Ms Áine Myler:

I thank the Chairman and members of the joint committee for giving me the opportunity to address them. I am the director general of the Society of Chartered Surveyors Ireland, SCSI, a professional body which represents more than 5,000 members in the property, construction and land sectors in Ireland. I am joined by fellow chartered surveyor Mr. Michael Cleary who works in private practice, specialising in planning and asset and development management. He co-authored the society’s recent report, Real Cost of New Apartment Delivery, and previously served as chairman of our planning and development committee.

There are many elements to this discussion, but for the proposes of this opening statement, we will focus on how improvements could be made to increase the delivery of social housing by unlocking the value and benefits of collaborating with the private sector. Last year the SCSI prepared a report entitled, Real Cost of New Apartment Delivery, which followed on from an earlier report entitled, Real Cost of New House Delivery. The findings in both reports suggest land and financing costs are crucial market obstacles in the development of apartment and housing schemes aimed at delivering affordable accommodation. The apartment costs report, in particular, report shows that costs can vary from €293,000 for a low rise suburban Dublin apartment to €578,000 for a medium rise apartment in Dublin city. Site costs outlined in the report which is now somewhat dated vary from €33,000 per site unit to €125,000. It can be difficult to justify paying such high land costs in a market with viability challenges. However, it is well accepted that the high price paid for development land is a symptom of a market starved of well located and serviced development land opportunities.

In considering the finance impact on development, it is perhaps not surprising that the Viennese housing model which has been highlighted as a good one by other bodies is successful in having private developers assist with social housing delivery programmes. The Vienna housing fund, Wohnfonds Wien, attracts developers by providing very low interest funding, currently 1% for 30 years, and actively managing the very limited land available in the city. Developers make a profit, but with these elements essentially de-risked, the necessary market returns from investments can be lower. It is essential that the industry as a whole, both private and public, work together to seek to improve the shared approach to the solving the housing challenge.

In the context of social housing procured by local authorities, as we are all aware, time delays can have significant repercussions for costs and, ultimately, the overall housing output. It is not uncommon, whether because of procurement issues or planning and construction problems, for significant delays of between 12 and 18 months to arise. The average housing development can often lose a monetary value of 10% to 15% of its units because of such delays. The impact of unforeseen issues can be very costly.

PPPs can be a useful tool for risk and gain sharing. When used properly, they are a good mechanism for releasing public assets to be developed in collaboration with the private sector, with the private sector providing risk capital, as well as know-how, and the public entity providing the land. Cities that are addressing their housing needs well are doing so by learning from long experience. There should be a review of the lessons learned from residential projects that did not deliver the housing mix originally envisaged. This needs to be fostered across all stakeholders. It will present an opportunity for the newly established Land Development Agency to engage with sectoral expertise to provide best practice guidance and support in PPP schemes and complex proposals where the critical scheme promoter role is key to a successful outcome.

It is important to support public sector delivery as the use of Part V, while effective in delivering social units in the boom years, led to the privatisation of the knowledge, skills and infrastructure required to deliver social housing. This has created a skills gap in the public sector, but as internal professional resources are being developed again, there is a real opportunity for local authorities to enhance their project knowledge by taking on the developer/promoter role for social and affordable housing projects. These skills will be critically important in times of reduced private supply, as an anti-cyclical counterweight when public housing needs increase.

Ireland also needs to de-risk its housing policies by supporting a range of public, private and not-for-profit entities to bring more supply to the market. To achieve a more robust delivery system, many development entities should be encouraged to take part, including private, for-profit organisations, as well as not-for-profit endeavours that meet set criteria in terms of scale and expertise. The approved housing body sector should be encouraged to deliver units that can be maintained in public ownership in the long term. These schemes should focus on cost rental and social rental funding models.

The Local Infrastructure Housing Activation Fund, LIHAF, is welcomed by the industry and developers. The Land Development Agency could prove to be a significant catalyst in freeing up the planning and infrastructure risks and making more State land ready for the PPP process. The agency could also be used to strategically streamline the procurement routes for residential projects. Its aim should be to become the specialist in this area and be a key resource for all State bodies and local authorities tasked with delivering the very ambitious national development plan and, in particular, the supply of public housing.

The SCSI has been supportive of the announcement that local authorities will once again return to the direct construction of homes. They must be properly resourced, with access to the right skill sets, professional knowledge and expertise in ordfer that they can put together the best social housing solutions without undue cost or delay.

We look forward to discussing this subject in more detail with the committee.