Sunday 22 January 2017

Builders 'must begin work now' to meet demand for new homes

Published 29/12/2016 | 02:30

Construction Industry Federation’s Tom Parlon
Construction Industry Federation’s Tom Parlon

Delivery of 18,000 new homes in 2017 will not happen unless developers get on site and begin construction works early in the New Year, the Construction Industry Federation (CIF) has warned.

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Director general Tom Parlon said the number of commencement notices indicating that works had begun were at a low level, and problems accessing finance meant output was below the levels needed to meet demand.

And he also accused civil servants of unnecessarily delaying processing of planning permissions for minor errors, saying that "officialdom" failed to realise that any delays impacted on the ability of the sector to deliver homes to help dampen price increases and soaring rents.

"The Government has made rebuilding Ireland a priority. They have come forward with a number of proposals and are looking at the planning situation, which is so painful," he said.

"You could have a very positive pre-planning meeting but when you go in it's different. A good percentage of plans used to be returned even for a minor mistake. This obviously reflected the person who made the application. But some local authorities will go through it (the application) and it's lodged immediately. There's such a myriad of political issues involved. Officialdom doesn't understand about timeliness. Going back to do something again could take six weeks."

Construction work has started on just under 10,000 homes so far this year, of which 5,300 are in the greater Dublin area. But Mr Parlon said that "risk-adverse" banks meant securing finance for projects was difficult, and expensive.

"We'd love to double output, but if we're looking at 16,000 to 18,000 (units) next year you need to have your commencement notices in now. If someone doesn't get onto a site until next summer, it's not going to happen until 2018.

"They (banks) are doing more, but their appetite is limited. They're sitting back. Banks will give a maximum of 60pc even if you own the site, have planning permission and are ready to go. They are probably charging 6pc to 8pc (interest), depending on your status with them. You also need mezzanine finance, and the unsecured stuff is riskier, and you could be paying 15pc to 18pc. There are other players who would take a stake and provide finance, but none of it is cheap."

Mr Parlon said the industry was worth around €15bn a year, with housing a "small part" of output. Land, levies, Vat and other charges added to housing costs, some of which the Government could address including cutting the Vat rate. He also revealed that unions have sought a 5pc pay rise, which would be subject of a Sectoral Employment Order (SEO), or industry-wide agreement, which are approved by the Labour Court.

Pay cuts had been restored, and "decent rates" were needed to attract people to the profession.

The SEO prevented below-cost tendering and "levelled the playing field", he added.

Irish Independent

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