Planning still a shambles as house building promoted
If there is to be another orgy of house building in Dublin, it will have to be funded by foreigners
“If the hedge funds take the bait, we may well be on the cusp of another house building boom, or at least a significant upswing.” Photograph: Gareth Fuller/PA
Last week, the Taoiseach told a business gathering in New York that: “If you had 30,000 three- bedroom detached houses in Dublin you’d sell them all in a week. That’s the pent-up demand that’s there.”
He was obviously exaggerating. But he was making a point, which was that there is a big opportunity to make money in Dublin right now if you are prepared to take a punt on residential housing. House prices are going up by €20,000 to €30,000 a week, he told the money men.
His comments were followed a few days later by the remarks of the secretary general of the Department of Finance, John Moran. He told a gathering in Dublin that more social housing will be needed for people who lose their homes as result of mortgage difficulties. “You only have to look at the size of the mortgage arrears numbers to know that there is a pent-up demand coming down the road,” he told the audience at a property conference organised by Byrne Wallace.
The key takeaway for the construction industry from Moran’s comments is the same as the Taoiseach’s: start building because there is money to be made. The more subtle message is that the Government will do what it can to facilitate you if you want to start building houses. You can make this assumption on the basis that if the Taoiseach and the secretary general of the Department of Finance don’t know what is Government policy, then nobody does.
This is good news for the construction industry and particularly good news for any property developers who fancy having another crack. And there seems to be quite a few ready to re-enter the fray with various familiar faces letting us know they are back on the scene and presumably testing the water.
The big problem facing them, and any rookie property developers thinking of having a tilt, is money. Broadly speaking, if Nama has done the job it was set up to do, then none of them should have any money left unless they have discharged their existing debts in full.
Even then, they will need to borrow and the banks who lent them the money the last time around are either dead, broke or at the exit door. The ones that are staying have hopefully learnt the hard way that speculative property lending and banking are not a good mix.
If there is to be another orgy of house building in Dublin, it will have to be funded by foreigners. And this explains why the Taoiseach went to such extraordinary lengths to talk up the Dublin housing market while he was in New York.
He hopes, we presume, that some of the international millions flooding into the commercial property market from various hedge and property funds will spill over into speculative house building.
If the hedge funds take the bait, we may well be on the cusp of another house building boom, or at least a significant upswing which would be more welcome. It would be nice to think that we will avoid the corruption, bad planning and poor development which characterised the last one; the consequences of which we will live with for decades.
That may be a bit optimistic. The Mahon tribunal into planning corruption reported in 2012 and produced numerous recommendations covering everything from the planning process and conflicts of interest to lobbying and bribery.
It called for the regulation of lobbyists, more stringent disclosures and penalties for people bribing politicians and officials. The overall objective was to make it much harder for politicians to interfere corruptly in the planning process to the benefit of property developers.
The penalties for trying to bribe politicians also needed to be toughened up, the tribunal recommended.
Mahon’s most significant recommendation in this regard was that the Minister for the Environment’s enforcement powers should be transferred to a powerful Independent Planning Regulator.
Asked on Friday how it was getting one with implementing the Mahon recommendations, the Department of the Environment said that Phil Hogan, the Minster for the Environment, will “shortly” publish the general scheme of a Bill to bring in a watered-down version of the regulator .
The regulator’s remit will be limited to providing an “independent appraisal” of city and county development plans and regional planning guidelines as well as “planning research, education and investigation”.
Local and national politicians will retain the power to override planners and enrich property developers.
A new game may soon be afoot and the rules are the same.