Tuesday 25 April 2017

How would developers solve housing dilemma?

Niamh Horan gathers the views of some of Ireland's top property people on how to increase supply and resolve Ireland's housing shortage writes

Johnny Ronan Photo: Douglas O'Connor
Johnny Ronan Photo: Douglas O'Connor
Niamh Horan

Niamh Horan

Kevin Nolan, Hibernia Reit: One of the biggest issues we need to address to increase the supply of new housing in Dublin is to use the land banks owned by the State more effectively.

I think there is a great strategic opportunity to set up a State land agency whose job it would be to co-ordinate amongst government bodies to use land to the greatest good of the country.

Michael O'Flynn Photo: Tom Burke
Michael O'Flynn Photo: Tom Burke

Whether it is a Dublin Bus garage, the RTE Montrose campus or the many buildings owned by government agencies, we need to ask ourselves whether there are opportunities to release land for the development of residential projects.

We need to consider whether current planning restrictions are fit for purpose, particularly the decision of Dublin City Council to limit the height of apartment buildings in the city centre to just 24 metres, or eight storeys.

There is no doubt in my mind that there are parts of our city where taller buildings would be entirely appropriate and the antipathy to height in every case is misplaced.

The authorities should introduce a different set of building regulations for apartment blocks where all units will be rented, with less stringent rules on dual aspect, number of lift cores and amount of parking spaces.

Sean Mulryan
Sean Mulryan

VAT should also be waived on the cost of inputs for residential rental construction, as is the case in the UK. These changes would help make it economically attractive for developers to invest in rental apartments, which currently is not the case.

Johnny Ronan, Ronan Group Real Estate

Build the Dart underground. This is a key piece of missing infrastructure needed in Dublin to alleviate traffic gridlock and to connect up transportation links including rail, Dart, Luas and bus systems. This would attract jobs through FDI [foreign direct investment] and create a world-class city to live in.

Increase density of developments on transportation nodes. There must be a plan to promote and encourage the height and density of buildings on transportation nodes such as Spencer Dock and in the Docklands in general, where you have valuable land, open water and transportation nodes.

Reduce VAT. In the UK there is zero VAT on property-building. In Ireland it is 13pc. We need to introduce zero VAT for three years to get the delivery of homes needed.

Reintroduce a Section 23-type relief for several years, which would quickly deliver a large volume of cost-efficient rental apartments.

Joined-up thinking is required in the planning system to speed up the process.

For example, we built 12-storey residential apartments in Spencer Dock; yet Dublin City Council then created a Strategic Development Zone (SDZ) scheme which now limits the rest of Spencer Dock to six storeys. It prevents us applying for higher apartments or for more density, which is clearly nonsensical. Everybody agrees - including the officials and the Government - but there is complete inaction on the matter.

The Government should appoint and give necessary powers to a talented visionary to plan and get the city operating to international standards. Undoubtedly they would demand a large salary, but developers would gladly pay for this through levies.

Simplify and allow flexibility in design standards. Planners should also be allowed to give permission to any scheme which is beautiful in design, innovative, environmentally friendly and creates a great place for people to live a good life. This would encourage developers to invest in great design. There is an obsession with the size of apartments rather than concentrating on quality design.

For example, before Nama gifted the best site in London to the Malaysian government, we had engaged naval architects and engineers for Battersea Power Station.

They were specialists at designing for small spaces and produced a state-of-the-art design for smaller apartments which would be prohibited from being built in Dublin.

Finally, we should reward quality and punish mediocrity.

Sean Mulryan, Ballymore

The Government needs to bring on the supply of land. They are in control of the local authorities, and a lot of government agencies are in control of a big portion of land that is suitable for development. Release the land so they can get on with it.

Reduce VAT. If there was anything to consider on taxes, it's having a look at the 13.5pc VAT on housing.

Prices naturally had to come up a certain amount because it wasn't viable on most developments to actually build at the prices of 18 months to two years ago; that's why a lot of developments didn't happen.

David Daly, Albany Homes

The current lack of new housing is a phenomenon that simply cannot be resolved in the short term. It's like starting from scratch.

It may take years before supply meets demand. There are, however, several hundred thousand houses and apartments which are still in negative equity and it is simply not feasible for the owners of these properties to contemplate selling if it means that they will crystallise a loss.

I think the Central Bank must further relax the lending criteria to their pre-intervention levels which will allow open market conditions to prevail. This will facilitate house prices to rise and continue to do so until the whole negative equity scenario has been alleviated.

The result should be that those several hundred thousand properties can now be traded. It also resolves one of the country's balance sheet problems, at which stage the lending criteria requirement can be revisited.

Michael O' Flynn, O'Flynn Group

We don't just have a Dublin housing crisis, we have a national crisis. We need to look at the country as a whole and make a plan for the future. There is no quick fix. While I welcome recent initiatives by Housing Minister Simon Coveney, they do not go far enough. We need a common-sense approach to planning decisions.

The introduction of a National Zoning Authority and National Infrastructure Authority and a directly elected mayor for each of our principal cities would enable strategic planning.

Land is a key cost in the delivery of housing and it is currently too expensive. We simply do not have enough serviced zoned land to make housing more affordable for those trying to get on the property ladder.

Solving the crisis means increasing supply. While land is a key issue, so is VAT. There is no justification for Ireland's 13.5pc rate and 0pc in the UK and Northern Ireland.

Nama's expanded role in the housing market is distorting the market due to its low funding model.

The distortion is keeping others out of the market at a time when the market desperately needs to normalise. Development finance must be made available for the entire market.

This will need special government attention as the availability and cost of funding plays such a big role in viability and consequently on the delivery of housing and advance units for FDI, both critical to our competitiveness.

The Central Bank loan to income ratio needs to be reviewed. It is keeping people off the property ladder and consigning them to renting indefinitely and making monthly rent greater than their mortgage repayments would be.

As we meet the challenge of Brexit, we face great uncertainty. One thing is certain however, we will see huge competition from our European neighbours for any opportunities arising from Brexit. Much has to change if we are to compete for those opportunities.

We need reform. We need a positive and inclusive approach to development which must include developers at the resolution table. We need to raise our game.

Nama

This newspaper contacted Nama for its submission. A spokesperson said: "Unfortunately Nama is not able to put a piece forward on this occasion."

Sunday Independent

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