Government’s Action Plan on Housing a Prime Opportunity for Real Estate Development
30 August 2016
Ireland needs more houses and apartments. Neither the private sector nor the public sector will fulfil the requirement on its own. The Government has set a target of 175,000 new housing units built by 2021. The aim is to achieve this ambitious goal through a combination of public sector house build, better use of existing resources, funding for relevant infrastructure and a more effective regulatory environment, with particular emphasis on large scale developments infrastructure and planning reform. We look at the potential opportunities that arise for real estate development on foot of these plans.
‘Rebuilding Ireland - Action Plan for Housing and Homelessness’ sets out a number of detailed proposals aiming to:
- address homelessness
- accelerate the social housing development process
- build more private homes
- improve the rental sector
- make better use of existing housing stock
These five targets will create opportunities for developers, builders, funders and investors.
Implementation of Action Plan
Building More Homes
The Government’s goal is to have 125,000 private housing units built over the period 2017-2021, with 50,000 social housing units delivered within the same time period. It proposes to do so by:
- opening up land supply and low-cost state lands
- establishing a Local Infrastructure Housing Activation Fund (LIHAF)
- providing financing through the National Treasury Management Agency (NTMA) for large-scale “on-site” infrastructure
- reforming planning laws and processes
- providing a €5.35 billion investment for social housing builds
- lowering housing delivery costs through efficient design and delivery methods
- supporting construction innovation and skills
Planning and Funding
The Action Plan proposes planning law reforms to enable planning applications for 100-plus units to be made directly to An Bord Pleanála and by-pass the local authority. This should fast-track large scale developments and assist developers in providing housing in a rapid manner to meet demand. The Action Plan is ambitious and will need significant resources to implement. If successful, it would mean a planning decision could be achieved within a maximum of 18 weeks, compared to 18 months or more.
The €200 million Housing Activation Fund will provide for a publicly sourced financial allowance to housing providers willing to build on particular strategic sites. This aims to significantly increase investment where infrastructural investment is needed in order to facilitate large scale developments. This should in turn make the construction of property in these areas more cost efficient. The savings achieved here should, in theory, be passed on purchasers.
Proposals to increase the use of strategic development zone designations and to use lands already zoned residential will be paramount to the success of the Action Plan. A lack of appropriate infrastructure means that already zoned land currently lies dormant. It is imperative that this funding is made available to the local authorities to assist in providing the infrastructure needed as soon as possible to activate the development of these key sites.
Improving the Rental Sector
With almost one fifth of the population living in rented accommodation, a build-to-rent model should form a central part of the solution. The Department of Housing, Planning, Community and Local Government will be looking at new methods to set and review rent to reflect local market rents linked to up-to-date market information. The Action Plan does not contain detailed proposals for the buy to rent sector so this is a work in progress.
The NTMA is developing proposals to offer competitive financing for student accommodation builds, given the anticipated growth of the student population by 15% by 2024. It also hopes to improve the way in which student accommodation proposals are prioritised and assessed at planning stage.
The Government expects to introduce legislation in the autumn to protect tenants in certain circumstances, including where 20 or more residents in a single development are served with termination notices simultaneously.
The Action Plan is ambitious and very welcome. The manner in which it is implemented by the different government agencies, at the initial stages, will determine its success.
For more information, please contact a member of our Real Estate team.
WATCH: Kevin Hoy, Jamie Fitzmaurice and Rachel Carney of our Real Estate team give an overview of the Irish government's Action Plan on Housing
The content of this article is provided for information purposes only and does not constitute legal or other advice.