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Mon, 23 Dec, 2024 - 00:00

WHILE officially we wait for a new government to be formed, it is obvious that we will see a renewal and continuation of the previous political parties in power. So unprecedented reforms of the housing and planning systems, which we witnessed during 2024, should continue. These reforms have resulted in some very positive (green), very mediocre (amber), and very poor (red) policy decisions.

One great positive of collective and collaborative effort between public, private, and political stakeholders is agreement on the fundamental challenges. While there are differences as to probable solutions, at least the right questions are now being asked around targets, infrastructure, land supply, and funding/costs.

The Report of the Housing Commission has helped, and the new government, who previously commissioned it, should give it due relevance and prominence.

Below is a summary and categorisation of policies that progressed in 2024.

The Green

As the old saying goes, ‘If we fail to plan, we plan to fail’. Despite there being disagreement on the ambition and revised targets within the National Planning Framework, which are too low, at least new, higher targets have been set.

Compact settlement guidelines were finalised, and new planning permissions have allowed for innovative, own-door typographies. These will deliver sustainable density and more affordable homes for rent and for purchase.

Last June, the Department of Finance published a report on the ‘Availability, Composition and Flow of Finance for Residential Development’. It identified and highlighted the need for €11.5bn of investment annually from private capital sources to deliver 33,000 homes of all tenures.

If this is grossed up to deliver 50,000 homes, that works out at €17.5bn and a big gap to breach.

The waivering of development contributions and Irish Water rebates resulted in a substantial increase to 50,000 commencements. To forecast completions over the next couple of years is going to be a challenge. It will be very interesting to see what commencements will look like in January.

The long-awaited and complex Planning and Development Act was signed in to law by President Higgins in October.

The Amber

The Planning and Development Act (the transition of new legislation and its interpretation to 10-year local-authority development-plan cycles) will be very challenging. This will be coupled with the lower targets set within the NPF, which are included in the said 10-year development plans.

ULI/PwC recently published a
European sentiment report, which highlighted that the greatest risk is geo-political. In Ireland, it would appear our geo-political risk is local, as can be seen by the publicised decision of councillors in Louth, recently, who voted to de-zone lands with planning permission and Irish Water connections.

The Red

The increase of stamp duty rates to 15% for houses to rent is extremely disappointing and is at odds with the Department of Finance’s own acknowledgement of the need to attract capital to the market.

The international messaging is all wrong and we really need a mature conversation on rental caps.

Next year, we will see the annual, 3%, residential zoned land tax being implemented and, hopefully, it will result in more land transactions. This is the stick to go with the carrots of supply and demand side supports. There is genuine unease around the Land Zoning Value Sharing Bill 2024 and for good reason. This 25% uplift tax potentially will apply to both residential and commercial lands and, when coupled with CGT, development contributions, RZLT, Vat, stamp, etc, is causing a lot of concern. We are in danger of taxing home building out of production.

Once agreement can be reached between the parties and our new government takes office, they need to be brave and rip the plaster on the known housing issues.

There’s no need to play politics for now; they can make the correct policy decisions for the long term. Our strong fiscal position is fragile, and we must attract inward investment in to housing. It is clear we need an IDA-style, foreign-direct investment approach to secure institutional investment in housing of all tenures, from student accommodation to senior and social housing.

The next generation of rent controls should be applicable to the tenancy rather than the property and we should reform the penal rates of stamp duty for investment in housing. Consideration should be given to tax allowances and CGT exemptions for domestic investment in housing and we should look at schemes already in place, such as the EIIS. Think of all the substantial capital on deposit: Surely, this could be mobilised if the circumstances were correct and underwrites in place.

Based on the election manifestos of Fianna Fáil and Fine Gael, who will likely lead the next government, we should have long-term stability on supports such as Help to Buy and First Home.

The planning system needs to deliver decisions on time, and key to this will be resourcing.

The construction sector depends on initiatives introduced under Housing for All such as Project Tosaigh and Croi Conaithe to make cost rental and apartment delivery viable.

Government incentive schemes, such as STAR (Sustainable Tenancies Affordable Rental) and Croi Conaithe have resulted in several apartment schemes being commenced in Cork City, but they should have a wider tenure application and need some work on the detail.

So, in summary, we have seen improvements and things are better, but not perfect. Those actively seeking new homes to buy, or rent, are now more aware of the supports available, and the demand side supports have resulted in increasing output.

We, as a business with 20% market share of the new-homes private market (only one third of all completions), have agreed nearly 25% more new homes to owner occupier than we did in 2023 and hope to see a further 20% uplift in activity in 2025. While the absolute numbers are relatively low, the trendlines and percentages are not insignificant. Surely, a stable government will be brave and do what is required to support our society and our economy.