Tuesday 22 October 2019

Ivan Yates: 'Politicians play Nimby card as housing crisis haunts FG'


Mickey Mouse policy: Housing Minister Eoghan Murphy is expected to be ousted this year. Picture: Steve Humphreys
Mickey Mouse policy: Housing Minister Eoghan Murphy is expected to be ousted this year. Picture: Steve Humphreys
Ivan Yates

Ivan Yates

The word from inside Leo's inner sanctum is once the Euro and local election hurdles are cleared the June reshuffle will see Housing Minister Eoghan Murphy shifted out of the portfolio.

The housing crisis, unlike Brexit, is a disaster visited on ourselves by ourselves.

There's no reason - unlike the interminable war-zone in health - the incumbent housing minister shouldn't be a popular, dynamic deliverer.

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And yet by any analysis the policies to radically increase output of affordable rental and social houses simply aren't working. I would argue changes among senior civil servants in Custom House are also required, along with the politicos. Specifically, the guidelines emanating from the chief planning officer Niall Cussen must be reappraised.

Constraints inhibit new housing development. As he moves to become an independent planning regulator, the policy must change.

Construction in 2018 once more fell well short of admittedly overblown Government promises. The approximately 18,000 new units include 12,000 one-off owner/occupier homes, retrofits and renovations.

The most recent Dublin Task Force data on housing supply reveals a 20pc decrease in the total number of units "under construction" in the latter part of 2018. The numbers of extant planning permissions, which have yet to begin construction, reveals a 36pc increase - suggesting the real problem is viability.

Last April, the Housing Department published its own review of the delivery costs and viability for affordable residential developments. It correctly noted that housing should comprise 40pc of the €20bn overall construction sector; this currently falls well short, with half the proportion that occurred in 2005/6.

The commercial/office development sector continues to rocket ahead. Thus total construction activity barometers miss dysfunction in residential construction.

Land banks have become investment commodities rather than potential building sites, as vacant site levies have had no impact. Rental yields and market values of apartment blocks are below the cost of construction. Despite Government promises to grow the city populations of Cork, Limerick, Waterford and Galway by 50pc, developers aren't proceeding because they can't recoup costs until the entire development is completed.

The Government promised the establishment of a housing finance agency as far back as October 2017. No working/development capital has been made available. Banks are still reluctant to provide finance outside the Real Estate Investment Trusts (REITs), PLCs and largest developers.

It is housing department policy to be complacently content with 20,000 units per year. They're actively preventing the building of traditional estates of three- or four-bedroom semi-detached houses.

The current housing density guidelines of 35-50 units per hectare prevent planning permission being granted for anything other than apartments.

Traditional phased developments, selling up to 30 units at a time, are choked by new legislation coming into effect last December which empowers An Bord Pleanála to prevent councils applying commonsense, localised flexibility.

New development on green field sites in the Dublin area cannot happen before 2026. The next capital development plan is to be reviewed in 2020, meaning it'll be 2022 at the earliest before more land can be re-zoned.

Given it takes two years for planning permission and a further two years to build, it'll be several years before land acquired by major residential developers can yield house keys to tenants.

Fine Gael in government has done nothing to reduce the cost of affordable homes.

Houses costing €300,000 contain a tax surcharge of 20pc or €60,000. There's been no VAT reduction or contribution rebate initiative to stimulate a one-off supply of accommodation. Development and social housing related levies are combined with infrastructural costs to make the end purchaser price well beyond the 3.5 times Central Bank mortgagors' limits.

Social and rental housing needs to increase by a factor of 10. But even bringing State-owned land to the market that could provide 70,000 units is endless delay. The new Land Development Agency awaits its first board meeting this month. It should fast-track the facilitation of construction with contract tendering.

Politicians are downright disingenuous on meeting the urgent need for housing. Public representatives campaign to stymie new houses by pandering to Nimby-ism.

The latest minister to oppose the construction of 377 apartments in Marino is local deputy Finian McGrath. Previously, in adjoining Raheny, politicians also sided with residents to enhance existing high-end property values at Griffith Avenue.

The permanent Government is happy with the housing crisis; content that large REITs (real estate investment trusts) and a coterie of developers build on large-scale sites in Dublin, which will eliminate smaller builders in a decade.

The biggest myth of all is that supply will come right if we're patient.

The truth is Brexit-related labour market requirements, homelessness pressures, demographics and repossessions will compound an ever-worsening shortage. The provision of the 35,000 units remains a political pipe-dream.

Irish Independent

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