Given everything Ms Murdock has said and the fact that deleterious material is not a peril that ever was covered by insurance, should there be any issue with an affected home being denied home insurance on that basis? Obviously it should not.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
All right, but regarding the phrase "a good state of repair", has Ms Murdock been in one of these houses?
Ms Moyagh Murdock:
I have seen the pictures and I empathise. It is definitely a very challenging situation. If the Deputy asks me honestly, I have not had a case brought to my attention either through a homeowner through our insurance helpline or from the FSPO. I am not saying there are not individual cases.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It might be helpful to the committee, if it is possible, for Insurance Ireland to contact its members to ask what happens when, on renewal or the taking out of a new policy, the insurance company is informed there is deleterious material in the blocks.
What is the impact then in terms of insurance and has insurance not been provided on that basis?
Finally, I will turn to the BPFI. I spoke earlier about the fact that the scheme does not work. I appreciate the fact that the federation put an offer on the table and it is scandalous, to say the least, that the Government took so long to make a decision. It has rejected the proposal but I always thought it was more beneficial for the Department to make the grant payment upfront, instead of having to go through the financial institutions. I know the institutions only put that on the table to be helpful and I understand that the proposal that is under consideration will not cut it. It is only for professional fees, which is a serious problem.
I have raised an issue privately and will raise it publicly now, which is that the banks need to come up with a product. They came up with a product which was a zero-interest loan which required a commitment from the State. In my view, the banks really need to come up with a product that is extremely low interest to help these individuals. I say that in the context of the net interest margins of some of the banks having increased. There is a lot of profitability within banks now. A lot of these people, though not all of them, are already customers of the banks. This is about restoring the asset value on the banks' balance sheets, as well as restoring their homes. I have countless letters here on this. One is from loyal customers of one of the pillar banks for 17 years who were refused a mortgage. Before they even get off the ground they are looking at €20,000 in engineering fees, €20,000 to €30,000 to demolish the house and €15,000 for preliminary works. This is all before they even start building. They need a top-up loan of about €90,000 to be able to rebuild their home under the grant scheme. They need about €90,000. They still have a bit of mortgage and have been with a pillar bank for 17 year but they have been refused. That is them dead in the water; they are not building their house. They talk in their letter about the immense stress. In fairness, I have seen correspondence between the BPFI and the Department released under FOI and I know the federation has been talking about the immense stress that some customers are under. I have other examples of people who have been refused mortgages. One is a tracker mortgage customer. Tracker mortgage holders have seen their interest rates increase ten times. This customer is 57 years old. People of that age are not even contacting the banks because they know they are not going to get a loan. We all know what. They will not get a loan at that age, not to mention the pressure they are already under with repayments. We need to find a way to provide a lower interest loan. There are green loans and other types of products in the banking sector already. This is a unique and serious crisis. I really appeal to the banks to step into the breach and find a way to support those who need to go to 100%. I want to confirm to everyone that if Sinn Féin wins the next election, the banks will not have to do that because we will provide the people with 100% redress and they will not need a top-up loan. In the meantime, however, until we get that election, the banks should help their customers in a better way. The interest rates are making it impossible for people and even if the banks provided a zero-interest loan, in many cases the people would not be able to pay it back anyway. Some of them are pensioners and do not have the disposable income to pay it back. We need to find some way for the banks to do a bit more.
Mr. Brian Hayes:
Let me briefly respond to that. First, it was not a loan that we were proposing but an interim funding mechanism. It was all around trying to get money upfront for people to get their development going. We did that deliberately because once we start talking about a loan, we are immediately into credit assessment, which is the law. Regulations from Europe and domestically mean that we have to do a credit assessment of people but people will not get loans in that stressed environment. This is because of laws passed by these Houses and because of external regulations. The second reason we suggested that proposal is that there is a whole group of people who may be in credit servicing firms who would not get a loan either. We put forward that proposal last September, as the Deputy well knows. We walked him and his colleagues through it at the time. The purpose of the proposal was to get money to people upfront. We understand that the Department is now looking at this again and determining whether a portion of the grant could be upfront, possibly for professional fees. We need further clarity on that and I would appeal to the Department to sit down with the affected homeowners to see if we can get that situation resolved. If we are talking about loans, we are immediately into credit assessment and that has an impact on people's creditworthiness. Our dilemma there is that we are not in the position, as an industry group, to produce products or pricing because that is illegal. We cannot do that as a group. We have lenders out there, including credit unions-----
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
With respect, banks can do that for those who are eligible. I made the point that this is not everybody. There are people going to the financial institutions now. The people who are rebuilding at the moment and who are having to put their hands in their pocket or to beg, borrow or steal the €70,000 to €80,000 are going to the financial institutions but the interest rates are very high. In those cases, we need to be looking at reduced interest rates because there is a benefit for the banks. I am not suggesting it is the be-all and end-all but-----
Mr. Brian Hayes:
Our members are very conscious of the situation. The other point I would put on the record is that we have just short of 200 people in the Deputy's own county who work in the three pillar banks across 22 branches. That is just in County Donegal. The people who work in those banks know this problem. It may be affecting them, their family, their relations or their friends. They get it. The issue on lending is that all of these things are connected, as Deputy Doherty knows. We have got to find a solution for people and lenders will do that. That is true of all of the pillar banks and other lenders as well. Ultimately, the solution has got to be found in terms of what we can do in the context of the credit directive. I will ask Ms Byrne to come in on this issue.
Ms Michelle Byrne:
Just to say, the proposal as we understand it is still with the Department. We have not had formal communications to say it is off the table. We remain available to discuss that if there is a need. As Mr. Hayes mentioned, we understand the Department of housing is engaging with homeowners this week to discuss earlier payments under the scheme as it currently exists. We are waiting for formal communications back in relation to that product. If it turns out that it is not an option, then our members are willing to take it back internally within their own institutions to see what can be done in terms of a more targeted product. As Mr. Hayes said, we cannot discuss that at an industry level because of competition law but it is something that our members are willing to take away if our proposal is not given the sign off by the Department of housing.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I appreciate that. Thanks.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We will split up the Donegal representation and go to Mayo now. Obviously, a lot of the issues arising in Donegal are also happening in Mayo. We have a whole list of things that need to happen in Mayo for people to get on and I really welcome the opportunity to talk to our guests here today.
I want to start with Engineers Ireland and its opening statement. In one paragraph, Mr. O'Dowd said that "where a chartered engineer has satisfactorily designed and inspected the remediation works on a property, pursuant to an approved remediation option under the grant scheme, that engineer will issue a certificate of remediation relating to that work.". I want to get to the crux of the matter here. It seems like part of a house could be insured while another part could not and we cannot tell what is going to happen in a number of years time if someone does the outer leaf or does an option other than option 1. We also cannot determine the situation with regard to the foundations and what would happen there. At the moment there is no provision to have the foundations tested. Following the science, can Mr. O'Dowd put it in a package for me as to what can be signed off on and what cannot?
Mr. Cian O'Dowd:
On the certificate of remediation, schedule 10 to the 2023 regulations states specifically that where there is a determination by the Housing Agency concerning the remediation option that is in place, when an engineer is employed by the homeowner and that piece of work is completed, the certificate of remediation will be provided for that and only for that.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Can I just stop Mr. O'Dowd there? He said earlier that in some instances issues have arisen due to a recommendation for a remediation option by an engineer employed by the home owner differing from the option determined by the Housing Agency. That is what I want to tease out, the gap between the Housing Agency and the engineer.
Mr. Cian O'Dowd:
There are a number of issues, which I am sure are reflected in our statement, that are a matter of frustration and concern on the part of a number of our members. One of these is the existence of a potential gap in transitional arrangements between the determination made by the Housing Agency versus a recommendation that might be made by an engineer, in the first instance, employed by a homeowner. What we are saying, in view of the fact there are significant questions over IS 465, the prevailing standard, which has been under review since 2021 and, obviously, we are calling for the urgent completion of that, is that where there is a gap between the opinions of engineers, the more conservative or the higher of those two should be favoured. That provides additional assurance to those who are involved in this process that the more conservative opinion will prevail in those instances.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Has Engineers Ireland communicated to the Department and the Housing Agency that they need to take that approach? We do not want homeowners falling into that gap. What happens if they do so?
Mr. Cian O'Dowd:
Certainly, our position is that the higher of two options where there is discrepancy in opinion should be favoured. This boils down to the issues we are experiencing at the moment over the ongoing review of IS 465, and because we do not currently have a settled position on the finalisation of that standard, there is going to be a question mark over how fit for purpose that standard is.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
In the meantime, where do the houses that have been demolished and are being rebuilt sit? Why is it taking so long to a new standard? The science and a lot of evidence is available. Why is it taking so long and what will the homeowners who are building right now do?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Where somebody has not tested the foundations because they have not been able to afford to, given this is not a 100% scheme and affordability is an enormous issue for people, they might take the risk and say they have been told the foundations should be okay, but they may not be okay. What happens then, if there is not sign-off on it and we come to a point where it does not meet the new standard when it comes in? I would also like to know, from the insurance companies and the banks, what will happen in that scenario if a homeowner does not have the certificate of sign-off.
Mr. Cian O'Dowd:
The certificate of remediation will be provided in respect of the scheme as it currently operates. If the standard changes to a relatively significant extent, it is conjecture on my part as to what would happen but, certainly, there would need to be some examination of that. The principal difficulty, however, and this what it really boils down to, is that at the moment we do not know when that revision is coming, nor do we know precisely what it will say. The answer to this quandary is to get that revision completed as soon as possible, and one of our key messages as part of our statement today is that the resourcing of that with the NSAI, in a way that manages to conclude that as quickly as possible, is both urgent and essential.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes, it absolutely is. That was clear before today but it is absolutely clear now. Turning to Insurance Ireland, in this situation, where the homeowner finds out a bit later down the line that the building does not meet the new standard, what will happen in respect of insurance?
Ms Moyagh Murdock:
The insurance industry is also putting its faith in the certification process and in the qualifications and expertise of the experts, such as the engineers, the NSAI and the surveyors, and when they get a certificate of remediation, that home is treated no differently from a home that has been unaffected. As for down the line, as I said previously, deleterious materials were not covered in the past and they will not be covered in the future either, but the home would have been insured against flood, fire, theft and the normal perils. I understand the concerns about the scheme not meeting the standard, but home insurance in its normal guise is probably not the main concern of homeowners. Rather, it is having to go back to square one with a rebuilding programme. That would not have been the coverage under home insurance in the first instance.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We realised that very quickly when we started to look at it. We had thought everything would be fine because the homes had been insured, and then we realised the actual materials of the homes on which they were built had not been insured and that the indemnity insurance that had been provided for people who had signed off on the homes was not anywhere to be see either. We have been here previously, therefore, when we first realised the issue.
Obviously, insurance is provided on a yearly basis, so someone might decide a house has been built and completed by next December, but the following year, the year after that or in five years, they might find there was a problem in the foundations and issues with that. Is Ms Murdock saying it would not be insurable at point? What is she saying about rebuilding?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes, home insurance would not do anything, so we would really have to question-----
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes, I know what home insurance is. When someone takes out indemnity insurance, what does that mean?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
If somebody made a wrong decision, did not pick up something or did not examine the materials in a house, would it apply to that?
Ms Moyagh Murdock:
If it were down to negligence or omission, there would be an issue there, but if it were something that was unforeseen and the person had depended on their expertise and qualifications, obviously, they would be insured against professional problems. There is the certification process and we depend on professional bodies to sign off-----
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
This is the problem. Everyone is dependent on everyone else but it is the homeowner who is left in the middle. As a matter of interest, has the liability of the insurance companies in respect of the defective blocks been tested in the courts?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Have any cases been settled?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
There is more than one quarry and some quarries are still operating, and the materials coming out of them are still untested, so the very same thing that happened to all those homeowners could be happening again today.
The Banking and Payments Federation advises that what is happening is on a case-by-case basis. A case-by-case process worries me because the cases end up with us. People come to us when their cases are not acceptable to the banks or when they are not granted the finance they need. We wanted a bespoke system or package for this in order that we would be able to help homeowners who would not, in the normal run of things, be eligible for a mortgage because of their age or their circumstances. No progress has been made in that regard in terms of providing finance.
BPFI states that training has been given to bank workers. What form does that training take? How are we evaluating what happens? For example, if a person goes in and makes a query, is that recorded as being a refusal of financing?
Mr. Brian Hayes:
I will ask Ms Byrne to comment because we have two working groups in this area. The first working group tries to bring together all of the lenders on this very point. The other group produced the interim funding mechanism proposal we put to the Government last September. This came up at previous committee meetings and it is important, given the role that we are going to have to play in providing finance to people if that is their choice.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
What is the status of that proposal?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Is it with the Government in order to make a decision?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
How long has it been with the Government?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It is quite shocking that a proposal has been with the Government since September. Has the BPFI had any feedback in the interim?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The BPFI has been waiting since last September.
Ms Michelle Byrne:
It is with the Department of Housing, Local Government and Heritage. We are waiting for a decision from that Department. However, we have had a lot of engagement with the Department of Finance to outline various questions and to respond to various questions that it asked us about the operation of the proposal and different risks associated with it. It is still with the Department of Housing, Local Government and Heritage.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Would what was proposed alleviate some of the issues? For instance, let us take the case of a 55-year-old single parent who is trying to access this. She is obviously short because it is not a 100% scheme. That will mean taking an additional top up for a €40,000 gap.
Mr. Brian Hayes:
To be clear in regard to the scheme we were proposing, this particular request that came from the Banking and Insurance Group in Donegal was around trying to bring forward part of the grant which the banks would effectively give up-front on the basis of a guarantee. This particular issue was raised by many people who do not have money and cannot get going with their development. They have no access to money. It was not a loan, per se. It was directly trying to get money up-front to people so that they could start the drawdown process. The reason we chose the guarantee route was to make sure that we did not have to do individual credit assessments on people, as it is not a loan, and also to ensure that a wider group of people who may have their mortgages with credit servicing firms could also access our banks' facility. That is what the request was. The other issue in regard to the deficit in funding that people will or could face and indeed are facing - we met with many people where there is a gap - is a commercial issue for the lenders concerned. However, as to the proposal we made last September, it is still on the table.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Are the banks giving guidelines or direction to the people they are training in terms of vulnerable customers or people who need to be looked at in a different way here? Will Ms Byrne tell me about that? What can people expect when they go in? We will take the example of the 55-year old woman who is on her own and trying to access €50,000.
Ms Michelle Byrne:
I do not have specific detail on the exact training the staff receive. However, our members had experts from their vulnerable customers units engage with front-line staff to ensure they are appropriately trained so that they can deal appropriately and empathetically with any impacted homeowners who come forward. Engagements are at local branch level and at centralised level. Depending on what the need may be for an individual customer, whether it be support with financial difficulty or an application for credit that needs to be made, the customer is routed through the appropriate division within each lender.
In regard to vulnerability, there was an ask for all impacted customers to be treated as vulnerable. We said to the redress focus group that we do not believe that is the appropriate approach but that if impacted homeowners want to be deemed vulnerable, they can opt in to that. They can signal that preference to their lender and be treated through the vulnerable customer unit which would have a different process in place.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
How is all this being measured?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
They are policing themselves in a sense, although "policing" is probably the wrong word. How do we know? What is coming back to us is that people are being refused. They are being told "No, we cannot help you in that area." How are we getting an aggregate of what is happening in order to be able to make the adjustments that need to be made?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Is that available?
Mr. Brian Hayes:
What we can do is bring best practice to all of the lenders and experiences. We are now on the second iteration of this scheme, as the Deputy knows. We may well have another iteration - who knows. The banks are working their way through this. I am sorry to use the phrase "case by case" but every single case is different because of the economic circumstances in which people find themselves and indeed the remediation solution that comes from the Housing Agency in terms of the solution that is there.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Is Mr. Hayes saying that they are happy for not all of the house to be remediated or the foundations not to be done and that the banks are okay with that?
Mr. Brian Hayes:
We were asked to give clarity on the mortgageability issue. We have done that in the statement we issued. However, it is fair to say from what we all heard today, that we await what comes from the NSAI's final issue on this question of the IS 465. It is urgent, I respectfully suggest, from an insurance and banking perspective, and a professional engineering perspective, that we get clarity on this issue because it has a knock-on effect. We raised questions with the insurance industry ourselves. I fully understand that people in the affected county who have their homes remediated will want to know, at some point in the future, that their asset, for whatever reason, can be realised. There is a huge pipeline of different groups. Will a lawyer tell someone who is buying a house to buy one of those houses? What is the legal opinion of the lawyer going to be here? Will there be a market for those houses? These are very difficult questions to resolve. That is why, in the proposal we made last summer around the implementation group, we said we need to have everyone around the table to try to sort this problem out. I am not saying it is going to be a case of trial and error but there has to be an understanding, when we are trying to resolve this, that there are many different players on the pitch dealing with legal conveyancing, engineering, banking and insurance issues. We need to work together on it. That is the point I am making.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
All the players, including householders, are left in limbo until such time as the NSAI comes back with the science to say what the standards will be. I have a vision of everybody suspended in midair until that happens. We are spending millions of euro on this. Government inaction on it is just beyond intolerable. I am not saying this to make a political point. For heaven's sake, if we were ever in any doubt, we have absolute clarity about the negligent delays that have arisen because of Government inaction.
It is wholly unacceptable. How can I go back to the people of Mayo and tell them this is the situation? I have a whole lot of questions and issues that have been raised by them and I have to go back to them and tell them it is as clear as mud. It is very clear that the Government's inaction is holding everything up but with regard to them getting on with their lives, I have to say, after more than a decade, "Can you just hang on another while?"
I will finish with that and let Deputy Mac Lochlainn come in. I thank the witnesses for being here and for their honesty in putting these things on the table. This has to go back to the Taoiseach. We have a new Taoiseach now. As I told him last week, he has an opportunity, once and for all, to put this right. He holds the cards with regard to what needs to be done here. He is acutely aware of what needs to be done to allow people to rebuild their homes and lives.
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I thank the Deputy. Do any of the members online want to come in? No. We will proceed as we are. We will have to take a break or finish, whichever is acceptable.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We will not take long, if the Leas-Chathaoirleach could bear with us for a while.
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Okay. Is Deputy Mac Lochlainn going first?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I will not be particularly long because Deputy Doherty has gone through much of the detail. Is that okay with Deputy McHugh or does he want to come in now?
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I have to be gone by 4 p.m..
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is an hour and ten minutes away. Has the Leas-Chathaoirleach forgotten to set his watch?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Deputy McHugh can go ahead. We have got an hour and ten minutes. Is that okay?
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Is Deputy Mac Lochlainn sure?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes, go ahead.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I thank the Deputy and the Leas-Chathaoirleach. I know I am a visitor here today and not part of this committee, so I really appreciate being let in. I thank all the stakeholders who are here today. This is really helpful, especially at a time when we still have many challenges with the scheme. The more information we can get out there, the better. There were a couple of strong points made earlier that I will come to in a few minutes.
In the context of campaign relating to defective blocks and the subgroup, we are trying to move away from using the word "mica" because we all know that there is more involved. I refer to various deleterious materials. I acknowledge the capacity building that has happened between the BPFI and the relevant sub-committee, namely the finance sub-committee of the defective blocks campaign. There is a strong regard on both sides for what you are all trying to do. I just want to acknowledge that in the first instance. I know Patrick Sharkey and his team. Patrick certainly talks to me about the open line of communication. However, the frustrating part is that there is a proposal sitting on the Department's table. That has come out of those deliberations and conversations.
In my position as a visitor here today, Leas-Chathaoirleach, am I, under Standing Orders, in a position to make a proposal that this committee to write to the Department of housing regarding the proposal that is on the table to free up funding and facilitate liquidity to flow easily, not just for householders but also for contractors and the suppliers? Can the committee do that?
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Yes, we can.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
We can do it. I thank the Leas-Chathaoirleach. I appreciate that.
I want to raise an issue with Ms Byrne. Has she taken account of the submission from Geological Survey Ireland with regard to the new science? Could Ms Byrne come in on that piece? If it repeats what is being discussed here, we could be looking at a completely different scenario in six months' time. Geological Survey Ireland has come in with very new and up-to-date science so I would like to hear Ms Byrne's thoughts.
Ms Michelle Byrne:
We are relying on the Department of housing or the National Standards Authority to make a statement and confirm its position on what is being outlined in that research update. I will repeat what has been said here previously by other stakeholders. That review of IS 465 is now critical. We want to see that moved on. Our position will remain the same until we hear further from the Department of housing on that research update. Until another stakeholder in the conveyancing chain raises concerns, then our position will remain the same.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I thank Ms Byrne. If the other members agree, maybe in an addendum to the letter to which I refer we should emphasise more haste and proactivity around the science that needs to be done here. Six months is too long. People are making decisions, doing outer leaf work and using four-inch blocks. Those doing the work are flat out but there are still concerns about the inside blocks and foundations. That could be stated in the letter as well
I have a question for Ms Murdock. If a home is remediated or is passed for remediation of the outer leaf, the owner will need funding. The homeowner will not be in a position to get insurance as a result of the structural issue. In order for that person to get finance, the bank will require an insurance certificate. I am interested in Ms Murdock's opinion on that very technical scenario.
Mr. Michael Horan:
I suppose our members will take their cue from the remediation scheme. Our understanding is that the building will be remediated under one of the five options. A certificate of remediation will be produced and our members will know from that that the building has been repaired under the scheme. That is really where we are coming from as Insurance Ireland.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Yes, exactly.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
It is a scenario where, if they get approved for an outer leaf, they need a loan. In order to get the loan, they need the insurance certification. It is technical, and I know there will be engagement between the subgroup and the BPFI.
Ms Moyagh Murdock:
I will come back to the Deputy on it but that would be against the individual as opposed to the actual building, as such. They will be assessed on their rating. I will come back to the Deputy on that one. It has crossed my mind that when it is all finished and they may have a mortgage, they will want to make sure they are fully covered. That is not lost on us either.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I would be grateful if Ms Murdock could come back to me on that. I know Mr. Horan talked about options 1 to 5, but the real concern is the certificate of completion. I know it is like the Bermuda triangle. One cannot happen without the other. Where are we on an outer leaf with regard to certification? I will leave that there.
Insurance Ireland is going to say that it is waiting for what the engineers are going to say. Where are we on-----
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
That is the crux of it. The outer leaf will meet the standards. I am not an engineer. I have been a labourer and carried a hod, but I am not an engineer. I know a wee bit about building. I do not know a great deal but I do not the outer leaf does not carry any weight. The outer leaf is going to be grand. However, what is the position regarding the inner leaf on a house that has Bison ceiling slabs and a roof? Will the engineers sign off on a house that is going to have potentially deleterious materials in a foundation that has not been taken out and an inner block that is carrying the weight of the Bison slabs and the roof? The outer leaf does not carry any weight. Will Insurance Ireland's engineers stand over that?
Mr. Damien Owens:
Like I said, the engineers will certainly sign off on the work that has been remediated. Do not forget that in order to arrive at a point where that work is undertaken, a Housing Agency engineer will have had due consideration of the potential future deterioration. That is part of their remit.
I want to go back to one thing that was said earlier. Deputy McHugh referred to the GSI research. I would just caution that it is apparently just one piece of research containing many threads.
As such, we should not read too much into it at this stage in case we go in the wrong direction. We should perhaps wait until the NSAI has completed other strands of research. Hopefully, it will have the resources to do that.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Mr. Owens is right about it being only one piece of evidence, but he is also aware that there is international evidence from America and Canada.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Professor Paul Dunlop and Dr. Eileen Doherty have done a great deal of research with which Mr. Owens is undoubtedly familiar. Much research has been done. Meanwhile, homeowners have to wait.
Just to confirm, did Mr. Owens say that 75% of decisions made under the first scheme by members of his organisation were overturned by the Housing Agency?
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Give me that figure again.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
What did they say?
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Correct, but would Mr. Owens agree that it is still a high figure?
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Are there different parameters for engineers in the Housing Agency compared with freelance engineers who are members of Mr. Owens’s organisation? Are there different ways of measuring?
Mr. Damien Owens:
The engineers engaged by the homeowners in the first instance would have undertaken a suite of tests that were sent off for analysis to a laboratory in England, for example, whereas the Housing Agency would primarily examine desktop reviews. It can undertake additional testing if it sees fit.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I will not ask for the witnesses’ opinions as engineers, since engineering is pretty black and white in terms of what is structurally sound and unsound. The language used at this meeting has been consistent. The words “potentially” and “the future” have been used. If there is potential for the further weakening of a structure, that is, the inside block, because of deleterious material, can Mr. Owens stand over that?
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
From the words the witnesses have chosen to use, none of us needs to be convinced about the enormity of this problem.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
That is the difficulty. This meeting is not just about what is going to happen in the next couple of weeks or months; it is about the damage that has been done over the past ten years. I would like us to take two steps today. First, we must ensure that a strong message about where the pressure points lie is sent to the Department. Second, Mr. Hayes made an important intervention about getting all of the stakeholders around the table. Looking back over my participation on this journey, the big thing that has been lacking is communication. That is not the witnesses’s fault, but the fault of the overall apparatus. The homeowners’ voices have been lost in this, leaving them feeling paralysed, left out and let down, which leads to anger, anguish and a trauma – there is no other word that can be used – that still exists.
I met a couple of people today who were living in Dublin. This is not to say anything against Dublin, but they asked me how the situation in Donegal was and said that the mica issue seemed to have been sorted. The witnesses know it is not sorted. As public representatives, we know it is not sorted. Just because it is not as evident as it was during the big campaigns in Dublin-----
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Next week, the Departments of housing and finance and the Central Bank will be before the committee to discuss the same subject. This discussion will continue for quite a while yet.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
If the Leas-Chathaoirleach could use his wisdom – he has a right bit of that, having heard him at various meetings – expertise and influence to try to bring all of the stakeholders around the table, that would be a good day’s work. I would ask him at a personal level to do that.
We all know where we are at with this scheme. There is a confidence issue at the moment, however. I met a contractor on Friday night last. He had to give a personal guarantee of €200,000 from his own loan account for money that he thought he was going to get on a particular date but that did not appear. There is a confidence issue with liquidity for the homeowner at point of entry, for the contractor, who has to have confidence in the system, and suppliers, including paint shops and hardware stores, who need to be confident that the payments will flow.
I thank everyone for attending.
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
I thank the witnesses for their presentations. Coming from a county that is not suffering the effects of mica, I have more or less been observing what has been happening. Hopefully, we will not see it in my county, as going through this is devastating for any family.
The most critical information we require will be found in the NSAI’s report on IS 465. Were my house affected, I would find it difficult to decide to do anything until after it was published. Deputy Doherty started off the conversation by saying we should make this simple. From what I have been presented with so far today, my understanding is that, once someone gets a certificate of remediation, that person automatically qualifies for mortgage approval and insurance. Is that correct?
Mr. Brian Hayes:
No. The sector will look on such an application, but where there is an application for any loan, a credit assessment follows and each institution takes its own decision on same. What we have found is that, following certification from professionals, there is an openness to engage in the loan on mortgageability.
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
It does not guarantee the loan. Does the certificate cover someone from an insurance point of view?
Ms. Moyagh Murdock:
It means that the person will be treated like everyone else, that is, he or she is not trying to insure a home that is any less secure or habitable than a home in Meath or Cork. The person will be assessed on his or her own mitigation measures, for example, double mortice locks, alarms, keeping the home in good repair, etc. The fact that it was originally a home that was affected by defective concrete blocks will not be taken into account.
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
It was not covered initially anyway. Is the engineer’s certification covered indemnified once the engineer certifies that the work has been carried out to his or her standard?
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
Is there now a liability on those carrying out the inspections?
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
Are there many engineers unwilling to participate in the scheme?
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
What would eliminate that fear?
Pat Casey (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
I appreciate that. That is all. I do not come from Donegal or Mayo and, thankfully, we do not have that issue in Wicklow at the moment. That is why I left myself until last. I thank the witnesses for their presentations.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It has been very interesting listening to the responses that have been given. Starting with Mr. Owens, he gave evidence to the housing committee on 13 July 2023. He was here with the National Standards Authority of Ireland. That is not too far away from a year ago. Mr. Owens reported about insurance risk and said:
There are a number of reasons for the reluctance of engineers to join the [IS 465] register. A key factor is the risk profile of the scheme.
He talked about the "difficulty in obtaining professional indemnity ... insurance" and "is especially acute for remediation options 2 to 5". Of course, in Mayo and Donegal, we are very aware of the serious concern among engineers. Indeed, Mr. Owens continued by saying, "There will remain a lack of data for a considerable time going forward, thus conservative approaches in any remediation proposal may prevail." That was almost a year ago. The NSAI gave an update at that time and said it would publish preliminary findings if need be. This is really a mess, is it not? We have an IS 465 register based on desktop analysis. The Government calls this a multi-billion redress scheme, the biggest redress scheme in the history of the State. Is Mr. Owens not astonished that is based on a scientific desktop study?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes. To quote again what Mr. Owens said back in July last year, and in fairness he has repeated it here today "Some engineers are of the opinion that IS465 is not fit for purpose". I would say it is a very large number of engineers, based on the engineers I am talking to in Donegal. Does Mr. Owens stand over that view himself?
Mr. Damien Owens:
IS 465 provides a testing framework and a regime under which to take tests. Like all standards, it needs to be based on certainty and rigour. What time has shown since the standard was introduced is that there are other mechanisms of deterioration at play here. It is very difficult for a standard to be adaptive and take that into account. Mr. Garrett might have a view on this as a practitioner who has undertaken sampling.
Mr. John Garrett:
I will make an introduction, as it is important that the committee knows a little about me. When I was invited by Mr. Owens to attend, I grasped the opportunity to share my experience and knowledge, acquired over the past number of years. I want to be part of the solution to this horrendous humanitarian crisis in my own country. Defective blocks are believed to be impacting families in 13 counties. My experience to date includes the preparation of condition assessment reports in five counties. In November 2020, I played a lead role in bringing the true extent of the problem to the attention of Engineers Ireland, which then published a document, entitled Case for the extension of I.S. 465 and associated Grant Scheme beyond Donegal and Mayo. In April 2022, I prepared the technical report that supported Limerick City and County Council's successful application for inclusion in the grant scheme. In April 2023, I prepared a similar report to support Sligo County Council's application.
In the same month, I organised and co-presented an Engineers Ireland Thomond region event, entitled Deleterious Materials in Concrete Masonry Units - Sharing the Knowledge. The co-presenters were Mr. John Paul Farren of Anytime Coring and Dr. Chris Brough of Petrolab. This event gave very clear advice about how to do condition assessment reports and how to properly extract core samples of blockwork from the dwellings and protect custody of the cores. Dr. Brough's presentation was particularly relevant and brought great clarity to the mechanisms of degradation in Donegal, which is unique compared with other counties. I am not a geologist and must remain within areas of my own expertise. It is my function to consider and apply the knowledge provided by suitably qualified and accredited laboratories. Suffice it to say, pyrrhotite and mica featured strongly in the presentation in relation Donegal and pyrite featured in most other counties. This presentation is available to view online. On the night, 162 people attended on the night and the presentation and has been looked at about 1,200 times since.
On average, I meet two families and do two condition assessment reports per week. I am confining my services to that because I am not in a position to become part of the certifying engineer process at the end of the day, but I will come to that question. For the most part, the remainder of my time is dedicated to exploring ways of applying what I have learned from each inspection and from interacting with laboratories and others who I know want to help.
In the Your Questions Answered document from June 2023, question 36 reads, “What is the position with existing house foundations?” I consider the answer to that question to be entirely inappropriate:
Foundations can be left in situ and built upon and this is the approach recommended. The issue of foundations is under review by the National Standards Authority of Ireland and should the current position change provision will be made to provide for foundations within the Enhanced Grant Scheme.
That leaves houseowners in a state of - I am trying to find the word-----
Mr. John Garrett:
Limbo. Thanks, Damien. Again we see in paragraph (f) of the quarter 4 research update from Geological Survey Ireland that “liberated pyrrhotite identified within the strip foundations shows early evidence of oxidation" with consequential liberation of sulphur, "indicating incipient ISA", and that, "This is considerably less advanced than that in rising walls but still poses a long-term risk.”
We all know at this stage that the degradation of blockwork is a slow burner. There is uncertainty about the ability to sell properties in future. To the very best of my knowledge, up in Donegal, where I have limited experience, although I have done a couple of reports there, there is a practice where it is not a question of who has the problem but of who does not have it. These are all things I have heard and I am in constant conversation with many people. The practice has developed whereby auctioneers and solicitors will insist on houses being tested. That practice will travel down the country. It has to. We have seen it develop in Donegal. We have come down along the west coast and into Tipperary.
I have knowledge of five counties: Donegal, Sligo, Clare, Limerick and Tipperary. Generally, somebody who has bought a house after January 2020 cannot be in the scheme. That must change, for a simple reason. How can young first-time buyers or young families buying a house know, or how ought they have known, about pyrite in that house when the local authority, the Department of housing and the Government itself did not deem it necessary or appropriate to put their county on the scheme at the time? These people would have bought at the full market value and their houses would, in most cases, have qualified to be on the scheme had they not been sold. Therefore, there are many questions. I do not believe the burden of proof should be on the house owner. It should not be up to the householders to justify themselves. Engineers can give all the advice they like but it should be borne in mind that if a prospective house purchaser goes back to the auctioneer and states that his or her engineer has recommended that the blocks be tested, the seller will move to an underbidder. There is a shortage of houses. Given the urgency to make decisions along the way, people are put in a terrible position and can make a wrong decision. If my clients do not make the wrong decision, the underbidder will do so, in certain circumstances. They need to be protected from that.
Mr. Owens has said on a couple of occasions that the conservative option must be taken. We are in a state of limbo. I consider the answer to question 36 inappropriate. The NSAI is revising the scheme. It must examine it and what the geological survey update states and then prepare a standard we can work to. I hope I have answered the question.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is fine. I thank Mr. Garrett.
Could Mr. Owens state whether the engineers who work for the Housing Agency are members of Engineers Ireland?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Crazily, Engineers Ireland has qualified, trained, eminent engineers on its register whose recommended option is being overruled by other engineers on the register. What is Mr. Owens's view on that?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The difference is that one set of engineers is not indemnified while the other set is. Is that correct?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Having listened to the whole exchange today, I think about the ordinary person at home. Whether affected by defective blocks or not, taxpayers are currently in circumstances in which what the Government calls a multibillion-euro redress scheme, the biggest in the history of the State, is based on a standard that was a desktop study. There is eminent scientific evidence emerging that it needs to be reviewed urgently. Could Mr. Owens elaborate on that?
Mr. Damien Owens:
The work is ongoing. It just needs to gather pace and be completed as soon as possible. There has been a tremendous opportunity, as some houses have been remediated, to get samples and analyse them in the laboratories. An issue at the start was the lack of laboratory capacity and the delay in getting samples tested. Typically, it took six or seven weeks, which, because of the demand, was pushed out to several months. Maybe there is laboratory capacity in some of our universities, given their geographical locations, that could be used to do local sampling. I am thinking about whatever can be done to increase the rate of testing.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
In fairness, in Engineers Ireland's evidence to the housing committee almost a year ago, it made it clear that some of its members – I would argue most of them, but that is my interpretation – had a major concern about IS 465. That evidence was given in front of representatives of the National Standards Authority of Ireland. Is Mr. Owens concerned that it has not even issued interim guidance, considering that it has been sitting on the evidence for months? This evidence is from eminently qualified geologists of international standing, including petrographers.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Is a certificate of remediation provided for option one under the current scheme?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
There is some doubt about that. The reason I raise this is that the insurance and banking representatives present have said they will issue insurance or mortgage cover based on a certificate of remediation. What happens if there is a certificate of remediation and the person follows the guidance of the Department, or of this State, stating it is not a problem to build on the foundations? That is essentially the guidance. Is Mr. Owens concerned that this could go wrong?
I have a supplementary question. There is evidence from abroad, but also from Ireland, of the danger of deleterious materials in foundations. This is not to be taken lightly. In fairness to Mr. Owens, he has said the foundations should be tested. Is he concerned that people are not even being asked to test them? If people realised what was going on, they would be astonished. We are essentially asking lay people – I am a lay person when it comes to engineering – to build on existing foundations without even testing them, on the basis that doing so is absolutely fine. Does that concern Mr. Owens?
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We are asking people to take on the remediation option recommended by engineers working for the Housing Agency, who operate under IS 465, which many Engineers Ireland members believe is not fit for purpose because those engineers are indemnified. Is this not crazy? Basically, intelligent engineers who are indemnified are making recommendations and following the guidelines to the letter even though doing so is madness? Engineers would never take that risk if they were not indemnified. How do we square that circle?
Mr. Cian O'Dowd:
On that point, the foundations are within the scope of the review. From what I can recall, the review, which I do not have in front of me, was commenced in late 2021. Three years later, naturally the hope is that there will be clarity on the question of foundations, but ultimately it all hinges on a finalised standard being presented.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I have a question for the BPFI representatives. Obviously, while the BPFI has a duty of care to ensure sound loans and investments, are its representatives concerned about the professional view of Engineers Ireland on IS 465 being unfinished, the failure to test foundations and the federation's having to operate on the basis of a certificate of remediation in this environment?
Mr. Brian Hayes:
It is not the first time I have heard it, it is fair to say. We said in our opening statement that it is critical that we get a position on IS 465 as soon as possible because we will not have certainty without it. I agree it is critical for all of us. We operate in a commercial way but this commercial way is dependent on the sign-off of the experts and professionals. Without this, all of the pipeline and conveyancing chain is broken, as Ms Byrne described.
It is a critical issue. I do note that what we have seen thus far is an initial view, following the publication of the freedom of information request by the group in Donegal. We must speed up now and get to the end point on this with some certainty. I understand it will take some time because of the testing. One of the points Mr. Owens or Mr. Garrett made earlier – I only discovered this recently – is that I am not sure if the sampling and the testing is even done in this country. I am not an engineer, but it is a crazy situation that we are sending these samples from homes externally, given the really serious crisis that faces people that we cannot do it here close to the site in order to have some certainty on the materials that are in it. "Yes" is the answer to the Deputy's question. We need to get a decision on this.
Joe McHugh (Donegal, Fine Gael)
Link to this: Individually | In context | Oireachtas source
On a point of information, it was done here at one stage in some of our third level institutions, not in universities, but it has not been done for a long time. I agree that it is ridiculous that these samples have to be sent across the water.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I am going to say it again. The other point is that we are facing the biggest redress scheme in the history of the State. When we throw in apartments and everything else, it is going to be multiple billions for the generation or generations to come. I ask Mr. Owens again if he does not find it astonishing that, essentially, we had to have an affected homeowner, who is a professor in climatology, reaching out to international peers and getting international assistance rather than this State ensuring that it was done and gripped by the State? In other words, we were fortunate that an affected homeowner came from the international academic fraternity. There was one engineer who I will name today, Ambrose McCloskey. To my recollection, he was the first engineer to express profound concern about IS 465. He felt that what he was seeing in terms of the deterioration of the buildings was not reflected in IS 465. He started to robustly challenge it, and then more engineers joined him. Then we had a community of engineers who expressed profound concern but even after all of that. it took people who had experience in North America and in Europe - outside the State. The point that Mr. Hayes makes is about going outside the State for testing, but it was not coming from the State, it was coming from affected homeowners. I would like to hear a comment on that from Mr. Owens. I will wrap up in a few minutes.
Mr. Damien Owens:
There should be enough demand, if I can use that phrase, to justify having those testing facilities within the State. One thing everybody needs to learn from this going forward is that greater oversight is needed of the entire construction process. I know some of that was done with the building control amendment regulations, BCAR, in 2014. There have been huge improvements. When you are dealing with critical infrastructure such as housing and infrastructural developments, given that we are experiencing a housing shortage, the effort spent on remediating defective properties could be better spent building new properties.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Absolutely. My last question is to Ms Murdock. I have asked Mr. Hayes and Ms Byrne about their concern about what we have heard. Mr. Garrett has given important evidence to the committee today. Right now, the State essentially says that the foundations are okay and that we are not required to test them. If a homeowner is recommended for option one, they just rebuild on the existing foundations. That is the number one concern.
Number two is that the emerging evidence on IS 465 is that it is not fit for purpose and that we will have to consider a wider range of deleterious materials. In other words, we have – to use my own words - a standard that is not fit for purpose and a recommendation not to test foundations. Does that cause concern to the insurance industry?
Ms Moyagh Murdock:
Obviously we are there to insure the finished product. We have put our trust in the system to ensure that the remediation does meet the standard, and that the assessment is done by competent, qualified professionals, some of whom are on the register or members of Engineers Ireland and some of whom are obviously in the Housing Agency. Honestly, I probably would be concerned. It is no different than an insurer trusting something like the fire certification in a home, and that it is being done by professional bodies. The insurer is not there to second-guess those professionals, they are there to take the certification in good faith. I do think it needs to be bottomed out. It is not for us to second-guess it but we would like to see it resolved as soon as possible. The work that the National Standards Authority of Ireland is doing must be completed as quickly as possible. We will stand over our commitment to insure, on the basis of the remediation certificate but it must be based on science. That is our position. We would not want to stand in the way by saying we second-guess it, but we do depend on professionalism and integrity to get it right.
Pádraig Mac Lochlainn (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I thank Ms Murdock. That is clear. Both the representatives of the insurance and banking industries are concerned about the evidence here today. Engineers Ireland has deep concerns on behalf of its members about getting to the point where we have science we can rely on that is robust and everybody can move forward on that basis. We are in a mess and hopefully we will find our way out of it.
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
Deputy Doherty wants to come in again, and I want to leave, so somebody will have to take over in a while.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I was just looking through some of my emails from different concerned individuals. One person said they contacted their insurance company and told them they had cracks in the wall because they thought if something happened and they did not disclose it, they would not get a settlement payment. They got a phone call from the insurance company - I will not name the insurance company, but it seems to be a trend among the large players - to say the person's insurance was cancelled.
Different houses are at different stages but in regard to deleterious material, we have been in houses where there is a fire risk. The risk of fire is a lot more advanced and obviously the fire will spread faster as well because of the structure of the blocks and the fact that they are breaking down from the inside. The fire risk itself is an issue because plugs have become unsafe due to the cracks, moisture and cables being exposed. I can understand the response of the insurance industry but what I am concerned about is whether the industry is going to sign off on a house that is partially remediated. I refer to when people actually tell a company that the outer blocks were done but when they are asked the question if their house is in good repair, they will have to declare that they have deleterious material in their inner block. The inner block is the one that holds all the plugs and sockets, and all the rest. Deputy Mac Lochlainn and I have been in houses where they cannot use the plugs. They cannot put on their dishwasher or tumble dryer and everything has to be moved into another room because of what is happening with the inner block.
I say that because I am worried about the issue. I have two questions. Does anybody know when we are likely – Mr. Owens in particular might have some insight into this - to have the standard review completed? Do we have any indication or does he have any insight that he could give us? It has been going on for the past three years.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Okay. Is it fair to say that the expectation is that the standard will change?
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I thank Ms Murdock, Mr. Hayes, and Ms Byrne for their answers. They were very clear. If there is certification, they will provide either a mortgage if somebody wants to purchase that house or get a top-up loan or refinance the house or they will insure the house. The standards are going to change. When that happens, will the companies still provide a mortgage for a house that was certified under the old standard?
That is what is going to happen. The standards are going to change. I do not know when it will be applicable but all the science is telling us the standard is changing. When the standards change, can the banks give the guarantee they are giving to homeowners today with regard to remediating their houses? I presume the BPFI's organisations will say the facts have changed and what they once thought was appropriate, even though there is a certification for it, is no longer so as the standard has now changed and it is not at the same standard.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I refer to the commitment that was given that the house would be mortgageable if there was a certificate of remediation. The point I am making is that the certificate of remediation will be based on an old standard. There will be a new standard and we do not know what that will say. I am asking whether there is a major risk for those who are rebuilding at the minute. If that standard changes in certain ways, the game changes for the banks and one cannot be guaranteed-----
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The certification will not change. The certification is provided on the basis of the work and the standard that existed at the time. The problem is the mortgageability of the houses in a future event and we all know around this room that the standards are about to change. By the time that somebody comes in, for example were Deputy Durkan to come in to buy that house in Donegal that has been remediated on the outer block, those standards will have changed. He will have a certification and will go to the bank, whether Bank of Ireland or AIB, which will say, "but that was an old standard. There has been a four-year review and they are now saying X, Y and Z."
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is exactly future mortgageability and somebody selling their property. That is exactly the case I am talking about.
Mr. Brian Hayes:
With a future mortgage, if somebody is looking to take out a mortgage on one of the properties that has been remediated and that has been certified on the basis that it has reached that standard within the standard that is there, a mortgage will be applicable in that circumstance. That is the commitment we have given. If there is a new standard as the Deputy has suggested, that is something we would have to look at at the time. We do not have that new standard now. That is something we are going to have to respond to at the time of a new standard.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Can I make the point, and this is very real, if I am that person who is going through the scheme at the minute and if I have had to find the €70,000 or €80,000 myself to rebuild my home or do the outer leaf or whatever the part is and the standards change - which they will - I need to know that I can refinance the house or sell it in the future. I need to know that the piece of document that I have which certified that the house was built under the criteria of the day, will be okay as far as the bank is concerned in three of four years' time when somebody is looking for a mortgage. I need to know because the standards are going to change. Everybody is pointing in the direction that what is happening at present is not appropriate. It is a desktop exercise. Engineers do not like it, homeowners do not like it and we all know the direction of travel. That is the question because that is too big a risk for anybody. The point is that Mr. Hayes has made it clear that the guarantee is there. Is the guarantee there, however, if the standard changes for houses that are remediated under the old standard?
Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I apologise for interrupting but I have to leave and I need someone else to take over the Chair.
This group has presented some very important information to the committee to enable the committee and the House to make its judgment at a later stage. In relation to insurance, I have always had the view that everybody must be involved, that is, the banks, insurers, engineers, the construction industry, everybody. This will come down the tracks again in some other shape or form and some other generation will have to deal with it unless it is dealt with now. The points that have been raised by members of the committee are indicative of that. Remember that public confidence in the system has to be retained. The constituents of the Members of the House are the ones who suffer and are suffering all the time and they have to rely on their elected members in a political situation to enable a proper judgment to be made.
I will leave our guests with a point relating to fire, storm, flood and theft. I had a famous case once upon a time when, during the course of construction - and there was construction insurance separate from everything else in respect of households as well - a lightning strike took a roof right from a house, right from the chimney stack above the attic, right down and through the foundation. The insurance company said it did not fall within the criteria until we told them that it was a storm. It happened to be an electric storm but technically it was an storm. I will leave with that.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
To be clear, I do not suggest the financial institutions should. This is drawing a spotlight to the situation and where people are at. If the standard changes to say that the remedial works should require the taking out of foundations, I would find it very hard to see a financial institution turning around and providing a €400,000 mortgage to someone who seeks to buy a house and who is stating he or she has the certificate when a four-year expert review was done that said the foundation should have been taken out of that house.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It is. That is why everybody said we have to get this standard review done as quickly as possible.
I will ask the same question of Ms Murdock. Obviously the insurance industry is integral to this as one cannot get a mortgage without insurance and there is also construction insurance for self-builds. What if the standard changes?
Ms Moyagh Murdock:
It is important to clarify whether the standard is going to change or is it going to be deemed wrong in the first place. That is the big concern, namely, that it may be the wrong standard. I would not doubt that standards improve over time, no different than vehicles and the standards that they are insured against. They all change as newer models come out or newer enhancements go into homes and the value goes up. Our position would be that we hope that if there are modifications to the scheme, the structure of the home itself and the integrity will not be compromised and there will not be a greater risk to those homeowners than any other homeowner would experience.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The whole thing is evolving. We talked about mica at the start and then finding out that mica was not involved. There was a whole learning experience and the redress group obviously has engaged with people to try to make sure that there is an understanding in organisations. I know that the BPFI have met Insurance Ireland a number of times and the redress group has done the same. Is there now a small group looking at this within Insurance Ireland, because it is an evolving scenario? The first thing in terms of being able to deal with this is having a complete understanding of where it is at. Is that something that is there or is it something you are looking to set up within Insurance Ireland, in the sense of having some of your partners and the experts there coming together and gaining a better understanding of the situation? I say this genuinely. While insurance is more tangential to the issue, it is really important to the homeowner, as if you do not get the insurance right, you will not get the mortgage. Is that is something that is done or something Insurance Ireland would look into?
Ms Moyagh Murdock:
Absolutely, it is something we have been doing and we are looking to attempting to provide more information to the homeowners themselves.
We will bring details of today's session to the attention of our members.
We are also engaging in the larger focus group, and we have one member who comes to that with us who is involved in the area of professional indemnity for the professional bodies that are working on this as well. In addition, it is important to say that the Central Bank has also engaged with insurers directly to get answers to questions from a consumer protection perspective. That is a very important topic. It would be wrong to use the word "appreciate" in this regard because none of us can understand or know how it feels to be living in a home like this if you are not living in one yourself. However, we do see the pressure and the onerous nature of this for people who have been going through it for years and seeing their homes deteriorate as time goes by while the solution is being worked on. As stated, it is a very important topic/. We will continue to engage at every level. In fact, we did ask ourselves along here today, so we want to be part of the conversation.
Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I thank Ms Murdock.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I have two very quick questions. If there is somebody starting their rebuild next week who has not had their foundations tested, would Mr. Owens's advice and the advice of Engineers Ireland be to hold off until they can get that test done?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Sorry?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It is in Mayo too.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Yes, of course it would. The last thing we want to do is delay matters, but we do not want to find ourselves in a situation where they have to start rebuilding once more. For clarity, is Mr. Owens recommending that people have their foundations tested before they start to rebuild? Is that his professional opinion? I know it is up to individual homeowners.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is right.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
For fairness, if the new standards say that the foundations should be included, then it would be absolutely fair to have retrospective funding in respect of anything that is paid out at this stage.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
For somebody starting to build their own home today and having their blocks delivered, what guarantees are there that they do not contain the same materials that caused all the damage?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That would obviously have been done in the first place when people were impacted by the defective block issue. That would have been done in the first place, where the engineer would have signed off on everything. I am just asking-----
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That is what I am asking Mr. Owens. Do the new regulations mean that people could have confidence in the blocks that are being delivered to them today, provided the engineer involved did their job?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
So a quarry could not be supplying damaged blocks today. Is that Mr. Owens' view?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Are the current regulations fit for purpose in the context of ensuring that this will not happen again?
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
The current building regulations and regulations for the quarries.
Rose Conway-Walsh (Mayo, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
That concludes proceedings. I thank all of the witnesses for being here. It was a very valuable session, and I thank all the contributors and members. We look forward to next week's meeting.