merrion street

In September 2011, Minister Hogan announced the establishment of an independent panel to explore options for a resolution to the problem of pyrite contamination in private housing stock. He took this action in response to the very difficult situations faced by homeowners who through no fault of their own, were left to deal with the consequences of pyrite related problems.

As he published the report today (18th July, 2012) he said ‘While I have always said the State was not responsible for this problem, it has a duty to assist in its resolution and one of my key objectives in setting up the Panel was to find solutions for homeowners to what is a very complex problem. I am satisfied that the report, which contains 24 recommendations provides me and the various stakeholders with a roadmap to move forward and make progress towards rapidly resolving this difficult problem for homeowners.’

“As a first step in the implementation process, I brought the report to Government and I have the full support of my colleagues as I seek to ensure that all relevant parties take on board and implement the recommendations in the report. I am also announcing the establishment of an information helpline 1890 800 800 where people can get more information on the report and copies of it. In addition, my Department has set up a dedicated email, pyriteinformation@environ.ie, where people can email queries.”

The Panel considered that the regulatory framework for hardcore in Ireland prior to 2007 compared favourably with that in the UK and other jurisdictions. Once the problem was identified, timely and appropriate action was taken here to deal with the problem by putting in place additional guidance to limit the presence of pyrite in hardcore and this appears to have contained the problem. The Panel did not consider the State was responsible for causing the pyrite problem and therefore is not liable for the costs associated with remediation. The report clearly states that those parties with direct or indirect responsibility for the pyrite problem should bear the costs of remediation. Those identified with having responsibility include: builders/subcontractors, vendors, material suppliers and insurers.

The Minister intends to move quickly on the report and to this end he has already begun a series of meetings with the key stakeholders, including the Construction Industry Federation, the Irish Concrete Federation, HomeBond, the Irish Insurance Federation and the Irish Banking Federation.

“I have asked the Stakeholders to come back to me before the end of September with their proposals for resolving this problem and I am hopeful that the outcome of these discussions will provide solutions for homeowners. However, in the absence of viable practical solutions from these obvious stakeholders I will be left with no option but to advise the Government that a solution along the lines recommended by the Panel must be imposed. My preferred option is for responsible stakeholders to take ownership of this problem and to work with me to advance solutions which will lead to a resolution for the homeowners concerned,” he continued.

In setting up the Panel, the Minister was conscious of the need to establish the scale of the pyrite problem being dealt with and he has noted that the Panel’s estimate is significantly less that the figures which have been speculated in the public domain.

In general, the pyrite problem appears to be confined to five local authority areas, Fingal, Meath, Dublin City, Kildare and Offaly. Seventy four (74) estates were identified to the Panel during the course of its work as possibly having pyrite. This amounts to 12,250 ground floor dwellings. Of these dwellings, the Panel understands that approximately 850 dwellings currently have a claim with a guarantee provider. A further 1,100 dwellings have already been remediated or are in the process of being remediated. Taking a pessimistic view, the Panel concluded that the remaining 10,300 ground floor dwellings represent the maximum estimated future potential exposure to pyrite problems. The Panel conclude that currently the only recognised method of remediation of homes damaged by pyrite is the removal and replacement of the affected hardcore. This requires major intervention and the typical cost for an average house is estimated at up to €45,000.

Not all dwellings in estates where pyrite has been identified will manifest pyritic heave and significant damage and the reasons for this are outlined in the report. Recognising this position, the Panel recommends a categorisation of dwellings based on a traffic light system to determine appropriate remediation approaches and these are detailed in the report. It would be unreasonable to expect that dwellings which have not exhibited damage should be repaired simply because they have reactive pyrite in the hardcore but a system needs to be in place to repair such dwellings if they exhibit damage in the future.

The Panel makes a number of recommendations in relation to insurance and also recommends a review of the Statute of Limitations Act, 1957 which it considered would be of benefit to consumers and, in conjunction with his Government colleagues, the Minister will be examining options to see what progress can be made on those recommendations. There are also a number of recommendations that are focussed on preventing similar problems in the future through the development of a standalone specification for hardcore for use under concrete floors, testing, certification and traceability of hardcore by quarries and evidence of periodic testing and certification of hardcore to be required by building control officers. Officials in the Minister’s Department have already begun work on enuring implementation of these recommendations.

The Minister expressed his sincere thanks to the members of the Panel, Brendan Tuohy, the Chairman, and to Noel Carroll and Malcolm Edger, the other two members, for their commitment to producing such a comprehensive report following on an extensive consultation process.

“I am anxious to see a practical solution to the problem of pyrite as quickly as possible and look forward to positive engagement from the various stakeholders,” the Minister concluded.

The full text (copies) of the report is available on www.environ.ie

END

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Note For Editors

Findings of the Panel

Scale of Problem

The Panel undertook a desktop study of the scale of the problem which is set out in the table under.

Summary of the Panel’s findings

Number of estates identified to the Panel Approximate number of

outstanding pyrite-related claims Approximate number of dwellings remediated (or in the process of being remediated) Remaining number of dwellings (with a ground floor) on identified estates

74 850 1,100 10,300

The Panel’s estimate is significantly less than the figures speculated in the public domain. Of the 74 estates identified to the Panel, the total number of ground floor dwellings is 12,250. Approximately 1,100 of these have been remediated or are in the process of being remediated and a further 850 approximately have made a claim to a guarantee provider. Taking the most pessimistic view of potential exposure to pyrite problems, there may be approximately a further 10,300 dwellings with reactive pyrite present in the hardcore. However, in the case of 23 of the estates with 3,250 ground floor dwellings, no claims have been made to guarantee companies nor does there appear to be any substantial evidence at this time to support the contention that there are pyrite problems in all these cases.

There are many reasons why not all ground floor dwellings on the identified estates will develop pyritic heave, including the fact that there may be more than one builder or subcontractor and hardcore may have come from different sources.

In relation to the possible broader scale of the problem in public projects generally, a number of State bodies were contacted and most of them reported that they had no incidence of pyrite problems. The Department of Environment, Community and Local Government reported that three local authorities, (Fingal, Dublin City and Meath) had identified approximately 850 social and affordable units across 18 developments where there were suspected or confirmed cases of pyritic heave. The Department of Education and Skills identified three suspected cases of pyrite in schools.

Knowledge of pyrite prior to 2007 and adequacy of Regulation

While it has been claimed that knowledge of pyrite was widely available prior to 2007, according to the report of the Pyrite Panel this does not appear to be the case. Among design professionals and the construction sector at large, knowledge of pyrite and particularly the potential problem of pyritic heave would appear to have been limited prior to 2007. There was only passing reference to the mineral pyrite as part of geology modules in third level construction and engineering courses and no specific information on pyritic heave or resultant damage.

Prior to 2007, hardcore was not seen as a high risk material and the regulatory requirements for hardcore were reflective of the knowledge and experience available at that time. While there was no requirement for testing of hardcore for use in residential construction prior to 2007, there was a requirement in Part D of the Building Regulations for proper materials to be used and proper materials are defined as “materials which are fit for the use for which they are intended and for the conditions in which they are to be used.” Technical Guidance Document C to the Building Regulations required hardcore to be “clean and free from matter likely to cause damage to concrete.”

The Panel concluded that the regulatory framework for hardcore in Ireland, prior to the identification of the pyritic heave problems, could be compared favourably with that in the UK and other jurisdictions where guidance evolved in response to specific problems. This is what happened in Ireland when the pyrite issue arose. Standard Recommendation (SR) 21 was amended in December 2007 to include specific guidance on limiting the presence of a reactive form of pyrite in hardcore and Technical Guidance Document C was amended in 2008 to further develop its guidance in relation to hardcore, by reference to the amended SR21.

When the pyrite problem came to light in 2007, the Panel considered that timely and appropriate action was taken and the problem was successfully contained. The Panel was not informed of any dwellings commenced after 2007 that are the subject of pyrite related claims to guarantee providers

The Panel did not consider it reasonable to expect building control officers, in the course of normal inspections, to be able to identify reactive pyrite in hardcore having regard to the unprecedented nature of the problem. The Panel noted that highly experienced site personnel did not identify the defective material.

Responsibility of the State

The Panel did not consider the State responsible for causing the pyrite problem and consequently did not believe that it should be liable for the costs of remediating private dwellings. This view was supported by many of the groups who engaged with the Panel as was the principle that those identified as having a direct or indirect responsibility for pyrite should pay. Those identified to the Panel as having responsibility were vendors, builders/subcontractors, material suppliers, insurers and companies supplying structural guarantees.

The Panel considered that homeowners face significant barriers to finding a resolution of the pyrite problem and particularly so where the builder is refusing to undertake remediation work, is no longer in business, or where HomeBond has declined cover. Most homeowners do not have the financial resources to pursue legal actions.

Approaches to remediation and costs

While some research is being undertaken by a number of companies into alternative preventative methods, currently the only recognised method of remediation for dealing with pyrite damage is removal and replacement of the hardcore. This requires major intervention and the typical cost for an average house is €45,000.

Not all dwellings in estates where pyrite has been identified as being a problem will manifest pyritic heave and significant damage. The Panel suggested a system of categorisation based on a traffic light system. Dwellings classified as red are those which have pyrite in the hardcore and display significant damage and require immediate remediation. Dwellings which have pyrite in the hardcore but no damage are classified as amber and should be monitored and only remediatied if and when they display significant damage. Dwellings in the green category do not have reactive pyrite in the hardcore or it has been removed.

Stakeholder activity

In its report, the Panel outlined some details in relation to actions being undertaken by different stakeholders in dealing with the pyrite issue. Premier Guarantee is remediating pyrite-damaged dwellings within the terms of its warranty insurance scheme. The Panel understood that some builders/developers are also remediating dwellings at their own expense and remediation work is also being undertaken as a consequence of arbitration/mediation agreements. However, these agreements are confidential and it is not known who are parties to such agreements but it is believed that some insurance companies are involved.

Recommendations of the Panel

The report contains twenty four (24) Recommendations broken down into four categories as follows:

(i) Categorisation and remediation approaches

This involves the development of a testing protocol to facilitate the classification of affected dwellings and to provide guidance on the appropriate remediation approach to be deployed. A method statement for remediation works should be developed to ensure the work is carried out to an acceptable standard and a certification process put in place for dwellings to avoid unnecessary constraints with insurance and conveyancing.

(ii) Proposals for a resolution of the pyrite problem

These recommendations provide for effective engagement by all the key stakeholders, including the Construction Industry, Banks/mortgage providers, HomeBond, Insurance Industry, builders, developers to bring forward solutions to assist homeowners to remediate their dwellings. The Government is required to drive this engagement and ensure that those with responsibility for the pyrite problem should bear the costs of remediation and that an effective overall solution is delivered for homeowners. The Insurance Industry did not engage constructively with the Pyrite Panel and it was reported to the Panel that insurances companies were limiting insurance cover and, in some cases, refusing cover for homes identified as having pyrite problems.

The Panel recommends the establishment of a Pyrite Resolution Board to deal with cases where all other options for remediation have been exhausted by the homeowner. The Board should not be funded by the Exchequer but possibly by a levy on the construction/quarrying sector and related sector insurance.

The Panel’s report contains a series of recommendations which could provide a number of options for homeowners to secure remediation of their homes. The Resolution Board would be a last option when all other avenues had been exhausted.

(iii) Reducing burden on affected homeowners

The Panel identified the banks as having a key role in providing finance to homeowners who want to undertake testing for pyrite or who wish to undertake remediation works outside of the other routes suggested. The additional funding could be added to existing mortgages and paid back over a longer period without adding to current payments.

Recognising the difficult position of homeowners who are living in pyrite affected homes, the Panel recommended that an exemption from the proposed property tax for a set period should be given to those who are confirmed by testing to have pyrite damage.

(iv) Review and propose measures to strengthen the provisions to protect consumers

The Panel recommends a number of inter-related measures to minimise the risk of similar problems to pyrite occurring in the future and to protect the interests of the consumer. These include development of a standalone specification for hardcore for use under concrete floors, compliance and traceability requirements for quarries, enforcement of Building Control Legislation, a mandatory certification system for building to strengthen compliance with Building Regulations, registration of builders with appropriate insurance, review of construction and home insurance and time limits in the Statute of Limitations Act, 1957, establishing more efficient and effective methods of disseminating information to stakeholders and the provision of CPD courses for construction professionals.