Thursday, 25 November 2021
Planning and Development (Amendment) (Large-scale Residential Development) Bill 2021 [Seanad]: Second Stage
I am pleased to be part of this debate, which is about amending large-scale residential planning and development. I hope what the Minister proposes will streamline the planning process, which is required if we are to affect the current lack of supply in starter homes in the country.
I welcome the Minister's decision to dispense with the strategic housing development policy. As the Minister knows, where schemes were applied in regional towns and villages, some of the configurations are largely unworkable in market terms for many developers and certainly for buyers of homes. In my city of Waterford I can think of two schemes applied for under the SHD process where the density guidelines bear no relation to what buyers are seeking or the previous draft or approved development plan. Where the subsequent high-density scheme is approved there would be no first-time buyer demand or even demand from property real estate investment trusts or other investors.
I raise the issue, as others have, regarding the timeline and the process to dispense with SHDs. The Minister has allowed for a significant window for pending applications for those who make new applications. Given that decision, has the Minister considered any review process of the SHDs that are to come his way in the coming weeks?
I welcome the greater influence this Bill will give to local authority decision-making. This is a good development and I hope council executives and their planners will listen carefully to the views expressed by local authority city and county councillors, who know more about the housing demands on the ground than do even the planning departments. They are speaking to constituents every day and have a good feel for where local authority development should take place in the future.
I also welcome the Minister's announcement of a two-stage pre-application process. This will allow for greater transparency, as the Minister has highlighted, before any formal application to planning is made. I welcome the proposed reference timelines for applications, considerations and the granting of appeals. I note the Minister potentially will put tariffs on not alone the local authorities but the developers. In my experience, these delays are mainly at local authority level and not with the developers but we will see how that goes. The Minister's decision to increase the 30% commercial floor cap on large strategic housing developments or residential developments is probably a positive measure in terms of the viability and the financing of those developments. All in all, the Bill has merits. It appears to streamline the application process for large-scale residential developments. This should be a positive development and hopefully it will give back greater powers to the local authority to be actively involved again in planning considerations and design alterations.
I wish to speak on issues beyond the Bill's scope that are presently impacting the housing sector and the housing supply, some of which have already been touched on by a number of Deputies. Affordability is becoming a key obstacle to people owning their own home, be that a first-time home or a second-hand home purchase. I note the VAT rate of 13% on a new home build, starter home or any home that is to be built, about which we have previously spoken. When one considers mortgage costs on top of that, it is a net cost of about 17% over the life of the build to the buyer. We are trying to give supports to first-time buyers. Will the Minister consider a form of VAT rebate to first-time buyers over a year or two years after the fact? They could short-term finance it in order that the price would not be reflected in the sale price and developers would not be taking it. However, a huge amount is being taken. More than 30% is being taken in Government tariffs and development fees and levies of all new house builds. This is a huge amount of money to first-time buyers when the affordability component is now becoming so difficult.
Another area I have raised before is the cost of housebuilding materials. In this country, they are probably between 20% and 30% more expensive than in the European market. As a member of the EU - with open borders and all the rest of it - we should have fairly equal prices of building materials but that is not the case. One can go to Poland and load up a container - leaving out the container cost - to ship and land materials here at a cost of up to 30% less. Surely, we need to look at whether there are cartels in the building materials space? Are anti-competitive practices happening that are sustaining these high material costs? I understand there is significant demand and that the supply chain has been interrupted due to Covid. Despite all that, however, there is significant price gouging going on in the marketplace at present.
I refer to the issue of rural density and one-off housing. While the Minister and the Planning Regulator have probably shared a different position to this publicly, the Minister needs to clarify the position on the future of rural one-off housing. We are talking about trying to retain, develop and sustain rural communities. At the same time, we are giving the message to people who have access to land in the rural community, such as a son or a daughter of a farmer, but who do not have a relationship with the land or in other words, they are not getting their livelihoods from the land, while living in the community, they are not entitled to a build a house. Some of those farmers might have ten acres or 20 acres. Those people are the lives of future communities. It is not fair to push them into areas they are not from and force them into potentially high-density builds in other rural villages. Will the Minister give clarification to councillors throughout the country as to where his thinking falls in this regard?
Another area about which the Government has not done enough is in respect of developer finance. It is only a matter of speaking to developers to understand the difficulties they encounter in getting build finance and the strictures put on them when borrowing large amounts of money. One of those is the 30:30:30 rule, whereby a developer who goes into a pillar bank to borrow money is told that he or she will be given money for one third of the development. When that is developed and the houses are sold, and when everyone has been paid, the pillar bank will then give the developer the next third and then the subsequent 33%. The problem with this is that building development does not work efficiently in that way. Developers on a large-scale building project want to bring all their people and materials and everything on to the site and to build without interruption. That is efficiency. We have not done enough in stimulating the banks. There are a number of large-scale developers in this country who are giving building finance to smaller developers. This is simply because they understand the marketplace and are prepared to risk money that the pillar banks are not. That is also putting a cost on the end product. This is something for which there could be some financial instruments or otherwise introduced. There must be some way to interdict this activity.
Beyond that is something that we are all aware of, namely, the funding of Irish Water. Many potential housing application schemes are not feasible to a large degree because of the cost of accessing rural and wastewater treatment facilities. Developers are being levied with these costs. I spoke to the Minster some time ago about a housing development in Waterford where the developer was asked to pay the full cost of an upgrade of sewage ducting in a scheme where further schemes would follow on. No amortisation was provided for the schemes that were to follow. He was to pay it all upfront and anybody else who came in afterwards would benefit. That is not sustainable but to my knowledge, that has not yet been addressed.