Seanad debates
Tuesday, 5 March 2024
Nithe i dtosach suíonna - Commencement Matters
Development Contributions
1:00 pm
John Cummins (Fine Gael)
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I thank the Acting Chairman. We look forward to good coverage of today's Seanad Commencement matters in the local newspapers.
I thank the Minister of State for taking this matter on behalf of the Minister, Deputy Darragh O'Brien, who is attending the EU housing ministers' summit in Brussels. I am calling for an extension of the waiver that has existed for the past ten months regarding section 48 development contributions and the refunding of connection charges that apply to water and wastewater connections as levied by Irish Water for new homes. As the Minister of State will know, these measures were introduced under the Housing for All action plan to incentivise an increase in the housing supply and help reduce construction costs for those in the sector. The measures were time limited when they were announced and they applied to developments that commenced on site between 25 April of last year and 24 April of this year and that will be completed before 31 December 2025. These measures were warmly welcomed by the sector, which has been grappling with a high-interest rate environment, increased costs of construction and inflation but, as we approach the end of that 12-month period, there is an element of uncertainty as to whether they will be extended.
I am making the case for extending them for a further year on the basis they are having the impact we in the Government parties had wished for. Data shows that commencements were up 21% in 2023 to more than 32,800 housing units, which will obviously translate into completion figures this year and next. What is more, the data for the past three months is even more encouraging and shows an even greater ramp-up in the sector, at 3,357 units commenced in January, 3,167 in December and 3,087 in November, bringing the average over the past three months to 3,204. If we extrapolate that over a 12-month period, it equates to 38,444 housing units, assuming we can maintain that momentum. This measure has increased the number of commencements and I believe that if we continue that for a further 12 months, that trajectory will continue to go in the right direction, which is what we all want to see. That is despite it not being lost on anyone in the Government that the Opposition opposed these measures when they were introduced last year. They are working, however, and thankfully, we did not listen to the Opposition when it was saying they should not be introduced. In addition to extending the waivers, there is also a strong case for including formerly vacant and derelict properties, particularly those that require a change of use. I was successful in having measures introduced in 2022 to include vacant former pubs in the exemption from the requirement to apply for planning permission and that has resulted in many such properties being brought back into use. However, for the purposes of water and wastewater connections, they are treated as if they were new developments, which means, for example, that a former pub with one water and one wastewater connection that has been converted into eight units is levied for seven water and wastewater connection charges. That has an impact on viability. If this measure is extended, which it should be, it should also include those properties because there are viability issues in bringing them back into use.
Malcolm Noonan (Carlow-Kilkenny, Green Party)
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Boosting supply is key to addressing the problem at the heart of the housing system. Housing for All has set an average annual delivery target of 33,000 homes per year over the period up to 2030. In this context, it was noted early last year that some permitted developments were not being commenced. This appeared to be due to increased housing construction costs. Construction inflation, including both labour and materials costs, arose from global supply issues as well as other related viability issues. On 25 April 2023, the Government approved additional measures under the Housing for All action plan to incentivise the activation of increased housing supply while also addressing cost and viability issues faced by the construction sector. These measures included the introduction of temporary, time-limited arrangements for the waiving of local authority section 48 development contributions and the refunding of Uisce Éireann water and wastewater connection charges. The new schemes apply for one year to all permitted residential development that commences on site between 25 April 2023, the date of the Government decision to approve the measure, and 24 April 2024, which will be upon us quite shortly, and is completed not later than 31 December 2025. This end date is to facilitate large schemes to be speedily brought forward and progressed while also incentivising their completion as quickly as possible within a reasonable timeframe, thus delivering urgently needed housing supply.
Addressing vacancy and maximising the use of existing housing stock is a primary objective of this Government, as demonstrated by the focus given to this priority area in pathway No. 4 of the Housing for All plan. Under the plan, 28 regulations that provided for an exemption for the requirement to obtain planning permission in respect of the change of use of certain vacant commercial premises were extended until the end of 2025. These regulations included a new and additional class of premises eligible to avail of the planning permission exemption, that of public houses capable of providing up to a maximum of nine residential units, as Senator Cummins referenced. In addition, the vacant property refurbishment grant is available for the refurbishment of vacant properties for occupation as a principal private residence and properties that can be made available for rent.
It is not proposed to extend the terms or timeline of the temporary, time-limited arrangements for the waiving of local authority section 48 development contributions and the refunding of Uisce Éireann water and wastewater connection charges beyond those approved by the Government in its decision of 25 April 2023.
John Cummins (Fine Gael)
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Many involved in the sector will be quite surprised by the last paragraph of the Minister of State's reply. I appreciate that today is 5 March and these measures are in place until 24 April. As a Government we want to drive commencements and encourage everyone that has valid planning permission to get on-site before that date. However, while the answer given may be valid today, I hope that in the coming weeks a decision will be made to extend the waivers for a further year. These measure have had the desired impact. We have seen a positive trajectory in the commencement data and we need to see that continuing if we want the output and completion figures to continue to increase. I will speak to the Minister for housing, Deputy O'Brien and to the Minister of State, Deputy O'Donnell about this, as I am sure will individuals from the construction sector itself.I would appreciate it were the Minister of State to convey to the Minister the strong need, which I have emphasised today, to extend the scheme for a further 12 months and beyond the current scope of the scheme.
Malcolm Noonan (Carlow-Kilkenny, Green Party)
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The development contribution waiver scheme has made a positive contribution to the highest level of annual residential commencements in 2023 since records began in 2014. This means that the uplift in new home delivery experienced in 2023, when almost 32,600 new homes were completed in Ireland, will be sustained in 2024 and into the coming years. Almost 33,000 new homes were commenced in 2023, which is an increase of 22% over the 27,000 new housing starts in 2022. That is very impressive and is an upward trajectory in the right direction.
Given the significant exemptions from planning that exist for refurbishment for residential use, many existing vacant buildings do not require planning permission and would not, therefore, be subject to development contributions. There is also significant grant aid available to bring such buildings back into use.
The vacant property refurbishment grant is playing a really important role in bringing vacant and derelict properties back into use as homes with some 6,800 applications to date, which is very impressive. Together with a range of measures that were introduced by this Government, the development contribution waiver scheme has played a part in accelerating housing commencements. The waiver scheme has been impactful precisely because it is a limited and time-bound measure for a specific period. We will continue to provide funding supports targeting the refurbishment of vacant and derelict properties for residential use but it is not intended to extend the waiver scheme beyond the closing date of 25 April 2024.