The government agreed three extra measures under its Housing for All Plan on 25 April 2023, in an effort to make building and refurbishing homes cheaper, with the hope that this will both speed up home building and make homes more affordable.
Measures
The measures are as follows:
- Waiving development levies required to be paid by builders to local authorities to connect new homes with roads and other services, including financial contributions and water connection fees. This measure will be in place for 12 months. The government has stated that this will reduce the average cost of building a home by €12,650. However, it is unclear whether builders will pass this reduction on to purchasers or whether this cost reduction will be absorbed in other rising costs associated with housebuilding. The government has issued Planning Circular PL 04/2023 with further details of the measure which sets out that in order to qualify for a waiver of development contributions, the residential development must:
a. Commence on site between 25 April 2023 and 24 April 2024 (linked with the timing of submission of commencement notices and 7 day notices); and
b. Be completed no later than 31 December 2025.
The above dates are irrespective of the date on which the planning permission was granted.
It is proposed that the Department of Housing, Local Government and Heritage will pay the development contributions to the local authority on behalf of the person liable for the contribution once commencement notice has been submitted to the planning authority and the planning authority has verified that the development has actually commenced on site. The expectation is that the relevant administrative support will be in place to ensure that these verifications and processes will occur efficiently without holding up the work on the site, and this is envisaged within the circular itself.Uisce Eireann water and waste connection charges (which are part of the development levies payable), will still have to be paid up front by developers but will subsequently be refunded by Uisce Eireann on notification of commencement of works, provided they fall within the qualifying criteria. Clawback arrangements will also be put in place if the works have not actually started or ended within the appropriate times.
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Amending the Vacant Property Refurbishment Grant, which is being increased from €30,000 to €50,000 for vacant properties and from €50,000 to €70,000 for derelict properties. The grant will also be available for houses built up to 2007 (it previously applied for houses built up to 1993 only) and houses intended for rent as well as owner-occupied. The government further announced that they will make it easier to apply for these grants in light of reports that approvals and pay-outs can take up to 10 months and confirmed that those who have applied for the grant already but have not yet drawn it down will be eligible for the additional €20,000.
Data released by the Department of Housing this month indicated that since this scheme came into being, 1,559 applications were made with 459 approved, 125 rejected and just one grant has actually issued, by Mayo County Council. Accordingly, appropriate capacity and relevant administrative support will have to be put in place if this measure is to have the desired outcome.
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Financing of the construction of affordable apartments under the Cost Rental model. The government has committed up to €750 million via the Land Development Agency (LDA) and other providers so that work can be commenced on affordable homes for which planning permission has been granted but has not been progressed. However, the details as to how the Cost Rental scheme will work in practice and which bodies can avail of the funding has not yet been published. Similarly, it is not known whether the state will take an equity in these homes or whether a charge, grant or other mechanism will be utilised to unlock this funding. It is understood that these funds will also be available to Approved Housing Bodies (AHBs) in a similar fashion to the CREL funds released to date for funding of cost rental, but further clarity is awaited on the details and requirements in this regard. The hope is that the additional funds made available for cost rental will allow developers, the LDA and AHBs to collaborate to unlock schemes, which have planning permission, but to date have not been viable to be delivered to the market and that greater delivery of this new tenure will deliver a greater scale of true mixed-tenure schemes.
Comment
Whilst all steps to accelerate the delivery of housing are welcome, it's difficult to determine if these steps will be sufficient to unlock substantial numbers of homes in the absence of more radical measures. The main stumbling blocks to delivery remain the protracted planning process, the high cost of construction including funding, and the lack of the necessary skilled workers to carry out the works. It seems likely that further measures will be announced in the coming months in an attempt to deal with these points.
Further detail is awaited on the exact terms of the new measures before we can determine their likely success but, on the face of it, these measures are attempting to bridge the funding gaps presented most recently in the market and only time and application will judge if they achieve their aims.
This article was contributed by Fidelma McManus and Caoimhe Banks in our commercial real estate team and our specialised housing team.