Brendan Burgess
Founder
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The Housing Agency held a Housing Summit on Friday 20th June. It was an ideas generating session as distinct from a series of presentations. We were split into 12 groups of 10 people, so the issues I took away from it, might be very different from what someone else took away. There was only one short open forum towards the end.
A lot of problems were identified, but I am not sure if a lot of solutions were.
The need for housing is very different from the demand for housing
Housing Agency figures:
|properties|population
Single person|25%|8%
two person|31%
3 person|18%
4 person|15%
5 +|11%The suggestion seemed to be that we "need" lots of one bedroom apartments.
However, those involved in the industry pointed out that there is almost no demand for one bedroom apartments. Even if someone is living on their own, they want to live in a house with a front and back garden.
I got the impression, that the planning authorities in the Dublin area want to see a lot of one bed apartments built, but developers don't want to build them.
This is a big dilemma for the planners. An intensification of one bed apartments would be good for society as a whole, but if we single people insist on living in three bedroom houses, nothing is going to get built.
A ptsb spokesperson said that their lending criteria for apartments in urban areas are no different from their criteria for houses.
"There is zoning for 200,000 housing units"
A lot of different figures were thrown out, which seemed to suggest that there were plenty of ready to go sites with planning permission.
But they are not for the right housing units in the right places.
Developers find it very hard to get finance for apartments
Say a builder has planning permission for 100 houses. They get finance for 25 houses, build those, sell them, and move onto Stage 2.
With apartments, they have to build them all together and so need a huge amount of finance.
It costs €40k per underground parking space
Dublin City Council insists that there must be an underground parking space for every apartment, although, people renting apartments in the city centre, don't want parking spaces.
This is a big dilemma for the planners. If they don't have parking spaces, the residents will park on the road.
A developer of a one bed apartment in Dublin would need €1,900 rent a month to justify building it
A developer who builds apartments to rent, says that he needs €1,900 per month to justify building a one bed apartment which would give him a 7%(?) return on his investment. The equivalent figure for a 2 bed apartment is €2,500
According to regulations, every house must be a Rolls Royce
One speaker made a very good point, that the regulations were such that every house must be built to Rolls Royce standards - solar panels, disabled access; etc. But more people drive Daihatsus than Rolls Royces. But they had to pay for Rolls Royces.
Social housing
I raised the issue that Part V requirements for Social Housing was one of a number of issues which pushed up the cost of building new houses, and as such, made building more expensive and less profitable to build.
Bizarrely, an employee of the Department of the Environment insisted that these requirements were good for developers as the local authority bought the houses from the developers. I asked, why, if the developers thought it was such a good idea, they paid money to buy out their obligations under Part V.
I think what might have caused the fuzzy thinking here, is that when house prices dropped, the fixed prices agreed in advance by the local authorities were a great help to builders. But not anymore.
It was pointed out by the housing association people, that builders don't like Part V, because they don't want a mix of social housing and private housing in the same development.
There is a €15k per unit Luas levy for new houses
Anyone building along the Luas line has to pay a Luas levy of €15k (?) as well as a development levy of €11k.(?) adding €26k to the developer's cost.
Selling off the plans
We looked at some ways of integrating development finance with mortgage finance. Could the mortgage lender lend the money to the borrower to pay stage payments as the house is being built?
Solicitors were against this, as the buyer had little protection is the builder went bust.
I asked if the site could be sold separately to the buyer followed by a building contract. At least then, if the builder went bust, the buyer would own the site and the half built house. This would give rise to two problems. Firstly, the developer would be taxed at 25% on profits arising from the sale of the site, while he is taxed at 12.5%, if the whole package is done together. Secondly, the lenders might be slow to lend for building on a site not owned by the developer.
I wondered if there might be one lender to the developer and the buyer. Say I commit to buying a house in two years and have mortgage approval from AIB. If I lose my job in the meantime, AIB will withdraw my approval. But say that AIB were financing the developer as well. AIB would give me a binding approval, so while I become more risky after losing my job, at least their developer client gets paid.
A lot of problems were identified, but I am not sure if a lot of solutions were.
The need for housing is very different from the demand for housing
Housing Agency figures:
Single person|25%|8%
two person|31%
3 person|18%
4 person|15%
5 +|11%
However, those involved in the industry pointed out that there is almost no demand for one bedroom apartments. Even if someone is living on their own, they want to live in a house with a front and back garden.
I got the impression, that the planning authorities in the Dublin area want to see a lot of one bed apartments built, but developers don't want to build them.
This is a big dilemma for the planners. An intensification of one bed apartments would be good for society as a whole, but if we single people insist on living in three bedroom houses, nothing is going to get built.
A ptsb spokesperson said that their lending criteria for apartments in urban areas are no different from their criteria for houses.
"There is zoning for 200,000 housing units"
A lot of different figures were thrown out, which seemed to suggest that there were plenty of ready to go sites with planning permission.
But they are not for the right housing units in the right places.
Developers find it very hard to get finance for apartments
Say a builder has planning permission for 100 houses. They get finance for 25 houses, build those, sell them, and move onto Stage 2.
With apartments, they have to build them all together and so need a huge amount of finance.
It costs €40k per underground parking space
Dublin City Council insists that there must be an underground parking space for every apartment, although, people renting apartments in the city centre, don't want parking spaces.
This is a big dilemma for the planners. If they don't have parking spaces, the residents will park on the road.
A developer of a one bed apartment in Dublin would need €1,900 rent a month to justify building it
A developer who builds apartments to rent, says that he needs €1,900 per month to justify building a one bed apartment which would give him a 7%(?) return on his investment. The equivalent figure for a 2 bed apartment is €2,500
According to regulations, every house must be a Rolls Royce
One speaker made a very good point, that the regulations were such that every house must be built to Rolls Royce standards - solar panels, disabled access; etc. But more people drive Daihatsus than Rolls Royces. But they had to pay for Rolls Royces.
Social housing
I raised the issue that Part V requirements for Social Housing was one of a number of issues which pushed up the cost of building new houses, and as such, made building more expensive and less profitable to build.
Bizarrely, an employee of the Department of the Environment insisted that these requirements were good for developers as the local authority bought the houses from the developers. I asked, why, if the developers thought it was such a good idea, they paid money to buy out their obligations under Part V.
I think what might have caused the fuzzy thinking here, is that when house prices dropped, the fixed prices agreed in advance by the local authorities were a great help to builders. But not anymore.
It was pointed out by the housing association people, that builders don't like Part V, because they don't want a mix of social housing and private housing in the same development.
There is a €15k per unit Luas levy for new houses
Anyone building along the Luas line has to pay a Luas levy of €15k (?) as well as a development levy of €11k.(?) adding €26k to the developer's cost.
Selling off the plans
We looked at some ways of integrating development finance with mortgage finance. Could the mortgage lender lend the money to the borrower to pay stage payments as the house is being built?
Solicitors were against this, as the buyer had little protection is the builder went bust.
I asked if the site could be sold separately to the buyer followed by a building contract. At least then, if the builder went bust, the buyer would own the site and the half built house. This would give rise to two problems. Firstly, the developer would be taxed at 25% on profits arising from the sale of the site, while he is taxed at 12.5%, if the whole package is done together. Secondly, the lenders might be slow to lend for building on a site not owned by the developer.
I wondered if there might be one lender to the developer and the buyer. Say I commit to buying a house in two years and have mortgage approval from AIB. If I lose my job in the meantime, AIB will withdraw my approval. But say that AIB were financing the developer as well. AIB would give me a binding approval, so while I become more risky after losing my job, at least their developer client gets paid.