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Construction costs reports confirm that State needs to drive delivery of affordable homes – Ó Broin

12 April, 2018 - by Eoin Ó Broin TD

Sinn Féin Housing spokesperson Eoin Ó Broin TD has commented on the long awaited publication of three reports on residential construction costs published today by the Department of Housing.

The reports compare construction costs in Ireland and comparable countries in Europe, the impact of the new construction guidelines for apartments and other issues such as land costs and how state lands could be used to deliver housing.

Deputy Ó Broin said:

“These reports by the Department of Housing and the Housing Agency confirm that the market cannot deliver genuinely affordable homes and that State land should be used to deliver more residential units.  

“The Department of Housing Report, ‘Review of Delivery Costs and Viability for Affordable Residential Development’, recognises that the cost of land is a serious problem and that state lands should be utilised better for residential development. Sinn Féin welcomes this. It has long been our view that the state lands should be used for local authority led public housing delivery.

“Sinn Féin set out costed proposals in our Budget last year and this year we will do the same on how local authorities can drive the delivery of affordable homes for sale and for rent between €170,000 and €260,000.

“Social and affordable homes for rent and for sale should be delivered on State lands by local authorities; not by public private partnerships, not via land initiatives and certainty not to private developers with no iron clad contractual commitments on affordability.

“Worryingly one of the key recommendations of the report by the Department of Housing states that: ‘Will match land with those best placed to deliver affordable units bringing increased affordable products in key locations. It will discourage high sales in the vicinity and ultimately will reduce land sale values enabling the provision of lower cost units to the market’.

“It is impossible for affordability to be guaranteed unless the Department recognises that local authorities are best placed to deliver affordable units, supported by approved housing bodies and the Ó Cualann co-operative model.

“Unfortunately, the reports definition of affordability at between €240,000 and €320,000 immediately blocks access to homeownership for people who earn above the income to qualify for social housing and whose average household income is between €45,000 and €75,000. These people are now trapped in the volatile private rented sector.

 “If the State aimed to significantly increase the targets for social housing, this would in turn alleviate pressure on the private rented sector.

“We welcome that the Department of Housing discounts introducing a VAT reduction as a means of lowering construction costs. The ‘Review of Delivery Costs and Viability for Affordable Residential Development’ report states: ‘given EU VAT Directive requirements, this is not achievable and would likely only result in further increases in land prices’.

“This dispels the myth peddled by the Construction Industry Federation and Fianna Fáil that reducing VAT will make homes more affordable

“Another industry claim is that the cost of construction here is too high compared to other countries.

“The facts are that, today the Housing Agency report, ‘Comparison of Residential Construction Costs in Ireland to other European Countries’, indicates that construction costs for residential buildings in this state are comparable with other EU countries including the UK, Germany and France.

“The third report published today, ‘Cost Analysis of the Updated Sustainable Urban Housing: Design Standards for New Apartments, Guidelines for Planning Authorities’, claims that the new guidelines have reduced the cost of constructing apartments by 13-15%.

“The claims are based on one example in Dublin 8 and if the costs are reduced by 15% for developers, will this cost be passed on to potential homeowners? 

“Again, you have to ask who is the Minister for Housing reducing costs for? I have written to the Chair of the Housing Committee today to request a dedicated meeting to discuss the contents of these reports.  I hope the Minister will make himself available to address the concerns I have outlined above.” 

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