Builders and auctioneers have warned that the social and affordable housing measure proposed in the new Planning Bill could drive up the price of property, and reduce the number of new houses being built over the next 18 months.
While the Government's aim was to reduce house prices and increase the supply of new homes, the Bill would have the opposite effect, according to the managing director of McInerney Holdings plc, Mr Barry O'Connor.
"Anyone buying over the next 12 to 18 months will face a situation where the prices are pushed up," he said, adding it was too early to tell how much prices would rise as a result of builders having to sell up to 20 per cent of newly acquired sites to local authorities for social and affordable housing.
"This is a tax," Mr O'Connor said. "Now it is a question who pays the tax - the land-owners, the developer or the buyer. With demand outstripping supply, the buyer will pay."
While the 20 per cent stipulation would raise house prices, it would also create uncertainty in the market-place and reduce the amount of development land coming on the market.
There would also be uncertainty among developers. All developers would be reassessing their plans in the light of the Bill, he said. The purchase of development land would also slow down.
"Developers are looking for the same return. Our costs have not changed, but the number of units on which we can get a return have. If developers cannot get a return on a piece of land, they will not buy it," Mr O'Connor said.
The measure proposed in the Bill would require developers to sell local to authorities - at agricultural land prices - up to 20 per cent of every site of more than half an acre they acquire from yesterday for development by the authorities as "affordable" housing.
The authorities would then rent or sell these homes to people with incomes too low to qualify for ordinary mortgages. There would be "claw-back" provisions to prevent people who get the homes from profiteering. If they sold them within 10 years, they would have to refund part of the sale price to the local authority.
McInerney's is one of the biggest home-builders in the State, completing an average of 600 to 700 new homes annually.
Mr O'Connor said he believed that if the Government was serious about increasing the house supply, it had to increase the staffing levels within local authority planning departments.
On average, he said, it took most housing developments a year from the time of the site purchase to the date when planning permission was granted.
The Institute of Professional Auctioneers and Valuers also warned that the Bill would slow down house sales. Describing the affordable housing requirement as apparently "unworkable", the IPAV said it was likely it would be legally challenged.
"This means that many developers will wait until the final outcome of expected prolonged hearings decides whether the Bill is constitutional or not," the IPAV executive secretary, Mr Liam O'Donnell, said. "Other land-owners, who had planned to sell land, may now opt to wait and see the outcome of the present uncertain situation, which could be a number of years from now."
The proposals also required further clarification, Mr O'Donnell said. "What would be the position regarding the sale of large apartment blocks?" he asked.
"Would one floor have to be designated purely for affordable housing? Such a situation would cause unwelcome social distinctions."
The real problem at the heart of the housing crisis was a lack of supply and not the cost of building land per se, and this problem was not being tackled by the Bill, the Society of Chartered Surveyors warned.
"The proposed provision will not provide any additional housing that would not otherwise be provided under existing conditions," it said.
The Construction Industry Federation's head of planning, Mr Ciaran Ryan, said the CIF had a committee comprising legal, economic, technical and planning experts who would now examine the Bill.
The objective of any proposals had to be to restore equilibrium between supply and demand in the housing market, he said. Nowhere was this imbalance as evident as in the Dublin market. However, he noted that the number of new homes registered under the Home Bond scheme was just 4,784 so far this year, compared to 5,662 for the same period in 1995.
"Whatever happens, we need to increase the supply of housing," he said. "No adverse factors must be introduced which would affect this."