Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context

Question 6: To ask the Minister for the Environment; Heritage and Local Government the changes he will make to the system of bonds, whereby, local authorities would in future normally insist on a requirement that bonds remain in place until the housing estate is taken in charge by the local authority, or in the case of apartments, until the development is complete and transferred into the control of the managing authority; the number of local authorities who have not insisted on such a practice to date; the number of housing and apartment developments involved; and if he will make a statement on the matter. [7011/11]

Willie Penrose (Longford-Westmeath, Labour)
Link to this: Individually | In context

Sections 34(4)(g) and 180(2)(b) of the Planning and Development Act 2000, as amended, enable planning authorities to attach conditions to grants of planning permission for development requiring the provision of financial securities sufficient to safeguard the satisfactory completion of essential infrastructure and amenities in those developments, and, if a development is not subsequently completed satisfactorily, to apply a security given under section 34 for the satisfactory completion of that development.

In line with advice provided in my Department's Development Management Guidelines of June 2007 and policy guidance as set out in Taking in Charge of Residential Developments of February 2008, the use of such conditions is followed generally by all planning authorities. Securities are lodged with the planning authority until such time as either the authority is satisfied that the development has been completed in accordance with the terms of the planning permission or the development is taken in charge.

It is a matter for the planning authority to determine the level and type of security that will be required for each residential development. The amount of the security, its duration and the terms on which it is required to be given should enable the planning authority, without cost to itself, to complete the necessary services to a satisfactory standard in the event of default by the developer. My Department does not keep statistics on the inclusion of such bond or security conditions as part of granted permission.

This issue has been considered by the high-level expert group on unfinished housing developments in the context of housing developments that have stalled and remain unfinished and where there are difficulties in securing completion of the development. I expect to receive the final report of the group in the near future. I will consider its findings and recommendations which I understand will include measures to address the issue of bonds and securities in respect of the satisfactory completion of developments.

Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context

I extend my congratulations to the Minister, Deputy Hogan, and the Ministers of State, Deputies Penrose and O'Dowd, on their appointment. The question arises as to why there are any ghost estates if the provision to which the Minister of State referred is as satisfactory as he indicated. The practical experience in many cases is that a bond was provided on foot of a planning permission for a period of seven years but the developments have not been completed within that timeframe. The difficulty is that there is little consumer protection. If a developer goes into receivership, for example, the bond is quite low in the pecking order of creditors. The receiver will generally try to negotiate the bond down and the shortfall must then be made up by the public purse.

A serious problem also arises where there is an inadequate bond and where the developer goes back to the bank and the latter refuses to renew the bond. The local authority is not then in a position to force developers to finish estates because if they cannot get money for a bond they will not get money to complete construction. It is a circular issue and the people who are ultimately paying the price are those who bought homes in these estates and have to live there. The money that has been provided, although welcome, will fall far short of what is needed. The Exchequer should not have to pick up costs that are rightly the responsibility of private developers. Is there anything in the area of consumer protection that can be strengthened to address this issue? Will the Minister of State insist that bonds remain in place until the estate is taken in charge by the local authority or the management company?

Willie Penrose (Longford-Westmeath, Labour)
Link to this: Individually | In context

There are clearly issues in regard to bonds, especially where developers can no longer be contacted or have gone out of business. This is a particularly difficulty when working with an insurance bond rather than a cash bond, the latter being far more accessible and liquid. Bonds were never designed to deal with the nature of the difficulties that have arisen. Their intended purpose was to ensure that all work would be completed in accordance with the terms and conditions of the planning permission. The duration of bonds is also an issue. I agree with the Deputy that we must not have a situation where local authorities, which are already cash-starved, are picking up the costs.

The expert group on unfinished housing developments is of the view that the issue of securities and bonds merits further examination, including the use of liquid security such as cash deposits, coupled with something that may meet the Deputy's approval, namely, careful phasing of developments in a sequential manner to minimise the working capital impact. I will carefully consider all the recommendations in the group's final report.