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‘It’s a complete mess’ – developers snub scheme offering up to €144,000 per new apartment built

Government scheme worth €450m hoped to incentivise builders to build 5,000 home

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Public Expenditure Minister Michael McGrath said the Government must do more on the housing crisis. Photo: Frank McGrath

Public Expenditure Minister Michael McGrath said the Government must do more on the housing crisis. Photo: Frank McGrath

Public Expenditure Minister Michael McGrath said the Government must do more on the housing crisis. Photo: Frank McGrath

Developers have snubbed a scheme offering up to €144,000 per apartment which had aimed to build thousands of new homes around the country.

It was hoped the Government scheme worth €450m would incentivise builders to construct 5,000 apartments up to 2026. But sources in the construction industry said the scheme was not attractive enough for builders as it has “serious structural issues” and money is paid out too late in the building process.

Apartment-building has reached a new crisis point as the Government is being forced to issue a second call for its flagship Croí Cónaithe (Cities) fund due to insufficient interest from builders the first time around.

It is a fresh blow to the Coalition’s hopes of resolving the housing crisis.

Public Expenditure Minister Michael McGrath has conceded the Government must do more to address the housing crisis.

Speaking to the Sunday Independent he said: “We need to build far more homes of all different types.”

The first call for expressions of interest from developers into the Crói Cónaithe (Cities) fund was launched in June.

The Department of Housing will now issue a second call for the scheme by next summer.

One source said developers have little interest in the scheme as it does not give security to builders until too late in the process of building apartments.

They called it “hugely problematic” and with “serious structural issues”.

“Nobody will fund apartments unless they have a guarantee they will get the money,” the source said.

“It may work for the very wealthy funded developers who operate as private limited companies, but most developers who struggle to meet the viability gap as it is don’t feel it is good enough.”

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And a developer said the scheme was “too complicated”.

“It’s a complete mess, even reading the details of it would give you a headache and people are just not going to use it,” the developer said.

Managing director of new homes at Sherry FitzGerald, Ivan Gaine said the launch of the scheme was too close to the launch of the controversial First Home scheme, which came out several weeks before.

He said the window for developers to submit their applications for Crói Cónaithe (Cities) funding was too short.

“These things take months and months for people to understand and be defined,” he said.

Mr Gaine said he was aware of “issues” around the timing of the scheme and the “certainty” surrounding when the money would be paid out.

However, he hoped there would be more interest in the scheme the second time around as he said a “subvention” is required.

Conor O’Connell, director of housing and planning at the Construction Industry Federation (CIF), also echoed concerns around when money is paid out to developers under the scheme.

“You get the money at the end and it is aimed at the purchaser. From the apartment builder’s perspective, you still have to carry all the risk associated with the construction phase, with no finance coming in and with no guaranteed end purchaser at the end.”

The Department of Housing refused to give figures on the numbers of expressions of interest which have been made by developers into the scheme, citing “commercial sensitivity”. However, it admitted there is “capacity” for further interest from developers.

“We can confirm the initial Expression of Interest has yielded a positive return. However, the department believes that there is capacity for an additional call for Expressions of Interest in 2023, subject to the first process concluding.

“The details of that will be announced in due course.”


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