Housing crisis: development levies suspended in bid to drive down building costs

Government says new plans will make it cheaper to build and refurbish homes, speed up home building and drive down building costs

The Cabinet has signed off on a range of additional measures under the Housing for All Plan which, it suggested, will make it cheaper to build and refurbish homes, speed up home building and drive down building costs.

Among the proposals are the scrapping of development levies to stimulate more building activity, higher grants to bring more vacant property back into use and expedited work under the cost rental scheme.

Details of the revised plan were contained in a series of memos put to Cabinet on Tuesday morning from the Minister for Housing Darragh O’Brien.

It commits to reducing the cost of construction by scrapping the development levies required to connect new homes with roads, water and other services, and subsidising development levies, saving up to the value of €12,650 per home on average.

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The proposals also commit to increasing the pace at which vacant and derelict properties are renovated for new housing by increasing the grants to cut the cost of restoring empty homes and making it easier to apply.

The Vacant Property Refurbishment Grant will be increased from €30,000 to €50,000 for vacant properties and from €50,000 to €70,000 for derelict properties, extended to cover houses built up to 2007, and will be available for properties intended for rental as well as owner-occupied.

Government financing of the construction of affordable apartments under Cost Rental is proposed to get work started on thousands of affordable apartments to rent which have planning permission but which are not being progressed.

The Government has agreed to commit up to €750 million via the Land Development Agency and other providers as part of this initiative to complete 4,000 to 6,000 additional affordable apartments under the Cost Rental system.

Speaking at a press conference with Mr O’Brien, Tánaiste Micheal Martin and Green Party leader Eamon Ryan after the Cabinet meeting, Taoiseach Leo Varadkar said the package would make it possible to build 35,000 new homes in 2024 and would “move the dial in relation to deactivated planning permissions”.

“At the moment about 400 people are buying their first home every week, which is the highest since the Celtic Tiger,” Mr Varadkar said.

He suggested that Ireland now has “the best social housing output since the 1970s. After a slowdown, commencements are bouncing back. And we are likely to meet our overall target again this year.”

However, he accepted that more needed to be done to tackle the housing and homelessness crisis.

Mr Martin said it was important to say progress was being made in housing. He said in the first quarter of 2023, there 3,300 new commencements, the highest number on record.

He said the only way of meeting the housing challenge was through “increased supply, supply and more supply”.

Mr Ryan said the housing plan was fulfilling the Government’s programme of achieving compact, and low-carbon, development.

He said that under the Croí Cónaithe scheme where vacant and derelict sites were brought back to life, there already had been 1,600 applications.

He claimed the Coalition was now delivering cost rental apartments at scale. “The Government has agreed on the principle of this intervention. It is our intention to make cost rental affordable,” he said.

Mr O’Brien said that cost rental had not existed 18 months ago and had already delivered 1,000 tenancies. He accepted the Government needed to go further.

He said the new incentive to bridge the viability gap for cost rental apartments would cost the Exchequer some €750 million but would have the capacity to deliver between 4-6,000 new homes in the near term.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times