News Comment

Sunday 21 September 2014

Six ways to break down barriers in our housing market and build more homes

Peter Stafford

Published 20/08/2014 | 02:30

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State is not acting quickly enough to ensure housing supply meets demand
State is not acting quickly enough to ensure housing supply meets demand

All the evidence suggests that demand for housing in certain parts of the country, especially Dublin, is growing. As a result, house prices are rising rapidly.

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Yet the creation of housing supply is not following demand. This presents something of a conundrum.

In any normal market, when demand surges, supply increases rapidly to meet it. As in the boom, where demand outstripped supply leading to a substantial overhang, Ireland seems once again to be unable to balance the two.

Recent reports from the Housing Agency and ESRI suggest approximately 15,000 houses per year need to be built to accommodate new households. Around half of these need to be built in the Dublin region.

This housing needs to be a mix of private dwellings for sale and social housing to help relieve the housing waiting list.

In 2013, only 1,360 units were built in the four Dublin local authorities. Nationally, only 8,301 were built. Over half of these were one-off properties that were generally not for sale on the open market and only 291 were social housing. Approximately the same number of units will be built in 2014.

In other words, we are not building anywhere near as much stock as required in some areas and we seem to be doing very little to rectify this. Of course, in other areas we do not need to create any new supply due to the continuing overhang.

The Government's proposed solution is the Construction 2020 strategy. This strategy is long on new review groups and task forces, but so far short on actual policy levers that might help bring supply on stream. Some key elements of this strategy, such as the revised national spatial strategy, are not due to be delivered until the end of 2015.

This is far too slow a response. We need to start creating supply right now to stop the problem from escalating.

That means trying to find common ground for policy response - a task we appreciate is difficult, given the varied vested interests in housing: developers, banks, landlords, tenants, owners, sellers, and local authorities.

We, the undersigned, have differing views on planning and housing policy, but in the interest of trying to foster debate and produce action we suggest adopting the following six interventions to remove barriers to creating supply and stimulate building.

Many of these interventions should continue running until a proper, functioning housing sector is established.

Land and sites

n Introduce a vacant/derelict site tax to get prime sites back into productive use and prevent hoarding; and where possible, use the revenue from this to offset other charges for development.

n The Derelict Sites Act should be rejuvenated to allow for fast-track enforcement.

n Bring non-productive or under- or poorly-utilised state agency land into use for housing.

Planning

n Implement 'use it or lose it' on permissions over three years old. This would force NAMA and other land holders to speed up their implementation plans.

n Put in place multi-expert review teams to examine the possible adjustment of existing permissions and proposals that require specialist referrals to fast-track them into development.

n Consider creating new Strategic Development Zones, such as Adamstown and Cherrywood, with properly resourced delivery agencies to ensure timely construction.

n Bring Dublin planning regulations into line with the rest of the country to reduce planning burdens.

Costs

n The reduction or suspension of development contributions.

n Funding for infrastructure should be part of local property tax, not an up-front hurdle to housing creation placed solely on new owners.

n VAT should be reduced to the lowest legal limit - this will also help to make new housing 
cheaper.

Regulations

n Rework or suspend Part V contributions for two years to reduce the cost burden and speed up the development process.

Finance

n State to provide alternative forms of finance through NAMA and the Housing Finance Agency for social housing, and to encourage other investors.

Developers and other housing providers, such as the community and voluntary sector, are struggling to secure adequate capital as they do not have sufficient reserves for down-payments.

n Reverse cuts in capital spend on social housing and regeneration schemes.

Alternative supply

n A 'change of use amnesty' for converting commercial property to residential use where suitable.

n Introduce grants to help contribute towards refurbishing derelict stock to put it back in active use.

This list is not exhaustive, and many proposals will require political bravery and further debate, but they show the range of options open to government. Most can be implemented quickly, as they require no legislative change.

Whilst these solutions are designed to try and address the problem in the short term, we also need to develop a coherent strategy that more closely matches supply and demand over the long term.

This would suit all parties involved in housing by providing adequate supply to home searchers and certainty in demand for suppliers - and it would help dampen the possibility of boom and bust cycles.

The longer we leave the issue of creating supply that meets demand, the more the pressure will build on existing stock; house prices will continue to rise; affordability will be undermined; and Ireland's quality of life and economic competitiveness will be damaged. In short, we need to act to try and stop the legacy of one crisis spiralling into another.

Peter Stafford, Director, Property Industry Ireland;

Karl Deeter, Irish Mortgage Brokers; Rob Kitchin, Professor, National University of Ireland Maynooth; Ronan Lyons, Assistant Professor, Trinity College Dublin;

Frank Quinn, Lecturer, Blackrock Further Education Institute;

Lorcan Sirr, Lecturer, Dublin Institute of Technology

Irish Independent

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