Mr. James Benson:

The Irish Home Builders Association, IHBA, is a constituent association of CIF representing hundreds of home builders of all sizes across Ireland. We support home builders to deliver quality affordable homes to home buyers. The past number of years have been particularly difficult as home buyers have struggled against the lack of supply and affordability. In 2020, the IHBA launched a comprehensive report, commissioned from EY, which offered a thorough and detailed analysis of housing affordability in Ireland. The report, the most wide-ranging and rigorous examination of the residential sector in Ireland for some years, provided a full analysis of affordability and supply of homes in Ireland and highlighted how difficult things were then.

The current situation is that things are worse now. Affordability remains challenging and recent extraordinary increases in the costs and availability of materials do not help. Supply of housing is not meeting demand. With mounting construction costs, home builders are challenged to bring new homes to the market at a level that average income earners can afford. The IHBA fully supports the goals of the national planning framework and the assurances provided that it would not lead to large-scale dezoning.

We support the concept of evidence-based policymaking. In recent years the sector has witnessed a vastly changed policy environment. Therefore the requirement for robust evidence-based assessments informing preparation of city and county development plans is critical. Prematurely, some planning authorities dezoned residential development lands in their current review cycle.

To inform the distribution of population and housing targets, the national planning framework, NPF, requires planning authorities to prepare and publish an infrastructural assessment of settlements distinguishing between lands that are serviced and serviceable. To date, these assessments have either not been carried out or the approach has been inconsistent due to a lack of resources and detailed guidance available to the authorities at the time of preparation. Constraining supply of zoned residential lands to a six-year development plan cycle compromises the forward acquisition and investment programme required by house builders to ensure continuity of development over the medium to longer term. We welcome the promised review of the NPF and the opportunity to use up-to-date information from our recent census to fully inform housing needs and demands.

We are currently experiencing a shortage of labour, in part due to a prolonged period of uncertainty in the past. We do, however, have a national development plan and Housing for All, both of which set out what developments will happen over the next decade. Both plans bring committed funding from the Government, giving certainty that developments will happen and confidence for people coming into the industry that they can make a living. The recent future skills report estimates that 27,000 additional workers will be required in the residential sector when delivery will be at its highest under the current plan. While we are already witnessing greater numbers enter the sector across the various professions and trades, we must continue to make the sector attractive to new entrants and remove current blockages. Work permits for those coming from outside the EU are currently taking 16 weeks to process. This is too long to expect someone to wait when we badly need workers. We welcome the additional resources in the Department of Enterprise, Trade and Employment. This timeframe must reduce dramatically. The apprenticeship model could also be enhanced by providing some trades through a traineeship model ranging from six to 18 months depending on the type of work.

The rising cost of building homes is a real challenge for builders and consumers. Residential material costs are going up daily and putting homes further out of the reach of those who so desperately need them. The sector continues to raise specific concerns and examples regarding how inflation is impacting the industry. However, the situation is worsening weekly. If an increased cost of delivery of €15,000 to €20,000 is not added to the purchase price of a home, taking a purchase price of approximately €350,000, pre-tax profit margins drop from 10% to 5%. As a result, the builder will not meet the primary criteria for financing and, therefore, will not be able to secure funding and cannot commence development. If the increased cost of delivery because of product inflation is added to the purchase price of a home, the consumer's ability to secure a mortgage is further diminished and those currently locked out of the market are further restricted.

It is not widely appreciated that over half the cost of bringing a home to market is made up of soft costs – VAT, levies, taxes, contributions, land, professional fees and margin. These costs are often incurred many years in advance of commencement. There is potential to streamline those costs, deliver homes sooner, reduce costs and make homes more affordable. There is a difference between construction costs and development costs and asking the new home purchaser to pay for all these soft costs is inequitable when compared to the second-hand home market.

While we support the advances in standards in recent years, these come at a cost. A regulatory impact assessment of recent changes to building regulations alone in the past five years would demonstrate the challenge to home building. There must be an urgent review of our compact growth design standards. By applying a qualitative assessment rather than a quantitative approach, we can increase affordability and optimise greater land efficiency. Through standardising open spaces, private open space and separation distances, we can increase affordability and viability and improve community spaces. Additionally, we recommend it be made possible to conduct early discussions with approved housing bodies, AHBs, before planning permissions are granted. By doing this, it is more likely that the design ultimately granted would be more suitable for their needs and more cost-effective for all.

Our members continue to work hard to supply much-needed homes. However, it is important that critical issues such as material costs and availability, zoning, infrastructure, planning, affordability and viability, which are impeding delivery, are tackled with urgency. I am happy to take any questions.