| 15.1°C Dublin

Home truths: Ireland's big empty housing prospects

Close

Ailesbury Road, Dublin 4

Ailesbury Road, Dublin 4

Ailesbury Road, Dublin 4

THE international property "guardian" network Camelot has just announced its intention to expand here in Ireland.

Camelot is famous for taking care of empty buildings around the world with its vetted volunteer "guardians". These benefit from cheap rent while the building's owners can relax because someone is on site to prevent the vandalism and fires which inevitably take place once a building stands vacant.

Endless articles have been generated around Camelot - usually focusing on people who live in grain silos, famous old churches or vast empty hotels. Last year, I wrote about young people excited about paying just €62.50 per week to live in 1 Ailesbury Road - a vast trophy period property on one of Ireland's two most expensive streets.

Camelot sees Ireland as a perfect market for expansion because it estimates that the numbers of empty buildings here are continuing to rise, while rents on the other hand are also on a steep upward curve - the perfect Camelot climate.

But surely there is something ­seriously wrong with the vacancy/rent surge ­picture that presents Camelot with ­opportunity?

According to Geoview, the geographic arm of An Post, there are around 7,000 empty commercial properties in Dublin at the moment - that's almost 14pc of all of the city and county's commercial buildings. Galway's tally is almost 15pc while Cork City has 11.5pc of commercial buildings empty. The national commercial vacancy rate in Q2 2014 was 12.6pc - a big increase on the 11.9pc vacancy rate recorded in Q2 2013. So Camelot is right.

There are vast numbers of closed shops in secondary city streets, empty because of the recent recession, changes in shopping habits and a shift to online. We know that a good number of these will never again be required for retail purposes.

There are expanses of empty buildings in old run-down industrial areas where no one wants to base a company any more. These will not be used again for purpose either.

Geoview's calculations don't take into account the hundreds of part-occupied buildings with shops occupied on the ground floor but with three to five times the empty space in floors overhead. Once occupied by shopkeepers, then by flatlanders and today often by pigeons and vermin, these floors have became too run down or costly to insure as lettable residences.

Now add to this the legions of recently emptied pre-63 properties which once housed warrens of bedsits, but are also standing empty all over the city centre - many for sale and devoid of buyers.

The landlords don't have the money to refit them to comply with recent regulation changes and potential buyers can't bypass other regulations to revamp and let them.

An estate agent I talked to recently has five of these empty buildings on his books and he says they once provided small homes for more than 30 people. But if they sell, they're likely to be converted back into single family homes. From 30 homes to five.

Even more empty space is being generated by the The Nursing Homes Support Scheme, designed to prevent people from having to sell their family home and to help fund their long-term care for incapacitated elderly people.

When the family home is held, there is a cap of 22.5pc of value on what the health services can take back against a period of care which is indefinite. However, if the family home is sold, then the health services can take 7.5pc each and every year uncapped.

Renting the resulting empty home results in 80pc of the income going to the health services and the rest to the Revenue Commissioners. Having a family member stay there for free results in gift tax complications. The result is that these homes stand empty and useless.

In other countries the warehouses, old unwanted shops, overhead spaces and old homes in cities don't remain empty for the same reasons they do here. In American, British and European cities, the "warehouse conversion" or "flat/apartment project" in a busy street is a valued home sought after by the well-to-do.

So why is Ireland's empty space increasing at the same time as we suffer from a housing crisis in populated areas?

It's down to red tape - planning regulations combined with building regulations, fire regulations, conservation regulations and tax regulations - none of which are joined up and which are becoming increasingly opposed to each other.

Therefore it becomes difficult to convert the mixed-use shop with a residence overhead into a single home because of rates clawbacks and zoning complications; or to turn empty bedsits into new apartments because the wheelchair access and fire escapes required by one lot of state regulations are forbidden by others (conservation requirements).

So buildings rot. And residential rents soar and families struggle to find affordable homes amidst a shortage of space we already have - all lying empty.

Indo Property