As activist Brendan Ogle, singer Glen Hansard and other members of the Home Sweet Home initiative finally left Apollo House last week, the issue of homelessness continued to dominate the headlines.
The group’s campaign, which was boosted by some other high-profile faces such as the film directors Jim Sheridan and Terry McMahon and the singers Hozier and Damien Dempsey, involved the occupation of Apollo House, a 1970s former civil service building lying vacant in central Dublin. The founders of the initiative came in for criticism but insisted that, if nothing else, the takeover “kickstarted” a national conversation about homelessness.
Certainly, the housing crisis in Ireland has been a topic of concern for some time, and it is recognised that the situation, along with rapidly rising rents, has forced thousands of people into emergency accommodation. Many feel that if the government solves the housing crisis it will signficantly reduce homelessness.
The shortage is “a drought of massive proportions”, according to Ronan O’Hara, chairman of the residential agency professional group at the Society of Chartered Surveyors Ireland (SCSI). “In a normal functioning market, about 4%-5% of the housing stock should be on the market or trading,” he says. “It’s now as low as 1% in some areas.”
At a time of chronic pent-up demand for property to buy and rent, the number of new homes completed in Ireland in 2016 amounted to a little over half of what is needed in the market each year.
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An estimated 25,000 to 30,000 new homes are required annually to deal with normal population growth. “Our data suggests that we’re looking at somewhere between 14,500 to 15,000 units being completed in 2016,” says David Duffy, director of Property Industry Ireland. “Supply still isn’t meeting demand, although we have seen a pick-up in the number of completions.”
But what can be done — and what is being done — to increase the supply of housing in Ireland?
The Rebuilding Ireland action plan, published by the minister for housing Simon Coveney in July, sets out a range of measures aimed at encouraging construction and removing delays.
The plan has been widely welcomed. Brian Moran, chairman of Urban Land Institute Ireland and managing director of Hines Ireland, describes it as “a comprehensive analysis of the issues”.
As part of the plan, the government has committed to investing €200m to provide the infrastructure needed to get large sites started and, in turn, to accelerate the supply of affordable housing. By November 2016 — just four months after the launch of the fund — it had received applications for €800m worth of works from 21 local authorities.
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To tackle the planning obstacle, the action plan proposes that applications for developments with 100 units or more will go straight to An Bord Pleanala.
“I think the fast-track system is a great idea,” says Moran. “If you have a piece of land that’s zoned and serviced, a 28-week path to getting planning on that site is a fantastic measure.”
As well as bringing houses to market more quickly, a shorter planning process should help alleviate climbing house prices, says Duffy. “A lot of purchases of development sites would be funded by borrowing,” he says. “The longer the planning process takes, the more you accumulate in interest, which puts upward pressure on house prices.”
More needs to be done to reduce delays in the general planning system, however, says Moran. “You have this crazy 18-month process to find out you’re not going to get planning because a window looked out over someone’s garden. That could have been fixed in an afternoon of negotiations between the parties.”
“One of the problems is that landowners are quite happy to sit on land and wait for prices to rise
Lack of availability of land for development has been another issue, despite a large number of vacant and derelict sites in Dublin, Cork and Galway. A 2015 Dublin city council audit found nearly 282 vacant sites — 150 acres — that could be used for housing developments. A new vacant sites register was published on January 1, though at the time of writing it was still empty while the council “satisfies itself” that the sites have been vacant for at least 12 months.
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“Great sites are empty, and nobody’s paying any tax to sit on them,” Moran says. “One of the problems is that landowners — state authorities, private landowners, banks and vulture funds — are quite happy to sit on land and wait for prices to rise.”
While he welcomes a new vacant land levy to be introduced in 2018, Moran believes there is too much scope for opt-outs: “All a landowner has to do is put a €100,000 debt on the land and you’re off the hook.”
A decision in November by the Central Bank of Ireland that the deposit requirement for first-time buyers would be reduced from 20% to 10% is good news, particularly coming on top of the help-to-buy scheme announced in the recent budget, according to O’Hara.
Ken MacDonald, of estate agent Hooke & MacDonald, says this will affect developments being built.
“There’s going to be a ramp up of supply. It just takes such a long time from purchasing a site, planning and funding to construction. It takes over two years.”
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The cost of building has been another factor slowing down development. The SCSI has been calling for a reduction in the VAT rate paid by new home purchasers from 12.5% to about 6%, even if only as a temporary measure. In the UK, there is zero VAT charged on newbuilds.
“Some of the local authority levies are outrageous,” says O’Hara. “With contributions to Luas and parkland, you could be talking €30,000 to €40,000 for one unit. The government is looking at solutions, but the need is immediate.”
One may wonder how increasing private housing supply may help the people stuck living in hotels around the country. A greater supply could ease pressure on the rental market and reduce rents, allowing people to return to the rent supplement for their accommodation. The more houses developers build, the more social and affordable housing is built as they comply with obligations under the Urban Regeneration and Housing Act to allocate 10% of their developments to social housing. However, those social housing units are very often the last to be completed in schemes.
Many argue that the government is over-reliant on private developers for social housing needs.
“To an extent, the government will always look to the private sector. It’ll build some social housing but not on a large scale. It’ll probably encourage builders to do it,” says O’Hara.
