Five quick ways to raise supply and ease housing crisis
We need to get our house in order. Since 2009 Ireland has experienced a strange macroeconomic cycle. Tens of billions of euro in property assets/liabilities have been locked in a financial and legal glacier.
The thaw is coming, but in the meantime we've been left with a desperate and worsening housing crisis. It can be addressed, we just need to change some of our thinking on the issue. Here are five policy changes that would really help ramp up supply.
1: USE IT OR LOSE IT Legislation could be drafted and passed to introduce a 20pc penalty tax on land and property within the M50 that is lying unproductive. This will apply to zoned land, land with full planning permission and commercial and residential buildings that are either on the derelict buildings register or have been vacant for over 12 months. This will focus the minds of land and property owners both private and public to implement asset management programs to increase housing supply. There are plenty of willing SME-type developers who are finding it very difficult to get land/sites to build on who have the means and experience to purchase and develop the affected real estate as it comes onto the market. Local governments and Revenue have the data required to implement this penalty tax within a short space of time.
2: ENFORCEMENT of zoning regulations around apartment use, particularly between the canals in Dublin. If we are in a crisis then we need appropriate action. In swaths of Dublin apartments are being used as hotels, and hotel rooms are being used to house families. One website boasts that using your property for short-term lets more than doubles the rent. We have a housing crisis and apartments are being used as hotels instead of being used for the permission that was granted on them. In order to maintain levels of tourist accommodation I suggest a change in policy. A permitted development policy for obsolete offices to be converted to hotels without the need for a lengthy change-of-use planning applications. London successfully introduced a similar policy for converting offices to residential property.
3: REDUCING PARKING spaces for new buildings, one of the main impediments to apartment building is the high cost of creating underground parking. These ground works have an enormous cost particularly given the maximum heights buildings can go to in Dublin. Driverless cars and car sharing apps will make the current model of car ownership obsolete within a decade. Hundreds of vacant underground car parks will become another expensive mess to be cleaned up. With this change in policy the economics for developers, be they private or public, begin to make sense for the re-commencement of apartment construction.
4: FLAT CONVERSIONS Having lived in London, New York and San Francisco I am very familiar with this type of housing, which is particularly economical from both a production side and a consumer side. Take a house and split it into flats. Most important is proximity to transport and the speed at which 1 unit can become 2/3. It takes around eight weeks and costs around €50,000 per unit in London. Houses near transport nodes would be zoned OK to split. The increase in housing supply from this change would be significant. Where once one unit stood three units can be accommodated and car ownership likely reduced.
5: HEIGHT The IFSC and Dockland are covered with buildings of between five and eight floors. These are our urban centres of commerce and production. The architecture of the area is modern glass clad imitation sky scrapers conservative only in their height, they are in fact ground scrapers. These buildings have double level basements. The most expensive part of building these things is land closely followed by basements! Seven-storey buildings on double basements makes no social, economic, environmental or architectural sense.
Toronto has five buildings being completed at 300m, the maximum height an Irish developer/consumer can hope for is 28m. Liberty Hall is 59m. From Connolly Station to The 3 Arena and from City Quay to Sir John Rogerson's Quay should comprise skyscrapers, they're efficient, free up land elsewhere, allow for concentration of infrastructure, cut down commutes and increase work-life balance, house offices, hotels, gyms, apartments, swimming pools and restaurants.
These ideas are not without risks but we don't get anywhere without risk-taking. As Mignon McLaughlin wrote: "Every society honours its live conformists and its dead troublemakers."
The opportunity is now.
Nessan O'Donovan is a senior business developer with Lotus Investment Group, an alternative lender providing short-term lending to property SME's since 2014. Lotus IG has enabled finance for just under 1,000 homes and helped over 60 property SME's re-finance and purchase various property types across urban areas. www.lotusig.com