The SCSI has broadly welcomed the announcement of measures to kick-start new housing construction by the Minister for the Environment, Community & Local Government, Alan Kelly TD, and the Minister for Finance, Michael Noonan TD.
In response to the fact that standard three-bed houses cost in excess of €300,000 to deliver, and that this is a price level outside the affordability of house purchasers, the Society issued its report on ‘Policy Options for Supporting the Provision of Housing at Affordable Prices’ on September 8, prepared by Anthony Foley of DCU Business School. This report presented ten recommendations, and the Society considers it to be a very positive step that the measures announced by the Government were broadly in line with four of these recommendations.
The Government’s actions, to be initiated from January 2016, include:
- Reduction of development contributions
These will consist of a targeted rebate of paid development contributions for housing sold at levels of €300,000 in Dublin and €250,000 in Cork, subject to certain conditions in relation to value for money, achievement of affordable selling prices, and sale and occupation by 2017, bringing down prices to purchasers by up to €10,000 per house.
- New National Apartment Planning Guidelines
These new guidelines will build on the floor areas set in 2007, but will allow for a certain amount of smaller, studio type apartments in ‘build-to-let’ developments, address the minimum number of units with dual aspect, address the maximum number of units per lift and revise car parking provision in city centre and public transport served locations. The Government has estimated that these could reduce the cost by as much as €20,000 per unit in Dublin City, making many potential developments much more viable. Addressing the minimum number of units with dual aspect will not only improve viability through reduced construction cost, but will also increase affordability through reduced cost in use.
- Changes to strategic development zones
This will enable swifter adjustments to meet market requirements through operational enhancements within the Government-designated strategic development zones, so that developments with more expensive planning schemes can be varied and expedited quickly.
- Provision of infrastructure finance from the Exchequer
This will take place through the Government’s Irish Strategic Investment Fund (ISIF).
It was also confirmed that other recent initiatives, such as the new Part V arrangements, which proposed removal of the affordable housing element and retaining a requirement for 10% social housing, and that NAMA will fund 20,000 starter homes for the greater Dublin area, will proceed.
The Government’s initiatives are a positive step towards correcting overhanging issues from the Celtic Tiger era. We are keen to see the detail of these proposals and how they will be (for example) initiated into development plans by the confirmed date, “January of next year”. This is not to say that the measures will be sufficient to make all apartment schemes viable, as the gap between cost and affordability is so considerable. Kerrigan Sheanon Newman has estimated that the cost of complying with new building regulations and standards introduced since 2007 is between €35,000 and €40,000 per unit. At the same time, Eurostat indices for residential construction costs across EU countries indicate that Ireland is well below the average, with only Greece, Croatia, Cyprus, Poland and Montenegro being cheaper in 2014. We also wonder if the other recommendations of the Foley report may need to be dusted off towards the end of 2016, if the provision of housing at affordable prices does not improve in the meantime.
These facts obviously raise many questions. The new Residential sub group of the Quantity Surveying Professional Group looks forward to actively exploring and shedding light on residential-related issues, and will update members on a regular basis.
Norman Higgins MSCSI MRICS
Norman is Chair of the Residential sub group of the Quantity Surveying Professional Group.