Blunt financial incentives will boost housing supply quickly

Paul McNeive

Refurbishing doesn't emit as much carbon as demolishing and building. Photo: Artur Widak/NurPhoto via Getty Images

March 16 2023 02:30 AM

The Government has seen the light and made the correct decision in not extending the ban on evictions for residential lettings. There is already a stampede out of the market by private landlords and even the institutional landlords are unsettled.

Extending the ban would have decreased supply and increased rents further, just as the rent pressure zones have done, as predicted here years ago.

Government is considering changes to improve the tax treatment of landlords and that is needed, but suggestions along the lines of giving a tenant a first option to buy a property being sold will be unworkable.

A landlord selling will always offer the premises to the tenant – if they can afford it, they may well pay the highest price. But a tenant who can’t afford to buy will have to be subsidised by the State and the bureaucracy around that can’t be allowed to stop someone selling.

One simple way of encouraging landlords to stay in the market would be to grant an exemption from capital gains tax (CGT) for properties held for another five years. CGT reliefs were usefully introduced to help restart the investment market from 2011, but could be extended to all residential investments.

Another topical piece of the housing crisis jigsaw is the conversion of older office buildings into residential accommodation.

This is an area where I do see potential gains, but I’m worried by talk about required changes to building regulations and other legislation. Attempting that will take years whereas the blunt instrument of incentives can spark immediate development.

The dynamic driving this proposal is that older office buildings, which are structurally perfect, are at risk of losing value by becoming detached from the market for new office buildings, which is driven by the sustainability demands of today’s environmental, social and governance agenda.

Thus, with demand for all office space reducing, it makes sense to consider converting older properties to residential use, where there is unsatisfied demand.

It makes sense to consider converting older properties to residential use, where there is unsatisfied demand

It was interesting to note the successful conversion of an office building at Park West, Dublin 22 into 86 apartments, and last week, developers MKN Property applied for permission to convert the upper floor offices in a block under construction on East Wall Road, Dublin 3, into apartments.

Converting office buildings into apartments is all about viability and Savills director Roland O’Connell doubts that the numbers will work in many cases.

“Offices that are obsolete due to their condition are generally worth more for refurbishing as offices, than for residential. However, offices that have become obsolete due to their location are prime for conversion,” he told me.

“Such locations could include some suburban buildings and properties on the fringes of city areas, such as Dublin 1,7 and 8.”

Architect and housing market expert, Mel Reynolds agrees that converting office buildings could become a real business opportunity but cautioned on funding difficulties.

Offices that have become obsolete due to their location are prime for conversion

Mr Reynolds pointed out that underpinning the conversion of existing buildings was that refurbishing generates just a fraction of the carbon produced by demolition and new construction and will be a crucial component in trying to meet carbon emission targets.

Again, the blunt financial incentive will be quickest to produce new homes and repopulate urban areas.

The State should copy Calgary, Canada, where a grant of €75 per sqft is available for converting empty offices.

Welcome!

Welcome! Discover your full benefits as a Premium subscriber.

Blunt financial incentives will boost housing supply quickly

Most Watched

CCTV released of moment gunman robs former boxer Amir Khan

Garda performs Wild Rover by The Pogues on Grafton Street during St Patrick's festivities

Worst pints ever? Irish holidaymaker shares scenes of ‘the Guinness massacre of Andorra’

CCTV shows twins sentenced for abandoning buggy and attacking another woman

Surprising moment Orlando Bloom sings a traditional Irish song in a Windsor pub

Latest Commercial Property

Most Read

Latest