Friday 28 October 2016

Home truths: Regulating the home buyers out

Published 05/06/2015 | 02:30

All councillors should be made to buy a Mercedes
All councillors should be made to buy a Mercedes

EARLIER this year, and almost without anyone noticing, Dun Laoghaire Rathdown Council decreed that new homes and commercial buildings in its jurisdiction should be built to "passive house" standards - this is according to a new amendment just added to the draft county development plan. The proposal will be subject to public consultation before the development plan is due to be formally adopted early next month.

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Passivhaus (to give the concept its proper name), is an excellent German devised design standard which has been researched, promoted and strictly certified over decades by the Passivhaus Institut in Germany. The building system enforces strict design stipulations and super high levels of insulation - to decrease the cost of heating a home almost to zero.

Passivhaus homes save their owners a packet over the lifetime of ownership on household heating and energy costs, which typically run to about €2,000 to €4,000 per year in Ireland.

Construction is of a far higher quality and therefore certainly more expensive, despite claims of near price parity by many of its supporters. While no research has been done on this here in Ireland, it has been estimated that passive houses cost 10pc more than standard homes in the UK. Requirements include triple glazed window systems, mechanical heat exchange systems and a series of ultra concise inspections by those certified by the Institut to ensure the finished dwelling meets the very exacting standards.

I'd love to own one but I can't afford it.

I have talked to a number of people over the years who have built one-off passive houses. Usually of an eco persuasion, they have been unanimously happy with their homes which have mostly been in rural areas. Most however indicated that they had shelled out far more than they had expected.

While a passive house is a good thing to have, so too is a Mercedes-Benz or a performance speedboat. As a highly-engineered home, in many ways the passive house is the luxury model. So why is the council deciding on our behalf that we can all afford one (even if it does ultimately save money) and that we should pay more for our homes in the council area as a result?

In the same plan, the DLR council is also seeking to extend the minimum sizes of site spaces which, according to construction chiefs, will mean a four-bed house has to have a 14-metre long garden instead of an 11-metre long garden as previously stipulated. Again, more garden is great but it also increases the cost of the built new house.

The same Council also has some of the highest local authority levies in the country. Levies typically ranged at about €3,000 per unit in the early boom years, but reached up to €25,000 by 2006 as councils realised they could cash in on the property surge. Dun Laoghaire Rathdown has levied as high as €60,000 per property for one scheme in recent years. But let's leave DLR Council alone for a moment, and all those others who consider upgrading house standards to Mercedes levels.

Let's also consider that recent changes to building regulations - which experts have variously calculated have already added between €35,000 to €60,000 to the cost of a new home (dual aspect only apartments anyone?). Thus far, if we have a passive house with a longer garden under the new regulations, we could be talking about an extra €100,000 on top of the price of a €400,000 house. All for good, but all for adding to the expense.

Land prices, labour costs and materials costs have also been edging up. As the cost of homebuilding has been increasing, household spending power has been falling hard since the downturn. Wages in Ireland have been static or falling in real terms thanks to wage cuts and additional taxes - property tax, the Universal Social Charge, bin taxes, water bills and other surging household costs not there in the boom.

Finally the amount a couple can borrow has recently been clipped substantially by new credit rules with a couple now expected to have an €80,000 deposit for a €400,000 house or €40,000 if they are first-time buyers. It means buyers can afford less while regulations demand more expense.

This is essentially a cities problem and it's been happening in the UK for a decade. As far back as 2005 the then Labour government attempted to solve the problem of homes become relatively less affordable by challenging the UK's construction industry to come up with a £60,000 house and pledging to build 60,000 within three years. An Irish company won the competition which showcased a range of high quality and high tech "kit" and prefabricated homes which were supposed to be built at lesser cost. But they costed much the same as average homes in the end because regulations demanded high standards which simply had to be met.

Raising the bar is great, so long as we can all buy into it. Meantime all councillors should be made to buy a Mercedes.

Indo Property

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