Property industry lobby groups have aggravated the housing problem

The property industry and its army of lobbyists do a great job of bending the Government's ear. Whether it's the planning code, apartment standards, or help-to-buy schemes, they campaign vigorously behind the scenes. According to the State's register of lobbying, the Construction Industry Federation has this year alone made 61 representations to Government. Irish Institutional Property (IIP), whose members include property firm Cairn Homes and Ires Reit (the biggest landlord in the State), has made 18, while the Irish Business and Employers Confederation (Ibec) group Property Industry Ireland (PII) has made four.

These groups have been instrumental in steering Government policy on housing. But not once have their lobbied-for policies provided us with a viable solution to our housing problem. For the most part, they’ve aggravated it.

Take the strategic housing development (SHD) system, the fast-track process established in 2017 to ramp up housing delivery. It came on foot of an energetic campaign by industry, which claimed the State’s planning system was the single biggest obstacle faced by developers.

At the time, the PII said: "[…] the fact that Joe Public had the same right as the developer in the planning process was democracy gone too far . . ."[The] democratic structure in our cities doesn't work" and Ireland needed a more corporate model, it said.

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The Department of Housing confirmed last month that almost two-thirds of the 210 housing projects approved under fast-track planning laws remain undeveloped. More than half have been halted by judicial reviews. Now we’re all agreed the legislation will have to be scrapped. But it’s worth noting the chronic under-provision of housing didn’t arise from delays in the planning system, but from the 2008 crash.

Perhaps the biggest lobbying coup for the industry in recent times has been for changes to apartment standards, to which the Government readily acquiesced, first in 2016 to make them smaller, and then in 2018 to allow for a greater density development for build-to-rent investors, and then in 2019 with the removal of height caps.

PRS funding has resulted in more high-density apartment development in Dublin and other urban centres but in most cases the units aren't suitable for families

The combined effect of these changes allow for more apartments on a given site by changing things like aspect ratios, reducing the requirement for car parking spaces and allowing for greater elevation.They were lobbied for by and specifically tailored to private rental sector (PRS) investors. Sherry FitzGerald estimates that PRS funds have invested close to €7 billion into the Irish property market since 2011 – including €3.8 billion since the 2018 changes came in.

This has resulted in more high-density apartment development in Dublin and other urban centres but in most cases the units aren’t suitable for families and are priced at levels few can afford.

At the outset, and according to its own documents, the Department of Housing had an objective “geared towards an outline affordability range of between €240,000 and €320,000” for a two-bedroom apartment in Dublin. The average price of two-bed apartment units in the centre of the capital now exceeds that range and construction costs are on the rise. Earlier this year, a Society of Chartered Surveyors Ireland report found the cost of delivering a two-bed apartment in Dublin ranges from €359,000 for a low-rise unit in the suburbs to as much as €619,000 for a high-rise unit in the city centre.*

Because PRS funds can source capital cheaply and pay less taxes, they can tolerate much higher levels of vacancy than traditional developers, which keeps rents high. Take a stroll around the city’s docklands on a Saturday or Sunday morning – where much of the recent development has taken place – you won’t see thriving new communities, you’ll see half-empty apartment blocks.

The same happened in London with the market supplying high-end, luxury units that don’t sell and in many cases can’t be rented, and at a time of acute housing shortages elsewhere.

[PBSA policies] have inflated land values – one of the chief drivers of prices and rents, and one of the main reasons why the system is so dysfunctional

We’ve also had massive lobbying around student accommodation followed by a change in the legislation to make purpose-built student accommodation (PBSA) more financially viable. PBSA was also facilitated by guidelines in the Dublin city development plan in 2016 that allowed for a form of student co-living with private bedrooms but shared kitchens and other amenities. They currently constitute about 10,000 beds in the city.

Similar to the high-end apartments, many of the new schemes are too pricey for students and many of the operators are now having to look outside the student market for tenants.

These policies have been delivered on foot of lobbying by the industry but have proved ineffective. They’ve also inflated land values – one of the chief drivers of prices and rents – and one of the main reasons why the system is so dysfunctional.

Dublin city councillors said last week they felt "fooled" into rezoning the old Chivers factory site in Coolock, north Dublin, after it was put on the market for €25 million, about 10 times its value, before rezoning.

Councillors said they felt misled into rezoning the site, which they claimed was being “flipped” for maximum profits. The developer – Platinum Land – says it has at all times acted “honourably and with integrity”.

Of course there have been many bad policies to do with housing, ones that haven’t come on foot of industry lobbying. However, the longer this goes on, the longer we alienate so many from a reasonable solution to their housing needs, the more likely people are going to vote for more radical solutions, potentially industry-disrupting solutions.

*This article was updated on October 24th