Saturday 21 October 2017

Builders refusing to commit to affordable homes as prices rise

Development levies are charged to cover the cost of providing essential services such as roads and public lighting in new housing developments. An analysis from the Society of Chartered Surveyors suggests they add almost €12,000 to the cost of building a three-bed, semi-detached home. Stock photo
Development levies are charged to cover the cost of providing essential services such as roads and public lighting in new housing developments. An analysis from the Society of Chartered Surveyors suggests they add almost €12,000 to the cost of building a three-bed, semi-detached home. Stock photo
Paul Melia

Paul Melia

Developers have committed to building fewer than 1,300 affordable homes priced at €300,000 or less in Dublin despite being in line for a refund of development levies.

Builders of just 16 housing schemes have told local authorities they plan to reclaim development levies in return for providing homes at 'affordable' prices to low and middle-income families in 2016 and 2017, the Irish Independent has learned.

It comes as the latest data from the Central Statistics Office confirms that house prices continue to rise due to the lack of new homes coming on stream. Prices rose by 11.6pc in the year to June, up 5.5pc compared with a year previously.

In Dublin, residential property prices increased by 11.1pc in the first six months of the year - houses are up 11.2pc, and apartments by 10.6pc. Outside of Dublin, they are up 11.8pc in the year to June. While nearly 30pc lower than at the height of the boom in 2007, prices have risen by almost 74pc in Dublin since a low of early 2013, and by 50pc across the rest of the country.

Analysis: Carrots have failed to get houses built... it's time to use the stick

But a parliamentary question from Sinn Féin's Eoin Ó Broin shows that a Government scheme to reduce the cost of homes is not being taken up.

The 'Stabilising Rents, Boosting Supply' scheme announced in November 2015 allowed builders to reclaim local authority levies in return for providing homes for €300,000 or less in Dublin, and €250,000 in Cork.

Development levies are charged to cover the cost of providing essential services such as roads and public lighting in new housing developments. An analysis from the Society of Chartered Surveyors suggests they add almost €12,000 to the cost of building a three-bed, semi-detached home. The rebate scheme applies to homes completed and sold between January 2016 and December 2017. They must be located in developments of 50 units or more, and located in the four Dublin local authority areas and both councils in Cork.

But it has emerged that no applications were made to Cork City Council, Cork County Council and Dún Laoghaire-Rathdown County Council. One application was made to Dublin City Council; however, it could not be processed as the number of units in the scheme was less than 50.

Costs

Fingal County Council expects rebates to amount to €6.8m for 2017 for 798 units spread across nine developments. South Dublin County Council estimates overall costs of up to €4m to cover rebates on 485 units spread across seven developments.

Reasons cited for the low uptake included the "low sale price threshold" and minimum requirement for 50 units or more. The Department of Housing said that applications were "expressions of interest", and it was not possible to indicate how many housing units might qualify.

Read More: 'Apartment market is trading at unattractive prices for investors'

Mr Ó Broin said there was a growing number of people earning between €40,000 and €70,000 a year in need of an affordable home to purchase or rent, and that the State should step in.

"The average cost of all social housing new builds is €191,000, ranging from €170,000 for a one-bed to €240,000 for a four-bedroom house," he said.

"There's no reason why the State, in a mixed tenure development on public land, couldn't provide social and affordable housing. If you can produce a house for €191,000, you could sell it for €200,000 or €210,000.

"There's a question mark as to what extent the private sector can deliver affordable units. That's why there's a compelling argument for the State to identify and start a programme of affordable house building."

Irish Independent

Also in Business