Inclusion of rental homes in new mica scheme in doubt over State aid rules

Hundreds of landlords with homes affected by crumbling blocks may face delays in getting access to a new grant scheme due to concerns about State aid rules.

Last November the Government decided to extend the defective blocks scheme to rental properties in affected counties, adding about €160 million to the cost of the scheme. An estimated 900 rental properties may be impacted by the presence of deleterious materials such as mica or pyrite. Fresh doubts have emerged, however, about giving landlords access to the scheme due to State aid rules, sources have confirmed.

It is understood the Attorney General has been examining the issue, and has told the Government that three of the four criteria to qualify for such an intervention as State aid have been met. EU State aid rules aim to prevent illegal and unfair subsidies granted by member countries to companies. If all four criteria are met, State aid provisions would apply.

The fourth criteria is in relation to the potential impact that grants to landlords would have on cross-Border trade. Such an impact could be through the movement of products, or in this instance movement of the landlord themselves, sources said.

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Government sources have expressed optimism that the issue can be addressed after initial advice was received saying the scheme may only have a minimal impact on cross-Border trade. However, further legal advice has been sought and is being examined by the Department of Housing.

Cabinet Ministers have been warned that if the issue cannot be resolved or clarified before the full Bill is published shortly, then there could be delays for landlords getting access to the scheme.

As part of the decision last November, the scheme was widened to make it available to both owner-occupied principal residences or properties registered with the Residential Tenancies Board after a certain date.

While the plan to give landlords grants remains in the unpublished legislation at present, officials may have to add a provision to the Bill which would allow for a delay while the legal position is established.

The Government estimates that it will cost an average of €177,000 to remediate each rental property, giving an additional cost to the scheme of €160 million. It has also emerged that there will be a clawback provision for the grant in certain circumstances if the property is taken off the rental market.

It comes as Cabinet Ministers were warned that the scheme could end up costing €3.65 billion if inflation runs consistently high. The enhanced scheme was originally set to cost €2.2 billion when it was agreed by Cabinet last November, but this has now risen to €2.7 billion, before inflation.

The new legislation, when published, will allow for the maximum grant of €420,000 to be increased by 10 per cent through a yearly review which could take place up to three times, with another three reviews allowed if the Oireachtas agrees.