Government claims it has cut apartment build costs by 15%

Minister claims drop is a result of changes to minimum apartment standards

Minister for Finance Paschal Donohoe with Minister for Housing Eoghan Murphy at St Mary’s flats complex in Dublin 1. File photograph: Cyril Byrne

Minister for Finance Paschal Donohoe with Minister for Housing Eoghan Murphy at St Mary’s flats complex in Dublin 1. File photograph: Cyril Byrne

 

The cost of building apartments has dropped by as much as 15 per cent because of recent changes to construction regulations, the Government has claimed.

Minister for Housing Eoghan Murphy claims that policy changes he introduced to minimum apartment standards have led to a significant drop in the cost to builders.

The amendments to the regulations included reducing the number of lifts and car parking spaces needed in apartment blocks, as well as changing rules that ensured apartments were dual aspect.

Mr Murphy released three related internal reports on the issue last night. The first report, conducted early last year, found that it was “extremely challenging” for builders to construct apartments in urban centres in particular. Suburban housing developments were found to be “marginally viable”.

The calculations were based on houses and apartments priced on an “affordability range” of between €240,000 and €320,000.

This, the report carried out by the Department of Housing argued, was due a number of factors, such as the number of car parking spaces needed.

The report says six-storey buildings are “optimal” from a cost point of view because higher buildings would come with greater structural and fire and safety requirements.

Recreation space

The report supports the need for a higher number of one- and two-bed apartments in developments. However, the need for recreation space above 10 per cent of the total site in suburban estates is questioned.

The cost of building report also deals with a number of mooted policy changes, such as a reduction in the level of VAT for construction. This is rejected because it will “likely only result in further increases in land prices”.

A follow on report – albeit much shorter in its analysis and conclusions – assessed the impact of the subsequent changes to the building regulations.

It based its assessments on the cost of a six-storey apartment in Dublin 8. A new layout was designed in line with new regulations, including smaller apartments. It led to an increased number of apartments – from a theoretical 252 to 285 – in the block when compared with older rules.

Two major factors

“In terms of the construction cost comparison exercise, the two major factors considered were a more efficient layout and the design flexibility around car parking provision,” it says.

This led to an overall cost reduction of 13-15 per cent, which it says “translates to a construction cost saving per unit” of between 23 per cent and 25 per cent.

An other report released by Mr Murphy last night states that construction costs in Ireland are broadly in line with those in the UK, Germany, the Netherlands and France.

“However, in the Netherlands, costs are of the order of 18 per cent less than in Ireland and are also notably lower than in the UK, Germany and France,” it says.

“The information we have obtained from the Netherlands suggests that there are a number of factors which may play a part in achieving lower residential construction costs including the types of houses and apartments built; the level of control and intervention by municipalities; and the high proportion of residential developments undertaken by housing associations.”