Dáil Éireann Debate, Tuesday - 18 April 2023
797. Deputy Joe McHugh asked the Minister for Housing, Local Government and Heritage if he will consider including a price escalation clause in turn-key housing developments to take account of time lags of up to six to nine months in price agreements and, to give councils more discretion and flexibility in giving the green light to housing projects (details supplied); and if he will make a statement on the matter. [17302/23]
Amharc ar fhreagraThe contractual nature of turnkey arrangements for new social housing does not lend itself to the inclusion of price escalation clauses. Turnkey arrangements are concluded through an acquisition process and each approval is based on the understanding that the units will be purchased at a fixed price by the local authority.
Where material cost increase claims do arise on turnkey contracts under Social Housing Capital Programmes, local authorities have a procedure for considering the basis for such claims based on a final fixed price and for making a clear recommendation to my Department on the matter.
Given that there is often a time-lag between approval and delivery through turnkey arrangements, an initial 10% of the project cost is usually paid as a deposit and the balance of the funding is provided on completion and delivery of the housing units in a 'turnkey' condition. An option for turnkey projects can also be to agree delivery on a phased basis, which allows for payment to be made to the developer on completion of each individual phase.
As turnkey contracts should be a straightforward purchase, risk in regard to abnormal cost elements should be factored into the costs and, accordingly, borne by the Developer.
Given that local authorities have discretion to negotiate costs and other aspects of turnkey arrangements locally, lengthy time lags do not need to arise and my Department will always encourage local authorities to present turnkey proposals for final funding approval as swiftly as possible. The time for assessment and funding approval by my Department on turnkey proposals is short, involving just one review stage.
