In Friends of the Irish Environment v An Bord Pleanála [2019] IEHC 80, Simons J held that developers are precluded from using the process provided for in section 146B of the Planning and Development Act 2000 (the PDA) to extend the duration of a planning permission.

The Court concluded that a developer could not invoke the general power under section 146B for An Bord Pleanála to alter a strategic infrastructure development upon request to seek an extension but, rather, an extension of the duration of a planning permission could only be granted under section 42 of the PDA. In doing so, he emphasised that section 42 of the PDA (as amended) is precise and deals with “one specific contingency, namely the extension of the duration of a planning permission”.  Simons J confirmed that the conclusion was informed by the presence of safeguards in section 42 which were absent from section 146B.

For further information on this topic please contact, Alan Roberts, Partner, Niamh Collins, Lawyer or any member of A&L Goodbody’s Environmental and Planning team.

Further provisions of the Land Development Agency Act 2021 have been commenced with effect from 31 March 2022, as follows:

  • Section 11 (Revocation);
  • Section 14 (Functions of Agency);
  • Section 15 (Services to local authorities);
  • Section 17 (Chief executive of Agency);
  • Section 21 (Staff of Agency);
  • Part 3 (Funding of Agency) (except insofar as it is already in operation);
  • Part 4 (Agency to establish subsidiary DACs);
  • Part 7 (Register and acquisition of relevant public land by Agency) (other than subsection (7) of section 55);
  • Part 8 (Compulsory purchase); and
  • Part 10 (Miscellaneous).

The only provisions of the Act remaining to be commenced at this point are:

  • Section 55(7), which requires any calculation of the market value of relevant public land to take into account the obligations in Part 9 that apply to the development of dwellings on relevant public land; and
  • Part 9 (Requirement in relation to development of dwellings on relevant public land and former relevant public land).

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

Key Points

The Regulation of Providers of Building Works Bill (the Bill) continues its progress through the Irish legislature and has now reached the Committee stage (the third stage, before the Dáil). This third stage will see the Bill debated before the Select Committee on Housing, Local Government and Heritage for Committee State, at a date to be confirmed.

The purpose of the Bill is to raise standards in construction through the establishment of a register to be known as the Construction Industry Register Ireland (CIRI). The aim of the CIRI is to regulate providers of building works by requiring all entities who provide building services to register with CIRI. This registration body will determine the standards and competence required from providers of building works. It will also investigate and adjudicate complaints against them.

CIRI’s main function will be to assess the competence and eligibility of any entity or person who requires registration, using criteria laid out in the draft legislation. These criteria will consider relevant experience or qualifications in the construction industry or a combination of both.

CIRI will establish an Admissions and Registration Board which in turn will establish committees to assist and advise it in relation to its functions. The members of the Admissions and Registration Board will be appointed by the Minister for Housing, Local Government and Heritage, Mr Darragh O’Brien TD (the Minister).

Registrants will be required to have public liability insurance and employers’ liability insurance if it applies. There will be a statutory Admissions and Registration Board and Appeals Board.

The Bill also allows for complaints against registered builders to be made on a number of grounds, in particular for providing building services in a category in which a provider is not registered. It also provides for a range of proportionate sanctions to be imposed after investigation.

Entry onto CIRI will be open to all builders, whether sole traders, partnerships or registered companies, who can demonstrate that they are competent to carry out works in the category for which they are seeking to register. Companies will be able to register by contacting the CIRI office or visiting its website and completing the online application form.

Background

Previously known as the Building Control (Construction Industry Register Ireland) (CIRI) Bill 2017, the General Scheme was first published and underwent pre-legislative scrutiny in 2017. This legislation has been long since supported within the construction industry.

The Construction Industry Federation (CIF) established a voluntary register in 2014 and CIRI will continue to be operated by the CIF, following the enactment of the legislation. Approximately 800 entities are currently registered on a voluntary basis.

The Bill is largely motivated by the Government’s wish to avoid the reoccurrence of housing defects that were the legacies of poor construction design, workmanship and materials. Something which has, to quote the Minister,

“impacted so significantly on the lives of so many of our people. By driving regulation in the construction sector, the State will ensure the mistakes of the past are not repeated and we have a more sustainable housing system and construction sector in the future.”

The Bill forms part of the Government’s national plan for housing, ‘Housing for All’, which sets out an ambitious target of delivering 300,000 new homes by the end of the decade to address our national housing crisis. As part of that plan, addressing the legacy of poor workmanship and regulatory failure while preventing repeated mistakes in the future, has been a priority for the Government.

Provided the Bill is passed, it is envisaged that the register will be set up over the next two years, with registration being mandatory from 2024.

Purpose of the Bill

The main objective of the Bill is to develop and promote a culture of competence, good practice and compliance with the building regulations in the construction sector.

The Bill provides for a mandatory register of builders, contractors and specialist sub-contractors, subject to a limited number of exceptions. Builders will only be permitted to carry out building works for which they are registered to provide.

The Bill aims to expose the ‘black market’ economic activity taking place in the construction sector and ensure fairer competition for compliant building operators.

Given the urgent need for housing in Ireland, the Bill aims to provide confidence that homes are built to the highest standards and that any professional services used are also of a high standard.

The Bill will also complement a number of key measures the Government has in place to strengthen the arrangements for the control of building activity following the building failures that have emerged in recent years. These measures include the revised Building Control (Amendment) Regulations 2014, the activation of registration arrangements for construction professionals provided for in the Building Control Act 2007, the development of the nationwide online building control management system and the move to risk-based, standardised inspections by local building control authorities.

Key Provisions

  • Part 3 provides for the establishment of the Admissions and Registration Board, Committees of the Board and the Appeals Committee. It provides that all members of the Admissions and Registration Board and the Appeals Committee shall be appointed by the Minister and that the Minister shall have a majority of nominees on these. It also contains appropriate safeguards to ensure the independence and objectivity of the registration board and the appeals committee;
  • Part 4 provides for the establishment of CIRI and the competence criteria required to be eligible for registration;
  • Part 5 provides for the operation of CIRI, and outlines prohibitions against operating as a provider of building services while unregistered. It also outlines the application process and the requirements for registration as well as renewal of registration;
  • Part 6 provides for the handling of complaints and appeals from applicants regarding registration decisions and from complainants in respect of the activities or conduct of registered members. It outlines the role and powers of the inspector who may investigate the complaint as well as the roles of the Board, the Appeals Committee and the High Court in the imposition of sanctions; and
  • Part 7 contains some miscellaneous provisions including provisions for offences and penalties. It provides for the publication of sanctions and convictions, arrangements for restoration to CIRI and transitional arrangements in the event of a change in the appointment of the registration body.

Concerns and possible Pitfalls

Protectionism 

There are concerns that the Bill may limit who can participate in the market and also how the criteria for registration will be applied. It will be important that CIRI does not discriminate against builders established in other jurisdictions, and it is hoped that online registration will alleviate this concern somewhat.

Independence and objectivity of Registration Board and Appeals Committee 

  • Given the broad range of academic qualifications and practical experience within the construction industry, it is crucial that applicants’ adherence to the competence and experience criteria (as set out in the Bill) is assessed as objectively and independently as possible. This will be critical to the acceptance and success of CIRI.

Cost

The administrative and cost burden of CIRI must be mitigated, particularly for small builders;

  • Requirement for CPD must also be proportionate to the complexity of the work being carried out;
  • Once the Bill is enacted and the registration body is nominated, CIRI is likely to incur a substantial pre-commencement establishment cost; and
  • To establish the register and enable a smooth operational transition, the CIRI will need sufficient funding to establish the statutory regime.

For further information in relation to this topic, please contact Conor Owens, Partner, Tom Sexton, Lawyer or any member of ALG’s Construction & Engineering team.

Photo of Michael Kennedy

The decision in John Paul Construction Limited v Tipperary Co-Operative Creamery Limited [2022] IEHC 3 relates to an application for leave to enforce an adjudicator’s decision pursuant to the Construction Contracts Act 2013 (the Act). It further endorses the key principles of adjudication, including “pay now, argue later”, which have been considered in detail in Principal Construction Ltd v. Beneavin Contractors Ltd  [2021] IEHC 578 and Aakon Construction Services Ltd v. Pure Fitout Associated Ltd (No. 1) [2021] IEHC 562.

A&L Goodbody LLP on record for John Paul Construction Limited (JPC).

Summary

JPC was engaged by Tipperary Co-Operative Creamery Limited (TCC) under a construction contract (as defined under the Act) to carry out development works at TCC’s milk drying and evaporation facility in Tipperary town. Pursuant to Section 6(2) of the Act, a notice of intention to refer was issued in relation to a payment dispute relating to delay events and prolongation costs.

The adjudicator issued a decision in favour of JPC, which ordered TCC to pay JPC the sums awarded within four weeks. In circumstances where TCC failed to pay the sums awarded, JPC sought leave to enforce by order of the High Court in accordance with section 6(11) of the Act. Section 6(11) of the Act provides that an adjudicator’s decision can, with the leave of the court, be enforced in the same manner as a judgment or order of the High Court.

TCC sought to defend the application based on two grounds:

  • that the adjudicator failed to comply with fair procedures and natural justice; and
  • that the adjudicator reopened a matter which had previously been decided upon in a separate adjudication between the parties.

In finding that the adjudicator’s decision was enforceable, Mr Justice Simons held that:

The legal effect of an adjudicator’s decision is merely to impose an obligation to make a payment in the interim…Certainly, there is no call for the court, on such an application, to carry out a detailed review of the underlying merits of the adjudicator’s decision…This does not affect the right of either party to pursue arbitration or litigation thereafter.

The role of the Court in enforcement of adjudications is therefore narrow.

Leave to Enforce Principles

Under subsections 6(10) and (11) of the Act an adjudicator’s decision is binding in the interim, unless and until it is superseded by a subsequent decision reached in arbitration or court proceedings. Even though it is not final and conclusive, the adjudicator’s decision gives rise to an immediate obligation to pay. This is described as “pay now, argue later”.

The Court noted a “twofold rationale” for its limited role in an application to enforce. First, the adjudicator’s decision is not “final and conclusive” in that the “unsuccessful party is entitled to a full rehearing of the underlying payment dispute – in subsequent arbitral or court proceedings – and has a right to recoup any monies paid…”. Second, statutory adjudication is designed to be far more expeditious than arbitration or litigation. It would therefore “undermine the legislative policy of “pay now, argue later” were the court to refuse to enforce an adjudicator’s decision precisely because the adjudicative process failed to replicate that of conventional arbitration or litigation”.

Grounds of Resistance

In resisting the enforcement proceedings, TCC sought to rely on two main grounds:

1. Fair procedures

Importantly, on the grounds of fair procedures, the Court acknowledged that it would not enforce an adjudicator’s decision where there has “been a blatant or obvious breach such that it would be unjust to enforce the immediate payment obligation”. This clearly indicates that the Court retains a discretion to refuse to enforce. However, this is a high bar to meet.

Alleged failure to consider defence
As its main ground of resistance, TCC inferred that a particular section of its defence had not been considered, as opposed to “expressly excluded” by the adjudicator. The Court noted that these were two distinct scenarios. The Court adopted a pragmatic approach and, in rejecting TCC’s attempt to “embark upon a reconsideration of the underlying merits of the adjudicator’s decision”, it noted that it would have regard to:

the adjudicator’s decision in the round: the decision is not to be parsed line-by-line. Where a respondent has sought to raise a number of distinct defences…or has raised a counterclaim, then the decision should record the adjudicator’s findings on each of these distinct defences. The position in respect of a single line of defence which comprises a number of interrelated issues is otherwise: the adjudicator will not necessarily be required to set out separate findings on each and every subtopic. It is sufficient that the substance of the defence have been addressed in the decision.

The Court stated that this position is “broadly similar, but not identical” to that adopted in England and Wales.

Allowing “new” claim to be made
TCC also alleged that the adjudicator had permitted a “new” claim to be made during the course of the adjudication in breach of fair procedures. In rejecting this ground outright, Mr Justice Simons stated:

this complaint is premised on a misunderstanding on the part of the employer. The supposed new claim is, in fact, simply a better particularised version of the original claim.

It is important to note that the revised claim was provided as a result of a request for further and better particulars by TCC and that the adjudicator allowed TCC nine extra days to respond. The Court stated that this period was “reasonable in the context of a statutory adjudication, having regard to the need for expedition” and it noted the detailed supporting discussion in Aakon [No.1].

2. Matters determined by first adjudication

TCC claimed that the adjudicator exceeded his jurisdiction in purporting to determine issues which were already the subject of an earlier binding adjudication decision (delivered by the same adjudicator). The Court rejected this argument on the basis that the first adjudication related to variations and “did not involve a claim for an extension of time nor were prolongation costs sought”. The Court was satisfied that the adjudicator’s decision “did not trespass upon issues which had been the subject of a binding determination in the first adjudication”.

Additional Issues – Judicial Review and the Act

JPC had submitted that, in resisting enforcement on alleged breach of fair procedures, TCC had attempted to judicially review (JR) the decision via the back door and that this was time barred due to the three month time-limit for JR under Order 84 of the RSC having expired. Ultimately, the question of whether adjudication under the Act is amenable to JR under Order 84 was not addressed in circumstances where TCC had failed to demonstrate that the adjudicator breached fair procedures and / or exceeded his jurisdiction. The Court noted “the opposition failed on the merits, rather than as the result of any supposed failure to comply with the three month time-limit”. Although the Order 84 issue was not decided upon in this matter, it is important and it is likely to arise before the Court in due course. It is clearly necessary for the Court to provide direction on this issue.

Final Comment

This judgment clearly sets out and reaffirms the principles of the Act, in that:

  • an adjudicator’s decision can, with the leave of the court, be enforced in the same manner as a judgment or order of the High Court
  • the adjudicator’s decision gives rise to an immediate payment obligation
  • leave to enforce does not preclude the paying party from pursuing the matter via arbitral or court proceedings

Importantly, the Court elaborates further on the principles set out in Aakon [No.1] and Principal Construction to the extent that it is now clear that the role of the Court in the enforcement of adjudications is particularly narrow and, although the Court retains jurisdiction under the Act to refuse leave to enforce, that the Court will not carry out a detailed review of the underlying merits of the adjudicator’s decision in this regard.

For further information in relation to this topic please contact Conor Owens, Partner, Michael Kennedy, Senior Associate or any member of A&L Goodbody’s Construction and Engineering team.

As detailed in our earlier post, the Land Development Agency Act 2021 was signed into law on 21 July 2021 but further Ministerial order was required for its provisions to be commenced.

The first such order has been made and appoints 15 December 2021 as the commencement date for the following provisions of the Act:

(a) Part 1 (Preliminary and General), other than section 11 (Revocation);

(b) Part 2 (Land Development Agency), other than sections 14 (Functions of Agency), 15 (Services to Local Authorities), 17 (Chief Executive of Agency) and 21 (Staff of Agency);

(c) section 25 (Share capital of Agency);

(d) section 26 (Shares in Agency);

(e) section 27 (Payment of dividends);

(f) section 30 (Amendment of National Treasury Management Agency (Amendment) Act 2014);

(g) Part 5 (Dissolution of body established by Order of 2018);

(h) Part 6 (Financial statements and public accountability); and

(i) section 79 (Application of Freedom of Information Act 2014 to Agency).

 

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

The Planning and Development (Amendment) (Large-scale Residential Development) Act 2021 (the LRD Act) sets out proposed new arrangements for “large scale residential developments” (LRDs), which will supersede the existing Strategic Housing Development (SHD) process, due to lapse on 25 February 2022. The SHD process was introduced in 2016, with the intention of speeding up the planning permission process for “well designed large-scale housing developments” on land already zoned for residential developments. The SHD provisions were always subject to a sunset provision, with an original expiry date of 31 December 2019. That date was pushed out to December 2021 following a review of the SHD system in 2019, and again to 25 February 2022 as a result of the Government’s COVID-19 related extensions to planning timeframes.

The LRD Act does the following:

  1. Inserts a new definition of “large scale residential development”/”LRD” into the Planning and Development Act 2000 (the PDA), which is very similar to that applicable to SHD. Specifically, the LRD Act defines a LRD as:
    • A development comprising 100 or more houses;
    • Development of student accommodation units that includes 200 or more bed spaces; or
    • A development of a combination of student accommodation and houses, where such development includes at least 100 or more houses or 200 or more bed spaces.

A key change from the definition of SHD is that the LRD provisions will allow for up to 30% of the gross floor space of the proposed development to be for commercial use – up from 15% under the SHD framework.

  1. Provides for applications for LRDs to be made to local planning authorities in the first instance, as opposed to An Bord Pleanála (the Board). This is in contrast to SHD applications, which go directly to the Board. Following the planning authority’s decision on a LRD application, an “LRD appeal” to the Board will be available. Consequently, LRDs will be subject to a potential “two-step” consenting process once the Bill is enacted, with judicial review also available following the Board’s decision.
  2. Establishes a mandatory, time-bound consultation process with the planning authority before the developer submits its planning application. Following that consultation, the planning authority must issue an “LRD opinion”, which states whether the relevant documents submitted constitute a “reasonable basis on which to make an application for permission for the proposed LRD“. The Regulatory Impact Analysis submitted with the General Scheme of the Bill in July 2021 noted that the intention of this process is for developers to submit higher quality applications, and in turn to reduce the number of appeals to the Board.
  3. Provides for an exception to the above framework where the application is located within a Strategic Development Zone (SDZ), the zoning of which facilitates the proposed use. In such instances, the developer may submit the relevant application directly to the planning authority without first needing to obtain a LRD opinion. The new pre-application consultation processes are not mandatory in these circumstances, and the new definition of “LRD appeal” does not apply to such applications. This position is currently the case for applications for planning permission within a SDZ.
  4. Sets out a transitional framework for existing SHD applications. Once the LRD Act commences, the existing SHD process will remain relevant where:
    • There is an application for SHD already pending
    • The developer has already completed pre-application consultation with the Board, and the Board has already given its opinion. A SHD application can then be made within 16 weeks of commencement of the LRD Act, i.e. a deadline of 16 April 2022, (allowing for the additional nine day period under section 251 of the PDA). Developers must notify the Board of their intention to take this route
    • Requests for consultation have been made on or before Friday, 17 December 2021.  Applications can be made within 16 weeks of the Board’s opinion. Again, developers must notify the Board of their intention to take this route.

The LRD Act also removes the current mechanism for amending an existing SHD permission under section 146B of the PDA. Accordingly, holders of SHD permissions will not be able to alter them using this route.

For further information on this topic, please contact Alison Fanagan, Consultant, Jason Milne, Partner or any member of A&L Goodbody’s Environmental and Planning team.

The Residential Tenancies (Amendment) (No.2) Bill was signed into law on 11 December 2021. Its main provisions are summarised in this post.

What is the Bill seeking to achieve?

This Bill has 3 primary purposes, as follows:

  1. An amendment to the current provisions around rent increases in RPZs, so that those increases will now be to the rate of general inflation evidenced by the Harmonised Index of Consumer Prices (HICP) or 2%, whichever is the lower – in other words, rent increases track inflation, subject to a cap of 2% per annum;
  2. The introduction of what the Government refers to as “tenancies of indefinite duration” by removing the landlord’s ability to terminate a Part 4 tenancy on a no fault basis at the end of the 6 year period;
  3. A temporary waiver in respect of annual registration fees in respect of each further Part 4 tenancy that exists on the commencement of the requirement for the annual registration of tenancies with the RTB (expected in Q1 2022).

Rent increase provisions

These provisions amend the current prohibition on any rent increase in an RPZ from exceeding general inflation (as recorded by HICP) to insert a new condition that the rent last set cannot increase by more than 2% per annum pro rata.

A review of this provision is to be carried out between 12 and 15 months after it comes into operation with a report on that review to follow within 3 months.

As was the case previously, the rent-setting restrictions do not apply where a there has been no tenancy of the property for the immediately preceding 2 year period (or 1 year for protected structures). There are no other changes with regard to the setting of rent / RPZ, exceptions, notice provisions etc..

The section also provides for the deletion of the Minister’s power to prescribe an index other than the HICP for the purposes of restricting rent increases in RPZs. The view of Government is that this power is no longer necessary, given the new provisions.

The provisions around rent review commenced upon enactment.

Tenancies of unlimited duration

The Government made a commitment in the Housing for All plan to introduce what it refers to as tenancies of unlimited duration. Having taken the advice of the Attorney General and “taking account of constitutionally protected property rights”, it has introduced the provisions set out in section 5 of the Bill in order to achieve this aim.

Section 5 provides for enhanced tenancy protections on the basis that once a Part 4 tenancy is established it is for an unlimited duration, and not subject to expiry at the end of a six-year term should the landlord exercise their right to terminate the tenancy as currently provided for under section 34(b) of the 2004 Act.

The concept of “further Part 4 tenancies” is also to be removed, as these will no longer be of relevance – where any existing Part 4 tenancy is renewed, rather than commencing a further 6-year Part 4 tenancy it will now become a tenancy of unlimited duration.

As a result of these provisions all Part 4 tenancies will, over time, become of unlimited duration. As existing and further Part 4 tenancies terminate, expire over time or are renewed, this process will involve the creation of a new tenancy of unlimited duration in respect of a dwelling, should it remain in the rental sector.

Existing tenants may seek the consent of their landlord to have their current tenancy treated as a tenancy of unlimited duration. However, the landlord will not be compelled to grant their consent. Where consent is not granted, the existing protections of the Act will apply until the term of the Part 4 tenancy expires. The stated aim of Government is “to transition to tenancies of unlimited duration, while respecting the constitutionally protected rights under section 4 of the Residential Tenancies Acts, 2004 to 2021”.

There are no changes to the bases upon which a landlord can otherwise terminate a Part 4 tenancy – for example, the sale of the property, its substantial refurbishment etc.. The change that the Government has made is therefore a limited one, removing the landlord’s ability to terminate on a “no fault” basis at the end of the 6 year period.

Section 6 provides that the duration of tenancy under any tenancy of unlimited duration and under any preceding Part 4 tenancy and/or further Part 4 tenancy would be treated as one tenancy in calculating any termination notice to be given. This is intended to maximise the termination notice period to be given to a tenant.

Both provisions will apply prospectively in respect of tenancies commencing from 11 June 2022.

Waiver of annual registration fees

Section 7 amends section 134 of the 2004 Act, regarding the obligation to apply to register a tenancy. It provides that, subject to conditions, where a landlord applies to register a further Part 4 tenancy before the commencement date of the requirement for annual registration under sections 22 and 23 of the Residential Tenancies (Amendment) Act 2019 (expected in quarter 1 of 2022), and where that tenancy still exists on that date, no annual registration fee shall apply in respect of that further Part 4 tenancy only. Any new tenancy of unlimited duration that commences will be liable to an annual registration fee.

To be eligible for the temporary fee waiver, any outstanding registration fee associated with the relevant application to register a further Part 4 tenancy prior to the roll-out of the annual registration must be paid within one month of the commencement of the requirement to register tenancies annually. The temporary annual registration fee waiver is being provided for existing further Part 4 tenancies in recognition of the registration fee payments already made to date in respect of relevant tenancies.

The commencement of this provision requires ministerial order, with the Government’s stated intention being to commence it at the same time as the commencement of the requirement under the Residential Tenancies (Amendment) Act 2019 for annual registration of tenancies with the RTB. This is expected to take place in Q1 of 2022.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

The construction sector has welcomed the easing of COVID-19 restrictions since April as sites have fully re-opened across the country. However, despite the surge in activity, the industry now faces new problems in the form of price inflation.

The Irish Times reported in April that the price of materials has been increasing from between 5% to 20% across timber, insulation, plastic piping and other key construction materials. Indeed, an Irish Home Builders Association market survey published in May 2021 was found to be outdated within two months of issue, such was the pace of price inflation. In August, project management company Turner and Townsend reported increases of 35% in the price of some building materials and ongoing complaints from builders and their suppliers that prices for key materials are rising across the board.

The increase in materials prices can be attributed to a number of factors outlined below.

Factor
COVID-19
  • COVID-19 has exacerbated the issue of both demand and supply and for nearly 18 months there was a slowdown in the production of materials due to national and international lockdowns. The spread of the virus also impacted the ability of raw materials providers to harvest or mine and now, as we emerge from the pandemic, there has been a huge spike in demand leading to price inflation.
  • In a recent Construction Industry Federation survey, 80% of builders noted steel price increases, while over 20% experienced difficulties in obtaining steel. Turner and Townsend reported that builders believe that labour costs will grow by over 4% and material prices by nearly 7% over the next 12 months.
National issues
  • There has been an increase in the amount of people renovating or extending their homes and the demand for new builds. The Irish Times reported that planning applications for extensions increased by 45% in the last quarter of 2020 in comparison to the same period in 2019. In May, the Irish Times reported on a number of building material suppliers being forced to limit or suspend their orders.
  • Shortage in timber supplies is also posing particular issues in Ireland. The Irish Times has attributed this to the backlog in approving forestry licenses. Government officials are issuing less than half the new forestry licences needed to tackle an ongoing shortage in timber supplies.

Global demand

 
  • Reuters has reported a backlog of uncompleted work in the US due to shortages of raw materials and labour. A survey conducted in May 2021 by the Institute for Supply Management found companies and their suppliers continue to struggle to meet increasing levels of demand and reported that “record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments” of US manufacturing.
Brexit
  • Brexit has further complicated supply chain issues internationally, with tariffs applying to both imports into the UK from the EU and imports into the EU from the UK. These tariffs vary by product and have led to further price increases. As a result of the introduction of a border for trade to/from the UK, supply chain lead times have increased. Getting to grips with new customs compliance measures has driven costs for construction companies upwards, as they seek to understand the new regulatory environment.
Blockage of Suez Canal
  • The blockage of the Suez Canal in March 2021 for nearly a week was another significant shock which blocked supply chains from Asia to Europe and beyond for several weeks following the incident.

From a legal perspective, as the price of construction materials continues to soar, parties to construction contracts or who are in the process of negotiating such contracts are becoming more focused on who should bear the risk of such cost increases.

The Royal Institute of Architects Ireland standard form contract places the risk of price inflation for materials on the employer under clause 36 (although for larger projects this position is often reversed, with the contractor shouldering the risk). Going forward, if the cost of materials continues to soar, developers and contractors should consider at the earliest opportunity how the risk of price inflation for materials and labour can be best managed and also how it will be allocated under the construction contract.

For further information on this topic, please contact Siobhan Kearney, Senior Associate or any member of A&L Goodbody’s Construction & Engineering team.

3 September 2021 has been appointed as the commencement date for the following elements of the Affordable Housing Act 2021​:

Part 2: Affordable dwelling purchase arrangements (other than subsections 2(c), (6) and (7) of section 6 which relate to housing authorities (i) potentially entering into arrangements with the LDA and (ii) being required to have regard to its own housing services plan);

Part 4: Provision of funding to purchase equity share in dwellings;

Part 6: Amendments to Part V of the Planning and Development Act 2000;

Part 7: Miscellaneous (relates to agreements with financial institutions in respect of affordable housing under the Planning and Development Act 2000 and the Housing (Miscellaneous Provisions) Act 2002); and

Part 8: Repeals.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

It won’t have passed you by that the Government’s Housing for All strategy was published yesterday. It is available to read in full here.

​The strategy consists of 4 key pathways:

  1. Pathway to Supporting Home Ownership and Increasing Affordability;
  2. ​Pathway to Eradicating Homelessness, Increasing Social Housing Delivery and Supporting Social Inclusion;
  3. Pathway to Increasing New Housing Supply; and
  4. Pathway to Addressing Vacancy and Efficient Use of Existing Stock.
Many of the key actions under each pathway have already been taken e.g. introduction of the Land Development Agency, the shared equity and cost rental schemes brought in by the Affordable Housing Act 2021, the expansion of Part V requirements from 10% to 20%, the extension of rent pressure zone designations to 2024 and the linking of RPZ rents to inflation.​​
However, it also touches on further developments which are yet to come e.g.:
  • ​the introduction of indefinite tenures for residential leases (note this is stated to be “subject to legal advice”) – expected Q4 2021;
  • strengthening of the oversight of tenancies by the introduction of an annual registration process – timeline unspecified​​;
  • increased enforcement of registration of tenancy requirements through measures such as the expansion of data-sharing arrangements between Revenue and the RTB – expected Q1 2023;
  • amendment of the residential tenancies legislation to provide for default conciliation as part of the dispute resolution process – expected Q1 2022;
  • examination of the potential for creation of a system of deposit retention based on best international practice – expected Q2 2023;
  • implementation of minimum BER standards for the private rental sector – expected Q1 2025;
  • ending long term leasing of social housing by local authorities and Approved Housing Bodies and focus on delivery models which ensure long term ownership of social housing homes – expected by end 2025;
  • ​develop active land management powers with fairer sharing of the increase in land values resulting from zoning decisions via a new system of Land Value Sharing (securing a proportion of the value uplift of a development site, tracked from zoning to planning permission) – expected Q4 2021;
  • develop proposals for new Urban Development Zones – expected Q4 2021;
  • introduce new planning process for large scale residential developments to replace the Strategic Housing Development process – expected Q4 2021;
  • reform of judicial review process and introduction of new division of the High Court for planning and environmental cases to reduce planning delays – expected Q2 2022;
  • comprehensive review and consolidation of planning legislation – expected to commence Q1 2022;
  • introduction of a new tax to activate vacant lands for residential purposes, to replace the vacant site levy – expected Q4 2021.​;
  • introduction of a new vacant property tax (on residential homes) – collection of data to commence Q2 2022;​​​
  • commencement of s9 of the Local Government Rates and Other Matters Act 2019 with a view to empowering local authorities to offer rates-based incentives for the conversion of suitable vacant commercial properties to residential use – expected Q1 2022;
  • development of new regulatory controls requiring short-term and holiday lets (ie Air BnB type arrangements) to register with Fáilte Ireland with a view to ensuring that homes are used to best effect in areas of housing need – expected Q2 2022;
  • regulatory reform under Multi Unit Developments legislation to ensure owner management companies are financially stable and provide for expenditure of a non-recurring nature (i.e. sinking funds) – expected Q4 202​​2;
  • examination of measures to accelerate conveyancing as part of the sale and land transfer process – expected Q4 2022.​
We will keep you advised as each of these developments come on stream.
For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.