Developers 'gouging' councils by charging up to €100k extra on apartment builds

Dublin City Council has been charged up to €372,842 for a two-bed apartment – €100,000 more than the average construction price, according a new report
Developers 'gouging' councils by charging up to €100k extra on apartment builds

New data reveals the price of construction for a two-bed apartment is between €219,000 and €262,000. Picture: Pexels

Constructions companies have been accused of "price gouging" local authorities by claiming up to €100,000 extra on construction costs for social developments.

Sinn Féin's housing spokesperson Eoin Ó Broin has said new figures show construction companies are now charging Dublin City Council considerably more in construction costs than they claim for private developments.

New data released by the Society of Chartered Surveyors Ireland (SCSI) reveals that construction costs for private sector two-bed apartments in urban areas of the capital now stands at been €219,000 and €262,000.

However, in a separate report published by Dublin City Council last month, deputy chief executive Brendan Kenny said it was charged between €303,636 and €372,842 in construction costs across five separate projects.

Mr Ó Broin said: "Private contractors are now charging Dublin City Council €100,000 more to build apartments in the city centre than the private sector are charging themselves."

He said this sort of "price gouging" now needs to be looked at and addressed.

“We also support SCSI calls for a public sector construction costs review, with the goal of making transparent delivery costs available," he said.

While the overall completion costs of between €403,750 and €494,441 are lower than private apartments in the city centre, these prices do not include the cost of the land acquisition, as it was already owned by DCC.

The Real Costs of New Apartment Delivery also finds that while total development costs have fallen for some apartment types in the greater Dublin area and viability has improved significantly, affordability remains a huge challenge.

The report found that the cheapest two bedrooms apartments in the greater Dublin area, which are basic low-rise developments in the suburbs, cost about €359,000 to deliver and would be put on the market for €375,000.

This means that a first-time buying couple would require a deposit of €38,000 and a joint income of €98,000 to purchase the lowest price apartment type.

SCSI president Micheál Mahon said while there was no one solution to the affordability issue, the Government needed to accelerate the roll-out of a range of targeted supports to people struggling to get on the property ladder.

“The early indications from our analysis is that cost rental is an effective model and can serve a proportion of overall housing needs. The recent announcement of the introduction of a shared equity scheme is a positive move but a more generous version of the scheme with a longer-term payback of the equity loan should be considered for apartment owner/occupiers.”

Sinn Féin's housing spokesperson Eoin Ó Broin said private developers are now building to rent and not to sell as the price they charge for finished apartments is not affordable for the majority of people wanting to buy a home. Picture:Gareth Chaney/Collins

Sinn Féin's housing spokesperson Eoin Ó Broin said private developers are now building to rent and not to sell as the price they charge for finished apartments is not affordable for the majority of people wanting to buy a home. Picture:Gareth Chaney/Collins

The report found that the all-in cost of delivering medium rise (five-eight storey) two-bedroom apartments in the GDA ranged from €411,000 for a low-spec unit in the suburbs to €619,000 for a high-spec medium rise (nine-15 storeys) in the city.

Mr Ó Broin said private developers are now building to rent and not to sell as the price they charge for finished apartments is not affordable for the majority of people wanting to buy a home.

"Ordinary working people can't buy any of these, the private sector just can't deliver affordable units, because of that, the lion's share of these units are going into the rental sector, but at a high rent which is also a problems," he said.

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