New measures to give boost to housing construction announced

Minister for the Environment, Community & Local Government, Alan Kelly T.D., and the Minister for Finance Michael Noonan, T.D., have just announced a number of measures with the aim of kick-starting new housing construction and enhancing supply at more affordable prices.

A number of actions will be initiated from January of next year which will include:

Ø  Enhanced supply of more affordable starter homes in key locations through a targeted rebate of development contributions in Dublin and Cork for housing supplied under certain price levels;

Ø  New National Apartment Planning Guidelines to be issued by the Environment Minister to reduce the cost of apartment building in Dublin City by approximately €20,000 per unit;

Ø  Changes to aspects of the operation of Strategic Development Zones to enable swifter adjustments to meet market requirements;

Ø  The Governments Irish Strategic Investment Fund (ISIF) to examine funding for housing infrastructure on a case-by-case basis

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These measures will combine with previous announcements including, the introduction of a vacant site levy, new Part V arrangements and 20,000 starter homes for the Greater Dublin area to be funded by NAMA.

The national apartment planning guidelines will aim to improve consistency in the approach to future apartment developments throughout the country will enhance supply and affordability by bringing down costs and also take on board and fast-track the addressing of issues highlighted in a review of the Dublin City Council draft development plan.

The new guidelines will retain minimum internal apartment sizes but allow for a certain amount of smaller studio type apartments in certain managed developments, address the minimum number of units with dual aspect, the maximum number of units per lift and revise car parking provision in city centre and public transport served locations.  It is estimated these changes could reduce the cost of apartment building by as much as €20,000 per unit in Dublin City making many potential developments much more viable and enabling them to come on stream and enhance supply.

This will be further combined with a development contribution rebate for developments completed in Cork and Dublin. Where new housing satisfies certain criteria in relation to value for money, achievement of affordable selling prices and sale and occupation by 2017, they will be eligible for a rebate of development contributions paid, bringing down prices to purchasers.

“Combined these measures should make badly needed new housing development in our urban centres much more economically viable. We have a major problem in Dublin in that very little housing at affordable levels is being developed and is adding further to our housing pressures and action is required now.”

“The revised apartment planning standards will uphold good planning practice and at the same time reduce costs of providing an apartment development by at least €20,000 per unit.  While changes of this kind are contemplated in Dublin City Council’s development plan, however there is strong evidence emerging that developers were waiting for these to take effect in 2017 before initiating development and we believe it’s time to fast-track the introduction of the National Guidelines,” said Minister Kelly.

“The changes will in no way affect building standards as these are set down by law. We are proposing changes to technical aspects of planning guidelines. The size of one-bed apartments will remain quite large by European standards so descriptions of “shoe-box” apartments are wide of the mark.  In line with existing safeguards in my Department’s guidelines, the new guidelines will ensure that there a good mix in the size of apartments.    Also, these new guidelines will allow for some city centre developments to be built without the very large costs associated with underground and multi-storey car-parks, which recognises the trend towards urban dwellers who wish to avail instead of lower purchase and rental costs and prefer to walk, cycle and use public transport,”

“For those who build and sell affordable housing at below levels of €300,000 in Dublin and €250,000 in Cork, subject to certain conditions, they will be eligible for a rebate of payment of local authority development levies on sale of the property but must demonstrate the passing on of savings to purchasers through a project plan,”

“We will also further amend legislation to allow for fast-track variations of planning schemes and developments within the Government designated strategic development zones so that developments with more expensive planning schemes from a previous economic cycle can be varied and expedited quickly, added Minister Kelly.”

“The shortfall in housing supply is clearly having a detrimental impact, and without policy intervention the situation could deteriorate further.  The measures that have been agreed today will help stimulate new housing supply, by making it economically viable to construct houses in key urban areas.  These measures, which cover planning, development levies and other areas, will complement NAMA’s undertaking to fund the delivery of 20,000 additional residential units by 2020.

In terms of the rental market, the measures will promote greater stability for tenants, but are time-bound in order to prevent any negative impact on supply.  Taken together, these targeted measures will have a positive impact on the housing market, and I am confident that we will see a significant stream of additional housing units in the near future.  This is in all of our interests.” Said Minister Noonan.

“These measures will help normalise the housing market. Housing completions for Dublin are likely to be down on 2014 figures, despite rapidly rising demand for housing. Therefore these measures, combined with the NAMA units, will have a big impact on housing construction, ended Minister Kelly”

Commenting on the package of housing proposals put forward by Ministers Kelly and Noonan this afternoon, John McCartney, Director of Research at Savills said; “The focus on stimulating the supply side of the market is appropriate and very welcome. In our pre-budget submission we recommended that local authority levies should be cut to reduce development costs and kick start new construction. We are delighted that this suggestion has been on-board and we are confident that the targeted rebate system will expedite the delivery of new housing in key population hot spots.”

Speaking about the other supply-side measures contained within the package McCartney continued;

“The announced reform of minimum design standards for apartments strikes the right balance between ensuring good quality housing and facilitating development by controlling costs. A scaling back of car parking and dual aspect requirements will make schemes viable without unduly impacting on the quality of the product.”

BIM Ireland