Developers are seeking up-front State subsidies in building schemes overhaul, housing summit hears

Developers want the Government to give them subsidies up front as part of an overhaul of flagship State schemes to encourage building.

A summit on housing held on Tuesday heard criticism of the structure of existing schemes by representatives of the property industry, sources present said.

They are calling on the Government to front-load funding under the Croin Conaithe and Project Tosaigh schemes - both of which the Coalition says will help provide guaranteed funding for stranded apartment developments where rising interest rates have left them unviable.

Big developers want subsidies under the scheme paid at the start of the development cycle - as opposed to at the end, which they claim is putting off financiers.

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“The commitment needs to be made at the front end of the project,” said an industry source present. The Government looks set to step up “viability” measures to encourage building amid a shortfall in commencements which will hurt housing targets next year.

Sinn Féin housing spokesman Eoin Ó Broin said the summit was “more talk but no recognition that their housing plan is failing… Increasing or front-loading subsidies to developers building unaffordable homes won’t solve the crisis,” he said.

Meanwhile, housing targets look set to be revised upwards due to demographic pressures, Taoiseach Leo Varadkar has said.

While the Government is awaiting advice on the matter from the Housing Commission, Mr Varadkar said that given the rising population and an influx of people from Ukraine, it “makes sense to me that we will need to revise upwards those targets”.

Currently, Housing For All, the government’s flagship accommodation plan, envisages an average of 33,000 units being needed per year through to the end of the decade. He said there would be significantly more money available for housing in the future.

“Certainly in the years ahead I would envisage the housing budget continuing to increase, so long as the economy is strong and so long as the public finances can support it.”

However, he cautioned that other issues could hold the sector back, such as the availability of labour, materials and the capacity of the planning system. “I don’t think the problem is going to be a lack of finance from Government, I think it’s the other constraints that may hold us back more so than finance.”

Many blocks have stalled as rising interest rates make the financial projections underpinning their development less attractive. Mr Varadkar said among the options being considered was to offer a guaranteed price to developers.

Both he and Minister for Housing Darragh O’Brien acknowledged that a recent fall-off in housing commencements would be a headwind come next year. Mr O’Brien said the pipeline of projects in 2023 was “decent” but there was a “slowdown in commencements”.

The Government is also set to consider more tax breaks for both developers and landlords to stem the flow of smaller landlords from the market, which the Coalition fears is contributing to a rise in homelessness.

The summit also heard calls for the eviction ban in place until the end of March to be extended, but Mr Varadkar said there “wasn’t unanimity” on that proposal.