Jamesy Hagan, Managing Director of Ballyclare-based Hagan Homes, one of Northern Ireland’s largest homebuilders, is calling on Northern Ireland Water to explain why local sewer bond rates are the highest in the UK.
A sewer bond is a surety provided on behalf of a property developer or house builder which provides a method of securing funds to complete sewers to an appropriate standard for adoption by NI Water, should the developer become insolvent or does not complete the sewers to an adoptable standard.
Mr Jamesy Hagan explains:
“The sewer bond is an essential component of the sewer adoption process and something that is vitally important to protect the consumer. Our major concern is that in Northern Ireland this bond is 40% of the cost of the construction of the sewers, compared to just 10% in England.
“We want to know why Northern Ireland Water is charging this higher bond percentage. NI Water has steadfastly refused to disclose its method of calculating the costs of the sewer bonds and its estimates are often many times the actual cost of construction.”
Mr Hagan believes that this excessive estimate and rate is contributing to the shortage of new homes in Northern Ireland:
“Developers currently have the majority of their working capital tied up in these sewer bonds. Indeed many developers are simply unable to obtain these bonds due to their excessively high costs. From my own personal experience Hagan Homes currently has approximately £2million tied up in sewer bonds.
“If Northern Ireland Water were to reduce the rate that was charged this would in turn release the necessary funds for developers to invest in new land and developments and thereby significantly address the new home shortage in Northern Ireland.”
Mr Hagan continues: “Excessive sewer bond rates are also a massive barrier for the smaller builder/developer entering into the Northern Ireland market. Whilst NI Water enjoys a monopoly position in Northern Ireland it is vital that the Utility Regulator steps in to prevent this abuse of the bond arrangements and provides the small and medium builders here a level playing field with similar builders in England.”
Explaining how a reduction in the sewer bond fee would positively impact on house prices, Mr Hagan adds:
“A similar bonding system to that in England would also mean that the excessive sewer bond costs to Northern Ireland builders would not be passed on to the homebuyers.”
Hagan Homes is one of Northern Ireland’s largest homebuilders. It is a local family-run, award-winning company that has built almost 3,600 homes across Northern Ireland since it was established almost 30 years ago.