Sunday 15 September 2019

Using State lands and cutting VAT on new homes will help address housing shortage

As Census 2016 shows the true depth and extent of a housing crisis which shows no sign of abating, Paul Melia sets out some possible solutions

'While the Government has reduced development levies, provided resources to planning departments to speed up processing of applications and increased funding to pay for infrastructure to help deliver homes, it’s clear that the pace of delivery is too slow. More could be done.' Stock Image
'While the Government has reduced development levies, provided resources to planning departments to speed up processing of applications and increased funding to pay for infrastructure to help deliver homes, it’s clear that the pace of delivery is too slow. More could be done.' Stock Image
Paul Melia

Paul Melia

Two figures revealed in the Central Statistics Office's 'Housing in Ireland' report set out the profoundly dysfunctional nature of the housing market. The first is that 3,308 apartment blocks dotted across the country, capable of providing 11,680 homes, are completely vacant.

The second is that 10,000 vacant homes are within 1km of a town or urban area. Not up a mountain, or down an isolated boreen, but capable of providing homes close to existing communities and essential services.

The CSO also notes that just over 33,000 new homes were built since 2011. There is a discrepancy with official figures, which put new home completions at just over 55,000 in the same period. But the fact remains that whatever figure is used, the number of homes being built is way below the levels needed to meet demand.

While the Government has reduced development levies, provided resources to planning departments to speed up processing of applications and increased funding to pay for infrastructure to help deliver homes, it's clear that the pace of delivery is too slow.

More could be done.

The first is to release State lands for housing, in partnership with private developers. Local authorities routinely purchase land - €60m was spent in 2015 - and they control vast land banks across the State. Also, other State agencies, including the OPW and HSE, also have sites, many in areas of high demand.

There's no reason why deals cannot be struck with developers to build homes on these sites, and the Government can set out the number of units for social housing required on each plot, and the prices which can be charged for affordable homes for first-time buyers.

It also needs to look at cutting VAT on new home construction. A three-bed semi-detached home in Dublin costs €330,000 to develop, of which €40,000 is VAT. There's no reason why this couldn't be slashed. The Government could also set a maximum price for units - x for a one-bed apartment, y for a two-bed and z for a three-bed, which would mean buyers and not developers would benefit from the taxpayer's largesse.

There's a also a need for some forum to start looking at ways of helping homeowners wishing to downsize strike deals with those living in overcrowded accommodation but paying hefty mortgages. If an older couple want to move from their four-bed, and a young family with children need a bigger place, there must surely be some mechanism which would allow both parties to end up in suitable accommodation that they are happy with, taking into account the financial circumstances of both parties. Could they house swap, and the downsizing couple be paid a monthly rent? It's certainly worth exploring.

We also need to build high-density homes in urban areas, close to essential services, and look at the State lending money for new house construction, given the high interest rates being charged by banks and private lenders.

We also need to get a handle on building costs, and see if the bricks and mortar element of a new build are more expensive here than abroad.

Finally, should a rural resettlement programme be explored? There are almost 90,000 vacant homes in rural areas, and some families may be happy to move from the cities and begin a new life in a new community.

We know that in many parts of the country, essential services such as schools and health facilities are under-utilised as Dublin continues to expand at the expense of the regions. More people brings more business, and with it the potential for jobs growth. Utilising services the State is already funding can only be a good thing.

Such a programme might not only go some way towards helping to solve the housing crisis, but also promote some form of balanced regional development where those seeking a property aren't priced out of the market, but instead can invest in somewhere to call a home.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss