Saturday 25 May 2019

Ivan Yates: Red tape has only served to heighten homes crisis

Yates Country

Guidelines: Housing Minister Eoghan Murphy
Guidelines: Housing Minister Eoghan Murphy
Ivan Yates

Ivan Yates

This country is still enduring the greatest housing crisis since the 1920s.

This is quite an achievement, considering housing was the primary focus in the last two budgets, with a €2.3bn annual allocation and four years of multiple policy pronouncements.

The main reason for rocketing rents that swallow 40pc of household income in cities, and for the dream of owning a home being beyond an entire generation, is the failure to build more than 30,000 units a year.

This is a market failure - the delivery of the number of private homes required will not be met by the private sector.

But many projects will not come to fruition because of the dysfunction of the Department of Housing, Planning and Local Government.

In retrospect, Nama and successive governments were very short-sighted during 2009 to 2013 to pursue a policy that blamed developers for all the country's woes.

Nama and the pillar banks closed down almost all the major housebuilders in the country, precipitating the exodus of thousands of skilled construction workers.

Vulture funds made a killing (their gains were tax free) on bargain-basement prime development sites - netting billions in hoarding sites.

This was compounded by the fact there was no immediate obligation to develop the site.

In 2015, politicians finally woke up to the serious dual problems of affordable/social housing. As the banks sold loan books, the consequent displacement of 40,000 families over-loaded council house waiting lists and homelessness to record levels.

Custom House responded with 'Rebuilding Ireland' - a compendium wish list of action plans marked by a notable lack of joined-up thinking to implement the delivery of house keys.

Infrastructural investment to provide fully-serviced sites with water, drainage and roads was to be provided through an innovative Local Infrastructure Housing Activation Fund scheme, with targeted allocation of €200m.

But here is the thing: why has only €1.6m of this been drawn down three years later?

Many sites awarded funding still remain to be serviced by Irish Water, and cannot obtain a final house sale price that will give an economic return to the developer.

A major contributing factor to the paralysis in house supply is the dysfunction of the Department of Housing and Planning.

Social housing projects of up to €7m were routinely unnecessarily delayed for two years because of a crazy series of approval stages individually required by the department.

It now transpires that density guidelines are also crippling private housing development.

They require a proximity to national transport arteries and there is an insistence on 50 dwellings per hectare.

This necessitates the need for four-storey or more apartment blocks in towns like Mallow, Kildare and Cobh.

The mandarins' stricture is based on "acceptable efficiency in serviceable land usage".

In implementing these national guidelines, planners say, viability is not a consideration for them.

Currently, sites all over the country suitable for immediate housing development are being compromised by these national policy rules.

The 2009 planning guidelines are impractical, applying the same policy to Dublin city centre as it does to many rural Irish towns. It's red tape devoid of reality.

The same department commissioned a report this year entitled 'Review of delivery costs and viability for affordable residential developments'.

It identified all the practical problems of funding, viability and financial contributions - yet not one policy initiative to deal with these problems has been forthcoming.

The same systemic structural failed relationship between this department and local authorities gave us decades of inefficiency.

It led ultimately to the National Roads Authority, Irish Water, privatisation of bin collections, and the Revenue Commissioners taking responsibility for the Local Property Tax.

In each case, Custom House and councils had to be relieved of their responsibilities.

Officialdom seems to combine to create layers of bureaucracy that strangle developers by implementing a national density straitjacket that fails to give local discretion. Property professionals believe this alone is blocking the immediate commencement of building 10,000 houses across the country.

The economics of apartment development are quite different to housing schemes, which can be phased by building a number of units at a time - creating cash flow as each phase progresses to market sale. A block of apartments has to be financed 100pc to completion before a single unit is even sold.

Banks won't lend on this basis. The result is that international finance funds will own all the apartment blocks in the greater Dublin area by buying the entire building.

Ordinary families simply can't compete and are locked out.

Rigid sustainable development guidelines issued by Housing Minister Eoghan Murphy effectively refuse planning permissions on rail corridors outside the M50. Within 1km of these routes, both councils and An Bord Pleanála are treating them as if they were inside the M50.

Construction costs of these units in apartments exceed the market value an estate agent can obtain.

Landowners in Limerick, Cork, Galway, Wexford and Waterford are thwarted in their development plans. An Bord Pleanála has recently refused planning developments specifically in Bearna, Co Galway, and Magee barracks in Kildare on density grounds.

Developers have worn a path to Mr Murphy's door, yet he fails to confront the issue. The logical solution is to allow local discretionary flexibility to build traditional three- or four-bed housing schemes outside our cities. The likelihood is 23,000 housing completions will occur this year - around half the national requirement.

Two flagship Government projects to release 50,000 new houses from 700 publicly-owned sites and €750m of low-cost construction finance to indigenous building firms for up to 100-unit schemes, have yet to procure one house or €1 of lending.

A disconnect between ministerial/Government pronouncements and actual house completions has not helped.

Disjointed non-delivery is due primarily to failure to listen to developers who are demonised - auctioneers and practitioners in the property market also get a deaf ear.

The most damaging legacy from the crash was to see politicians distance themselves from frontline construction and development.

Ultimately, we'll realise that the housing crisis won't be resolved by bureaucrats, rather by those with a track record of technical know-how and commercial construction experience.

Their solutions to reduce house costs by Vat reductions and more land zoning are binned.

Irish Independent

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