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Apartments under construction. File photo Alamy Stock Photo

Govt plan to boost building: Cost-rental units subsidised and development levies scrapped

A new plan includes an increase in grants for restoring empty homes and alleviating development levies.

LAST UPDATE | 25 Apr 2023

CABINET HAS AGREED to temporarily subsidise the construction of between 4,000 and 6,000 additional ‘affordable’ cost-rental apartments to the value of €750 million. 

Government ministers have signed off on a plan today to try to accelerate the building of new homes and the refurbishment of vacant ones in an update to its Housing for All strategy.

The funding for new apartment construction will be made through the Land Development Agency under the cost-rental system. 

Minister for Housing Darragh O’Brien said that work will begin on cost-rental developments that have planning permission but are not currently being progressed, describing it as a “viability gap”.

The cost-rental initiative aims to provide long-term, secure tenancies with rents that start at 25% below the average local area rent. 

For a person to apply for cost-rental properties, the net household income must be  below €53,000 per annum and they must not be in receipt of any social housing supports. 

It is understood there are no plans to modify the income threshold under the new changes. Last year, 684 cost-rental units were delivered through local authorities, housing bodies and the LDA. 

Around 1,850 were delivered in the first quarter of 2023. 

Vacant and derelict houses

The plan also includes an increase in grants for the restoration of empty homes and making it easier to apply for such grants.

The Vacant Property Refurbishment Grant will increase from €30,000 to €50,000 for vacant properties and from €50,000 to €70,000 for derelict properties.

It will be extended to cover houses built up to 2007 (previously it only applied for houses  built up to 1993) and include both rental properties and those occupied by their owners.

The housing minister said that all local authorities are identifying the vacant stock that is in each region. 

He also clarified that those that have applied for the grant already, but who have to draw down the funds, can avail of the additional €20,000.

While 765 applications were made last year for the grants, data released by the Department of Housing in February showed that no drawdowns had yet been received. 

It is understood that payouts of the approved grants is still slow and running at between nine to ten months. 

Development levies 

One of the more controversial measures is the scrapping of the development levies for developers and whether there is enough safeguards to ensure that the cost-cutting measure is passed on to the buyer. 

In a bid to reduce the cost of construction, development levies required to connect new homes with roads, water and other services are to exempted for 12 months. 

The housing minister said he believes it will help to mobilise many of the dormer planning applications and deliver some 70,000 to 80,000 units that fall under the inactive planning permissions that are already in the pipeline. 

The new measures today will deliver a saving up to the value of €12,650 per home on average. 

It is not yet clear whether the reduction in levy costs will translate into lower prices for house buyers, given the cost of construction and inflation. However, it is understood that there will be a ‘open-book’ on the accounts so as to ensure transparency on costs. 

‘Playing catch up’

Speaking at a press conference this afternoon, Taoiseach Leo Varadkar said there is a “huge deficit” in housing and the government is “playing catch up” to close the shortfall. 

“We are likely to meet our overall target again this year but we need to do more,” the Taoiseach said.

He said that “merely meeting our own targets won’t be enough” and that the government needs to “restore the social contract and make home ownership affordable for the majority again”.

Responding to the announcement, Labour TD and finance spokesperson Ged Nash said that “there will be plenty of backslapping in Government Buildings today as they throw around €1 billion to give the appearance of doing something on housing” but that “there will be more spin and bluster and very little change for working people”.

“The reality is a huge amount of workers in low and middle income are struggling to put food on the table. So many people across Ireland are not able to cope with the dramatic increases in the cost of living,” he said, calling for an increase to the national minimum wage.

People Before Profit TD Richard Boyd Barrett TD, called the measures “a clear indication that the government are unable and unwilling to break from a failed formula when it comes to addressing housing crisis”.

“The measures mooted by government clearly show that they want to give further subsides to private developers rather than acknowledging their own failure to deliver the public and affordable housing that is needed to begin to resolve the dire housing crisis,” Boyd Barrett said.

“The vast majority of new private developments that are coming on stream are totally unaffordable for people. That is why the government need to directly step in and use this surplus to get public and affordable houses into our existing housing stock.”

Leaders’ Questions

At Leaders’ Questions this afternoon, Sinn Féin leader Mary Lou McDonald said the measures announced today “see Fine Gael and Fianna Fáil continue to tinker around the edges of this emergency”.

“Your big idea to hand private developers €1 billion of public money with absolutely no detail is back of the envelope, threadbare stuff. And worse still Taoiseach, no guarantee that it will deliver genuinely affordable homes to rent or buy and not one extra cent for local authorities or approved housing bodies,” she said.

“We need private builders building homes that ordinary people can afford to buy, but government over-reliance on the private sector is not the answer. The answer to the housing crisis, the game-changing answer, is for the State to intervene directly to build thousands of homes on public land.

“What we need is for Government to initiate a massive scaling up in affordable and social housing.”

In response, Varadkar said the Government is building public housing. 

“We are building public housing. We built more social housing last year than any year since the 1970s. More than Sinn Féin has ever built in Northern Ireland. We’re going to build more again this year and that’s our commitment. We’re doing all of those things.”

He said the Government is likely to meet its overall housing supply targets this year, “with more than 29,000 new homes expected to be built this year and that doesn’t include student accommodation, it doesn’t include derelict homes being brought back into use”.

“But we need to do more. We understand the scale and depth of the crisis. We understand that people are suffering and that’s why we decided as a Government to do more today. ”

He defended the increase in the Vacant Property Refurbishment Grant for derelict properties. “That’s not giving money to developers. That’s giving money to young people, or not-so-young people, to bring a vacant property back into use so they can live in it, or in some cases rent it out.

“And I can’t believe that Sinn Féin is against that. You shouldn’t be against that. You should be supporting us on that.

“Only a few weeks ago, we announced additional money for local authorities. What we announced today is additional funding to bring derelict properties and vacant properties back into use. That’s going to make a big difference all over Ireland and I hope you’ll support us.”

Housing for All ‘failing’

Labour leader Ivana Bacik also criticised the measures announced today, saying the represent “the latest in a series of desperate efforts to kick some life into your housing policy”.

“It’s yet another attempt to tweak the Housing for All policy, which you have to accept is failing. This indeed is a tacit acceptance that Housing for All is failing. That it hasn’t delivered results that this government – your government, Taoiseach – is out of its depth,” she said.

“That you lack ambition, you lack urgency and crucially, you’ve lacked any impact on the housing disaster. We have not seen the delivery and the results that people require. Instead, you continue to throw good money after bad while nothing changes for those who are desperately seeking a home.”

Bacik described the temporary waiving of development levies as “yet another unconditional subsidy for developers”, and asked Varadkar if he thought that first-time buyers would see the benefits of the measures. 

Varadkar acknowledged that Ireland is in a “very deep housing crisis that’s affecting individuals and families in so many different ways”, adding that it’s “not about public versus private”.

“People who want to buy their home against people who are in social housing. If we’re going to solve the housing crisis, we need to maximise the amount of public housing we build and we also need to maximise the amount of private housing we build. It’s not an either-or,” he said.

He disagreed with Bacik’s analysis and said Housing for All had had a “very good start” and that all housing progress should be acknowledged. 

With reporting by Christina Finn

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