LDA on track to build fewer than 10,000 homes in next five years
The Land Development Agency will only be able to deliver fewer than 10,000 homes in the next five years at best due to financial, capacity and development constraints, its new report on public land reveals.
The LDA, which was established in 2018 to unlock State-owned land for desperately needed affordable housing, has classified sites for just 9,760 homes as “least constrained” for development.
According to the LDA’s definition, that means they “represent an opportunity to deliver” new homes in the next five to 10 years – meaning an average of only 2,000 homes a year if development occurs at the fastest pace.
Moreover, the land in that category makes up a small fraction of the LDA’s overall potential portfolio, which it says could accommodate nearly 67,000 new homes.
However, the vast bulk of those landbanks are effectively ruled out for development for at least the next decade because they will require significant work, such as rezoning or major infrastructure upgrades, to be fit for residential use.
As many as 39,000 potential units are in this category, which are least likely to be developed.
The LDA said it already had 5,000 homes in its direct-delivery pipeline at various stages of development, plus a potential 5,000 more through cooperation with private developers under an initiative called Project Tosaigh.
The realistic number of units the agency can credibly deliver in the medium term is only a small percentage of the overall housing need in the country.
Assuming a housing requirement of 30,000 homes annually for the next five years, the LDA would satisfy only 10pc of the total need if it builds every potential house in its “least constrained” category plus every public-private unit in Project Tosaigh.
But it also isn’t clear that the LDA has the financial resources to do that.
The agency was capitalised with a five-year budget of €3.5bn in September 2021 under the Government's Housing For All plan. But by last April chief executive John Coleman was already expressing concerns about high inflation eroding its spending capacity.
Since then, interest rates have gone up significantly, dramatically increasing the cost of debt funding, which makes up at least half of the LDA’s financing.
At a development cost of €300,000 per unit, which is consistent with the LDA report’s own estimates, the agency currently has the financial firepower for fewer than 12,000 homes.
“That sounds like a lot of money and it is but delivering housing is an expensive business,” Mr Coleman told a media briefing on Tuesday.
“Unlike a private-sector developer, we don't typically sell our product. So the money doesn't recycle back in, it just goes out. So, over the longer term, the capital capacity of the LDA will have to be something that's in constant discussion to meet what is set out for us in terms of land availability, and so on.”
He said that discussions with Government were “going on all the time” to match available resources to the available opportunities in terms of accessing and building on public land.