‘We need to build far more homes of all different typed’
Public Expenditure Minister Michael McGrath conceded the Government must do more to address the housing crisis and admitted work is needed to attract and retain small landlords in the rental sector.
Rising costs, bottlenecks in the
planning system and a “reluctance in some instances to turn the sod on new schemes” because of supply-chain problems, or issues accessing finance were posing difficulties for the supply of new homes.
Speaking to property auctioneers and valuers last week, Michael McGrath said government will also have to review the national planning framework in light of census data revealing Ireland’s population is growing at a much faster rate than previously thought.
The current framework, Project Ireland 2040, commits to a headline target of delivering 550,000 new homes by 2040 — an average of 25,000 per year.
While the Government’s Housing For All plan aims to deliver on average 33,000 new units per year up to the end of 2030, McGrath said longer-term infrastructure targets need to be revised. With preliminary census figures showing the population is now at its highest since 1841, the minister said this and inward migration figures will have to be considered.
“What all of that means is we have to build far more homes of all different types,” he added.
“The private market has to continue to deliver and increase output, and as a government we have to deliver more public housing through our local authorities and approved housing bodies — and we have announced a range of schemes in that regard — so more affordable homes, and also cost-rental homes.”
McGrath, who will become finance minister next month, told the Institute of Professional Auctioneers and Valuers (IPAV) European Valuation Conference he believes new housing supply is constrained because of “rising costs, supply-chain difficulties, and in some cases access to finance”.
“We have to address all of those issues as a government, to make sure we can unlock the potential that is there. We have between 70,000 to 80,000 units with planning permission around Ireland which have not commenced for a whole variety of reasons — principally the reason of viability and the challenge that is there.”
He said supply also needed to be enhanced and retained in the private rental sector.
IPAV and the Irish Property Owners’ Association (IPOA) have previously warned that landlords were leaving the market in droves. Both organisations said smaller landlords are angered at paying up to 52pc tax on rental income, while institutional landlords are taxed at lower rates.
McGrath said Housing Minister Darragh O’Brien and Finance Minister Paschal Donohoe were in on-going discussions around the Finance Bill “to see what further we can do, not just to attract, principally to retain people who are in the market at this point in time, because of the shortage of accommodation that is there.”
The Government has “work to do”, McGrath conceded, and added: “We are very conscious of the exodus from the rental market of small-time landlords in particular”.
He also voiced concern about the high number of planning decisions being overturned in the courts, and said that “in some instances” this can be “a blockage to development” — but added that this was not a criticism of the legal system.
“It’s the fault of a planning system that is not necessarily robust, and is delivering decisions that cannot be stood over when they are deeply challenged.
"That is why we have embarked over the past 12 months on a major, radical and vicious programme of work, in terms of consolidating planning law in this country and reforming it.”
There was also a warning that new European rules could have a chaotic impact on property valuations next year.
The European Group of Valuers Associations (TEGOVA) chair Krzysztof Grzesik, an expert on property in Poland and the UK, said he is concerned that proposed changes to the rules on European capital requirements are open to interpretation and could be applied inconsistently.
The rules aim to encourage more conservative valuations.
Mr Grzesik told the Sunday Independent that this proposed change — along with rising interest rates, impacts from the war in Ukraine and potential supply constraints — mean it is difficult to predict how property markets in Europe will perform next year.
“I don’t think we are in a position to predict. Logically, one could assume because of restrictions in lending and higher interest rates, affordability will go down — and the logical conclusion is prices will go down. But we really don’t know how far.
“I think valuers should be very nervous about predicting the future.”
Engineers are expected to test between 300 and 600 homes every year to see if they are affected by mica and qualify for the new Defective Concrete Blocks Grant Scheme, according to the Housing Agency.
The agency is recruiting teams of chartered engineers to “survey, assess, sample, test and categorise” homes affected by the scandal.
Applications for the scheme are made via local authorities in affected areas but the Housing Agency will inspect homes and determine if they meet the damage thresholds for entry into the scheme.
It will also make decisions on “the maximum grant amount” to be available to affected homeowners after receiving reports on homes suspected of being impacted by mica.
Homes in Donegal, Clare, Limerick and Mayo are to be surveyed under the scheme, but the Housing Agency said it will recruit teams of engineers to cover each province because it is aware the Government may designate more local authority areas to the scheme.
The agency is responsible for assessing whether defective concrete blocks were used in the construction of homes in local authority areas.
Teams of engineers will also participate in “a notional project” where unaffected homes are tested for mica.
The project will be run “to allow tenderers demonstrate their qualitative skills and price competitiveness”. It will include a survey of 20 homes across the country.
An agency spokeswoman said it is not yet possible to determine how many applicants will have homes tested for mica every year.
“Based on current information it is envisaged that tendered services will be required for between 300-600 dwellings on a per annum basis,” she added.
Engineers will be recruited for two years but the contracts may be extended for another two years at the agency’s discretion.
A 5pc levy will be placed on concrete products next September to help fund the defective blocks scheme.
Finance Minister Paschal Donohoe said the levy should raise €32m annually.