Planning rules ‘collapsed’ apartment market

Excessive, prescriptive, planning standards, which lacked an evidential base contributed to the “collapse” of apartment building in Dublin city, according to an unpublished Department of the Environment report.

The report was prepared by the department’s architectural and building standards and planning sections as part of the drafting of the Planning Guidelines on Design Standards for New Apartments issued last December.

The guidelines, which superseded the standards set by local authorities, set the minimum size of one-bed apartments at 45sq m, two-bed apartments at 73sq m and three-bed apartments at 90 sq m.

The Dublin City Development Plan had set the minimum size of one-bed apartments at 55sq m, two-bed apartments at 90sq m and three-bed apartments at 100sq m.

The report identified a “virtual collapse” in apartment building in Dublin, “with on-going commencement figures indicating further declines rather than a badly needed increase”.

Not withstanding the effects of the economic crash on the property sector, additional restrictions imposed by local authority apartments standards meant that new apartment development would remain economically unviable, the report said.

Minimum

“When Dublin City introduced their minimum floor areas . . . the Department was not supportive as they departed from the Department’s own floor areas that were proposed following independent research, and also from a consideration of cost and potential confusion arising from two sets of standards.”

The council’s restrictions on the numbers of apartments serviced by each lift and the numbers which had to be “dual aspect” – apartments with windows on two sides, had also contributed to costs the report said.

Central Bank mortgage lending rules meant that if a buyer wanted a home costing €315,000, an income of at least €80,000 and a cash deposit of €34,000 was required.

By contrast, the report said, the average industrial wage in Ireland is €32,000, which at a multiplier of 3.5 for a 2 person household earning at that rate equates to a practical spending power of about €224,000.

Profitable

“Because some local authorities demand additional planning policy requirements over and above national planning guidelines, development of much needed one- and two-bedroomed apartments is loss-making if aiming to price points around the €200,000-€260,000 mark and only becomes marginally profitable once a ‘package’ of measures to deal with numbers of lifts being provided and floor areas is adopted.”

If planning restrictions were not changed new apartments in the city would be affordable only to those on high incomes, which represented an “insufficient market to justify the high up-front development and finance costs associated with apartment development as opposed to conventional housing which can be more easily developed unit by unit”.

“Essentially Dublin City Council are enforcing very prescriptive standards, without any indication that they will in any way better foster sustainable communities and in fact, by effectively limiting apartment development to high cost units, are discouraging a sustainable balanced community”.

The department’s standards came under criticism this week following claims minimum room sizes could not fit into smaller apartments.