In February this year the Government released the Housing for All Q4 2021 Progress Report. The accompanying press release celebrated ‘significant progress towards the Government’s plan to increase the supply of housing to an average of 33,000 units per year, and fundamentally reform the housing system to ensure it is sustainable into the future’.
The report declared ‘confidence that the targets for delivery of homes for 2022 will be met and very likely exceeded’, with commencements ‘the highest since 2008’ and ‘over 39,000 planning permissions were granted in the 12 months to end-September 2021’.
Over half of the 213 action points in Housing for All ‘have either been completed already or are being delivered on an ongoing basis’. In response we sought the views of CIF members for their feedback to the aspirations of Housing for All and the Q4 2021 progress report. Respondent members reported an average expectation of 94 weeks from commencement to completion of developments. Depending on scale some developments would range either side of this timeline.
For a typical house, excluding site development or infrastructure, a majority (57 per cent) estimated 20+ weeks for the home build. Concerningly this is up on a previous average of 16-20 weeks.
Worryingly, 86 per cent of respondents reported abnormal delays in the provision of utilities from Irish Water and ESB Networks. Meanwhile, 43 per cent reported planning and compliance delays as issues. Taken together this evidence bolsters member sentiment that illustrates planning is no guarantee of viability.
Viability and costs
We are not seeing the same level of throughput from planning to commencement, and homebuilders are experiencing an elongated period from commencement to completion of scheme developments. Recent independent reports highlight the average timeframe for scheme developments from grant of permission to commencement is almost two years. It’s taking too long to get to site and that impacts viability.
The delays are due to the time taken to obtain a fire cert, agree compliance obligations, install infrastructure, secure funding, procurement and so on. Most of which is outside the builder’s control. The impact of such a delay is devastating because we simply do not know what the full impact of rising costs will be in two years’ time, however, we do know today that what was marginally viable in 2020 is simply not viable today.
The result being further disadvantaged prospective home buyers or those trying to find more suitable accommodation for their families. Any discussion on viability must take into account costs. These costs must account for the true costs the development costs and all comparisons should be like for like.
The soft costs such as levies, taxes and contributions account for almost 52 per cent of delivery of typical residential developments. There is a real opportunity to reduce the cost of construction by looking at these soft costs and reforming the planning system and standardising our regulations for densities, open spaces and garden sizes. This would provide real value for those trying to access the market.
In terms of policy, a number of county development plans are at draft stage and propose a number of critical policy changes. We have reviewed numerous draft Plans and submitted to the relevant authorities a series of recommendations and amendments that we consider necessary to ensure the supply and cost of housing in these areas is not adversely impacted upon.
Policy and Judicial Review
Our key concerns relate to policies which could negatively impact Build to Rent (BTR) developments, including the proposed locational restrictions, unit mix requirements, and Core Strategy which places greater restrictions on the delivery and supply of housing.
It was also noted that Judicial Review of planning applications is now becoming more relevant in draft Plan preparations, with a number of recent plans being subject to judicial review. It is contented as beneficial for the Planning Authority to undertake a detailed legal review of the Draft Plan before publishing the proposed amendments to ensure it stands up to legal scrutiny.
Despite the Strategic Housing Development (SHD) planning system coming to an end, the Government has allowed County
Councils to continue with the review of their County Development Plans. This means that there will be a local planning policy conflict from when a SHD application is lodged to the determination of the same. This will happen in particular in Dun Laoghaire Rathdown (DLR), Wicklow (WCC) and Fingal (FCC) County Councils where the adoption of their new Plans are imminent.
Despite pleas from industry experts highlighting the additional legal risk this will expose positive planning decisions to, the situation has so far been allowed to continue.
This risk can be avoided by pausing the review and adoption of new Development Plans for a short period until SHD applications have been determined. Notwithstanding all the above, whilst some have pointed to the new Large-scale Residential Developments (LRD) process as the saviour to the current planning impasse, concern remains that planning decisions will continue to be challenged as judicial reviews are now widely recognised as an easy and accessible way to frustrate and delay development.
Furthermore, the fast-track nature and consistency associated with SHD decisions may potentially be lost in the new LRD process. Today’s market presents a number of obstacles for homebuilders. Builders require more assurance that they will have a steady supply of homes to build. County Development Plans have too short a life cycle to address the needs of homebuilders to produce homes on serviced land, which is in short supply.
The development plans of boroughs in the United Kingdom, for example, have a 12- year life cycle. They undertook that change realising that identifying infrastructure and getting from planning to start to finish in five to six years was simply not achievable. Ireland could benefit from the same. Combined with rampant material cost inflation the industry faces a difficult future.
The need for reform
We are currently witnessing members working on the ground that could see a product inflation range of approximately €25,000 by the end of 2022 compared to 2021. It’s difficult to the point of impossible to provide a definitive figure. The impacts of such inflation could be far reaching. Either the increased cost is absorbed by the homebuilder, if not added to the cost of the home pre-tax profit will drop below the primary criteria to access financing from financial institutions and therefore developments will never commence, or, the cost will be passed on to the home buyer, further diminishing their ability to secure a mortgage in an already restrictive environment.
There is high hope that the reform of the Planning and Development Act expected later this year will positively impact supply and residential delivery. The reform provides an opportunity for greater reform of all planning, not just residential. We need to learn from what works elsewhere.
As mentioned, the UK’s encouragement of forward planning and 12-year cycle for development offers good lessons for Ireland to emulate. Members continue to await the mechanics of many Housing for All initiatives such as Project Tosaigh, Croí Cónaithe and the First Home scheme which should all offer opportunities but we need to see urgent actioning of these initiatives.
A series of upcoming IHBA Workshops running through April and May will provide the latest information and expert opinion on housing, planning and development issues to ensure that members are up to date with changes in legislation and regulation. Each session will provide the latest practical information on various topics including Planning & Development, National Development Plan & National Planning Framework, Building Regulations, Finance, Utilities, Construction & Demolition Waste and Construction Industry Register Ireland.