Housing Minister Darragh O’Brien’s landmark €450m apartments plan faces delay until next year due to EU clearance backlog

The European Commission is being blamed for delays in signing off on the Government’s flagship scheme to build apartments.

Housing Minister Darragh O’Brien’s €450m Croí Cónaithe (Cities) scheme, which gives up to €144,000 per apartment to developers, may now not go ahead until next year.

A green light for the scheme has not been given by the EU Department of Competition (DG Comp) and it could be next year before it is formally approved.

The warning has come from Department of Housing officials in a detailed document outlining the department’s activities and structures, prepared in December.

“The department are continuing engagement with the DG Comp regarding our notification seeking to have Cities Scheme cleared as a state-aid scheme and hope to have concluded that by end year, although that is dependent on DG Comp who have indicated that there is a backlog of notifications which is delaying matters,” the document states.

The scheme must be signed off as a state-aid scheme by the EU as there is a high level of exchequer funding involved.

The Irish Independent previously reported the Government has been forced to put out a second call for expressions of interest in the scheme as it was snubbed by developers the first time around.

No development applications have been approved yet for the Croí Cónaithe fund, worth €450m and a pivotal part of the Housing for All plan.

A total of 5,000 apartments are expected to be built as a result of the supports by 2026.

Officials are also currently working on new supports to activate stalled planning permissions on cost-rental housing “at scale”, briefing documents show.

A working group across the Departments of Housing and Finance has been set up to examine possible proposals.

The report is to be brought to the Government by April.

It is not clear what proposals are being examined.

However, loan supports to help approved housing bodies (AHBs) were increased from 30pc to 45pc of development costs.

This support may be increased or the loan mechanism improved to encourage more cost-rental apartment building.

Officials warn higher-density projects in Dublin are becoming “unviable” and the building of high-density cost-rental homes has become “severely constrained” by spiralling construction costs.

“High-density cost-rental delivery, considered an optimal affordable delivery in the cities, is severely constrained by high apartment construction costs,” the briefing document states.

Building affordable housing in cheaper urban areas is also “challenged by the subsidy available being insufficient to deliver affordable prices or rents as construction costs rise”.

The document also points to a survey by Knight Frank which details the availability of land, planning delays, labour and material supply constraints to be the biggest challenges for builders.

Officials reference recent CSO data, which shows planning permissions for apartments falling 67pc when compared to autumn of 2021.