Apartment size matters, but so does affordability

Dublin City Council’s run-it-up-the-flagpole-and- see-how-it-flies notion to boost new homes development by relaxing building regulations for one-bed and studio apartments has certainly evoked an emotive response. Unsurprising given our recent collective property experience and the desperate legacy that poor development has left.

But a little perspective may have been lost in the rush to damning judgment. While it is laudable that developers should embrace a best-in-class approach to every build, should it always follow that homebuyers be required to afford a top of the range property?

It’s a little like expecting someone on an entry-level salary to only buy a high-end saloon, when a compact runabout might be all they require, or more crucially, can afford. And the argument always comes down to affordability, starting with the developer and ending with the buyer.

Access to capital funding isn’t what it used to be, and any developer decision to build comes down to very basic maths. Better design standards require bigger floor spaces, better accessibility, more windows and greater energy efficiency. This all translates into significantly higher build costs per unit (of the order of 20 per cent in some cases), and developers will not break ground on a new scheme until they can cover those costs and make a profit.

Further exacerbated

The Housing Agency reported this week that only just over half the minimum number of new homes needed to meet demand in the capital and its environs were built last year. So an already bad situation – 8,900 units will be needed by 2018 – is being made worse.

And the more demand exceeds supply, the more prices will rise.

So the somewhat simplistic solution to relax building requirements, thereby reducing costs, will only ever be a small part of any proposed solution. Property Industry Ireland (PII), an Ibec interest group for the property and construction sector (with a clear vested interest), this week published its submission to Government in advance of October's Budget, and in it outlined a suite of measures that might address the worsening supply of affordable housing.

It suggests applying the revised building criteria to developments of purpose-built rental accommodation for students and housing for the active retired. As a student who happily lived in accommodation where the toilet was accessed off the kitchenette by a poorly fitted sliding door that opened like a DeLorean car (and not in a cool way), I wonder is it now an absolute must that students should enjoy a dual aspect and have a parking space. Surely proximity to the college and affordability are priorities?

The new building requirements have led to the virtual disappearance of the traditional bedsit. It prompted many landlords to sell up rather than upgrade to the new standards. Many of these homes have now reverted to single-family use, taking multiple accommodation units out of the market. They may have been substandard dwellings, but many tenants have been forced into homelessness as a result.

The PII calls for the immediate construction of social housing units. But how will they be funded? The current system of fixed rent subsidies to those on lower incomes is not working, with the burden falling on the tenants. Unless a more flexible subsidy can be devised, housing bodies need to raise the debt finance themselves. Income can be raised through the sale of State property and proceeds invested in housing funding schemes. Tracts of wasteland currently zoned industrial could be rezoned residential, providing scope for thousands of units to meet housing needs.

The proposed relaxation of building requirements was also conceived as a way to facilitate investors wishing to convert unused retail space in historic older buildings to rental accommodation, thereby rejuvenating city and town centres. Upper floors of high street shops are dead, vacant spaces that with the right investment could make beautiful loft-style apartments.

If we have learned anything, it’s that the one-size-fits-all approach to housing simply doesn’t work. There is already an abundance of one-bed apartments out there proving unsuitable for cash-strapped owners who have outgrown them.

Meeting future housing needs is a complex process that requires a multi-strand approach. A little flexibility and imagination are needed.