The concrete levy will see the added cost of a typical three-bed semi-detached house rise above the predicted €1,200, an Oireachtas committee has been told.
Updated figures were provided to the Oireachtas finance committee on the additional cost of building houses following the introduction of the concrete levy, however it does not include increased inflation or energy costs.
The Government halved the concrete levy from 10 per cent to 5 per cent after Government TDs and representatives of the construction sector raised concerns that it would add to the cost of construction amid a housing crisis.
The introduction of the levy will be delayed from April to September 1st, and it is expected to raise €32 million over 12 months, under half the €80 million it was originally expected to raise.
Officials from the Department of Finance, who appeared before the committee on Wednesday, acknowledged that the impact of costs on building houses will be higher than what has been reported.
Sean Armstrong, head of residential construction cost and innovation unit at the Department of Housing, said that the predicted cost of levy on buildings, including three-bed semidetached houses, office developments and apartments, were made in a “snapshot in time” based of information available last month.
It excluded rising energy costs, inflationary costs and other factors.
The actual extra costs will be above the predicted 1,200 euro for a block-built three-bed semi, and the predicted extra €350,000 for a large regeneration project, including office and retail space.
A levy on 18 concrete products and on pouring concrete was announced as part of Budget 2023 to fund a redress scheme for people living in homes built with defective building materials.
Tom Parlon, director general of the Construction Industry Federation (CIF), said that some developments have been paused while some first-time buyers are delaying purchases because building projects are not longer viable.
Mr Parlon said that the Government’s decision to introduce a concrete levy will be added to the cost of housing and buildings.
He said that he has not seen the level of cost increases in 40 years.
Kevin James, president of the Society of Chartered Surveyors Ireland Discussion, said that the cost exercise was carried out in a vacuum.
He said that there is a need to build 45,000 houses a year for the next 10 years to meet demand, but added that there is a need for projects to be viable.
Mr James warned that the state housing targets will not be met unless the costs of high density developments are “unlocked”.
Lisa Hone, chair of Mica Action Group, said that that families living in homes effected by defective blocks see the concrete levy as a “smoke screen” and a “PR exercise” by the Government.
She told the committee that the suppliers of the defective blocks was not a “few bad apples” but a systematic failure across the country.
“The levy seems to be smokescreen to persuade the public the government is holding companies to account,” Ms Hone said.
“This won’t touch them. They are operating unhindered and haven’t paid one cent.
“We are still waiting for a senior counsel to be appointed to work out a way forward to pursue the offender.
“We are also awaiting the audit report from Darragh O’Brien (Minister for Housing). The report was produced at end of June but home owners who are interested in contents have not had any information. People feel abandoned.”
She added: “There is huge anxiety among families around the financing of rebuilding their homes.”
Frank Kelly, president of CIF, warned that contractors will look to pass on the costs of the concrete levy, whether it is on a one-off property or a large scale residential or commercial building.