Matt Shanahan (Waterford, Independent) | Oireachtas source

It is fair to say that the housing sector is in crisis. It must be acknowledged and I acknowledge this is a multifaceted problem. It has not occurred only in the past couple of years. It goes back to the banking crash and construction sector withdrawals and liquidations and the loss of skilled labour. Then we had Covid and now we have Ukraine and the energy crisis. We must also acknowledge the rise in our population of more than 360,000 since the census of 2016.

That being said we have a regulatory, planning and cost environment that is adding to our construction woes. In the Sunday Independenttwo weeks ago an article referred to a site in Balbriggan where landowners proposed a scheme of 600 houses to be developed. This scheme has been proposed for more than eight years. The land bank is required to undergo a local area plan review by Fingal County Council before planning can be granted. This is one of 33 local area plans yet to be considered by Fingal County Council. According to itself, it is completely understaffed and overtaxed with work and these reviews take significant time. What is very interesting is that despite the council intimating it does not have the resources for up to two years, in the interim the council is considering that the land should be liable for the new residential land tax. This is despite the fact there is no possibility of it getting planning permission.

This shows that there is not a lot of thought going into some of the processes and policies we have. Beyond that, the construction sector is now a big boy's game. It is no longer the purview of small house builders because the costs that arise in developing a scheme are mammoth and are only the preserve of the very large house building schemes.

Let us look at where the development of housing is going at the moment. Generally speaking, the developer will carry the cost of the site. As soon as a developer applies for planning permission, they will be faced with having to make an upfront payment of a bond to Irish Water. For any reasonably sized scheme of houses, such as 150 to 200 houses, that upfront payment is a minimum of €1 million in addition to a bond for Irish Water. The developer will also pay development and planning levies to the local authority. It will take a minimum of two years to develop and get approval for a planning scheme before a brick is laid on the site. Once the planning scheme is in place, the developer must finance the cost of building the houses until they are completed and secure all the engineers' and surveyors' certifications and so forth before a mortgage can be placed on them or anyone can buy them and before the financial institutions will sign off. On top of that are the interest charges that are being levied. Most developers can only access 50% of the funding from the pillar banks. They have to get the rest from private equity or wherever else they can get it and many of them are paying an annual interest rate of 8%, 9% or 10% on these loans.

In my city, Waterford, I cannot see any new entrant to the house building sector. That is because it is not a sector that can support anyone except those with the deepest of pockets and those with access to institutional funds. This is a major pinch point in trying to get construction activity going. Beyond that, affordability for the renter and buyer is falling. We know that about inflation, but I wonder whether anyone has looked in the past few weeks at what effect the rising costs of utilities are having on the discretionary income of households.

I got an electricity bill for my office that was five times higher than usual in the past two months. It was a fivefold increase only for heat and light. That is not sustainable by anyone. I do not know how it can be arrived at but we have created a monster now as regards the delivery of new housing. I have heard the idea many times in this House that somehow local authorities can now magic up new public building quangos. It is fanciful to be honest, not least because public procurement practices will create housing inflation twice and probably three times higher than what is being delivered by the private sector at the moment which at least has some control of its costs.

We need some new thinking and that means we must address the critical pinch points in the construction sector. Planning regulation is a major problem. Development levies are a major cost, as are utility costs, prior to construction. Surely we can find a more credible way of financing house builders than going to the commercial mortgage markets. In addition, we need to look at the labour shortages we have. A builder's labourer is now as rare as a hen's tooth. You just cannot get them and the costs of labour have risen dramatically. We cannot entice new entrants into the market unless we can provide some framework under which smaller builders could potentially combine to tender for housing schemes. While some factors are outside our control, fundamentally our housing sector is out of control because we lost control of other levers in the State trying to support those in the sector and trying to provide subsidies where needed to build houses.

I accept that some of the schemes the Government is promoting are providing additional housing units, especially social and affordable ones. I see that in Waterford. Waterford is an outstanding local authority area with respect to the repair and lease scheme, which has brought a significant number of new homes into the social market sector. The fact remains that we are in a game of catch-up. We need additional targeted supports for the refurbishment of vacant and derelict property. I am sure the Minister is aware that under a number of those schemes where properties are looked at they would not qualify for grant aid because engineers will say the properties are not fit to be refurbished. Then we are into a different cost, which basically involves knocking and rebuilding. That has not been thought through to any great degree that I can see.

We must give consideration to the standards we are demanding for short-term letting. I am not sure whether the Minister of State spent any time in Dublin in his youth and availed of the bedsits that were ubiquitous throughout southside and northside Dublin for years. They did very well for many people because the rent was low. I accept that we might not accept those standards now but in trying to bring in minimum standards in accommodation we have created unbelievable expense. We must find ways to get around it.

I hear Deputies talking about modular building. There was an article in the English press recently about one of the largest modular building companies in the UK which is up and running for almost three years and has yet to make a profit out of modular building. That tells us about some of the difficulties in that sector. It is not the panacea that people like to promote. I have spoken to representatives of a number of construction companies and I asked them why they will not go to modular building. There are two main reasons they will not go there. There are exceptional difficulties in the layout of the site because of levels. It is far easier to build in brick as different levels on the site can be allowed for. That cannot be done with modular housing. A way has to be found to make everything fit and match. Beyond that, builders are being asked to give guarantees whereas modular companies will not guarantee buildings beyond 20 or 30 years. That is a significant problem. We need to look at some deleveraging of the housing standards we are asking for and look at the likes of bedsits. Perhaps emergency legislation is needed because in Dublin it is chronic trying to get any accommodation, even for students and certainly for single people.

As the Minister of State will be aware, the Regional Group recently proposed a number of policy changes the Government has adopted, but they need to be moved on now to try to deliver additional accommodation units. We need a fundamental rethink of our planning processes and a fundamental re-examination of the construction sector because we have to find a way to bring in the people in smaller construction companies. Without that we cannot create the capacity we need in the market to try to fix this housing problem.

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