Pressure put on government to call in the estimated €500 million to €600 million bonds pledged by developers so that local councils can complete the public infrastructure of the 2,800 ghost estates around the country.
A Cork County Councillor called upon Minister for the Environment, John Gormley, to enable local authorities to call in all bonds pledged by developers over the past decade. These bonds were given by developers via their lenders at the time of starting to build housing estates around the country as a form of insurance to local authorities.
They were intended to provide assurances that all public services i.e. footpaths, street lighting and similar would be in situ and that the estate would be completed to the standard prescribed in the grant of planning permission. It is well accepted that this stage that almost 2,800 estates nationwide fall short of being completed and there is no available data to confirm what portion of these pledged bonds, if any, have been called in or collected to date.
If such an initiative as this was to be successful, it would provide much needed work within the construction sector, improve the living conditions of residents in situ and potentially bring more stock to the market, albeit in the form of site-only or builders-finish. More stock to the market could definitely be seen as a double edged sword, causing further price drops in areas of over-supply and low demand but it will inevitably allow the local markets to reach their trough naturally.
The obvious obstacle to this must be the ability and willingness of each developer’s lender to deliver on their pledge and the enforceability of any action that might prove necessary for local authorities to take in order to collect the funds. Could this be one more headache for the bean-counters in NAMA? Ultimately, will this amount to yet another bill for tax-payers?
It is most likely that each local authority will have a different approach to dealing with troubled developments, if you have any queries in relation to particular developers or specific housing estates in your locality please email me directly on firstname.lastname@example.org or phone our offices on 01 4428 035 and I will do my best to provide you
with the most up-to-date information available .