Dublin City Council paying €100,000 more in construction costs for social housing

Private developers have been accused by Sinn Féin of "overcharging" and "price gouging" Dublin City Council (DCC) for social housing developments.

In a report released on Monday, the Society of Chartered Surveyors Ireland (SCSI) said the construction costs for two-bed apartments in urban areas of Dublin now stands at between ¤219,000 and ¤262,000.

The calculation was based on data obtained from 49 developments in Dublin last year.

However, figures circulated last month by DCC deputy chief executive Brendan Kenny showed the council was charged on average €100,000 more for construction on its social housing projects.

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The council’s figures, which relate to social housing projects undertaken on its own land in 2018 and 2019, show it was charged on average between €303,636 and €372,842 in construction costs across six separate projects, which included either a mix of houses and apartments or just apartments.

The council’s figures also show it was charged significantly more for professional fees.

In its report, the SCSI estimated the professional fees attached to building two-bed apartments in Dublin at between €18,000 and €21,000.

However, DCC was charged between €44,027 and €54,062 for the professional fees attached to its projects.

“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,” Sinn Féin’s housing spokesman Eoin Ó Broin said.

This raised the prospect that some sort of “price gouging” was taking place, he added.

Dublin City Council last night said: “All our construction projects go through a thorough public procurement process in line with European Union and national regulations. At the end of that process the most economically advantageous tender is selected to carry out the project.”

While acknowledging that both sets of figures covered a variety of different projects with different design specs, Mr Ó Broin said the disparity in costs was enough to raise concern.

He said Minister for Housing Darragh O'Brien needed to examine why the tender prices for DCC were so high and "why is it that it appears that DCC is getting charged substantially more for comparable-type developments than the private sector".

“If the taxpayer is going to be spending ever-greater volumes of money on public housing we need to know the taxpayer is getting value for money,” Mr Ó Broin said.

Procurement rules

In comments attached to DCC’s figures, which were circulated to councillors, Mr Kenny said current procurement rules were limiting, and this might be affecting competition for building contracts.

“Many builders do not apply for public work contracts given their complexity and the level of oversight that the city council carries out on sites,” he said, noting this often limited the field where increased competition might provide better prices.

In its report, the SCSI said the cost of delivering a two-bed apartment in Dublin ranged from €359,000 for a low-rise unit in the suburbs to as much as €619,000 for a high-rise unit in the city centre.

The figures, based on data obtained from 49 developments in Dublin last year, suggest the “bricks and mortar” element, or the pure construction costs, accounted for less than half (47 per cent) of the overall cost of delivery.

The so-called “soft” construction costs – land, development levies, professional fees, VAT, developers’ margins – accounted for the remainder.