Just when the housing industry was beginning to increase supply of private and social housing, the industry has suffered a number of major setbacks. Not alone have Covid health restrictions delayed delivery, but in addition judicial reviews of Strategic Housing Developments have stymied the Government’s efforts to accelerate the planning process for approval of new developments.
Ambitions to improve the sustainability of housing have added to costs and this in turn means that larger scale projects are vital to ensure the viability which will encourage developers and investors to take the risks required to invest in projects which will deliver supply in the quickest time possible. Sustainable homes is not just about energy efficiency but around diverse tenure communities, urbanisation, density and amenity (parks, cycleways, schools) all of which require considerable investment.
In addition our politicians at local and national level are so frustrated by the pressure to catch up with demand, that they are adding tension to the community debates and thus exacerbating problems for all of those who are trying their best to deliver to people who seek to rent or buy a home.
If we have learned anything from Covid it is that it shows how, by adopting responsible and informed decisions and listening to the experts and co-operating with each other, we can pull through this together.
Like Covid there is no silver bullet that can solve the problem of meeting demand for housing. While the vaccine will help we also have to remember that we will still need to keep our distances and respect other people’s requirements. Likewise we will need to recognise that Government can work with individuals and families to assist them to buy their own homes through novel approaches such as the shared equity scheme.
From my perspective there is too much concentration on height when we need to focus on viable delivery of medium density housing. National policy dictates that we must deliver a minimum density of 35 homes per hectare or 14 homes per acre. When you think of 35 homes to the hectare… think of a hectare as a GAA pitch. Such density cannot be developed with traditional house types and therefore apartments must be built in order to achieve this density.
Nevertheless by simply varying some of the guidelines, it is possible to achieve courtyard style housing with viable and community friendly densities. For instance there are high densities within some of our much-loved Georgian squares and parts of Dublin such as Portobello, Stoneybatter, Ranelagh and Rathmines.
Furthermore we need a significant uptick in delivery across all home types ranging from public/social homes, private rental homes, private for sale and self-build homes while the housing industry needs to double output in a sustained and viable way with a wide variety of targeted solutions.
What can we do…
The new minister is grasping the nettle and is engaged with a myriad of varied solutions, which are targeted at different parts of society and relate to differing housing needs. I for one hope he achieves his ambitions in the Home for All Plan in the summer.
Dare I say, there is an overly simplistic and even lazy analysis of many initiatives but perhaps especially the proposed Shared Equity solution.
This will be especially useful for first time buyer families as it will enable them to buy a home with mortgage repayments below monthly rents.
Furthermore by fostering this cohort of demand it will encourage Irish builders to respond and as a result it could generate the supply of an extra 1,500 new homes each year. This would be especially important outside Dublin where institutional investors are generating the demand which ensure the viability of new development.
Within Property Industry Ireland, we have prepared some examples which show how shared equity would benefit buyers.
Take a person or couple acquiring a home for €400,000:
Purchase Price €400,000
Deposit €40,000
Government Equity €100,000 (25%)
Mortgage €260,000
Mortgage repayments years 1 – 5 €1,095 @ 2.85%
Years 6 onwards, Equity repayments €168
Total repayments from years 6 onwards €1,263 per month or approximately 21% of the net income depending on the couple or individual earning €75,000.
Another benefit is that if income improves after promotions or after their children leave home, the couple can pay down Government equity and thus increase their share of the ownership of the property.
Shared Equity has potential to be a part of the solution complementing social and affordable accommodation which would make a meaningful difference to aspiring first time buyers
Ivan Gaine Managing Director, Sherry FitzGerald New Homes; Chairman of the Supply & Demand Committee, Property Industry Ireland (PII is part of IBEC) and member of the Practice & Policy Committee, Society of Chartered Surveyors. Opinions and comments are personal.
