Developers could secure up to €144,000 in State funding for each apartment they build outside the Dublin area under a new scheme to bridge what is known as the construction viability gap.
The €450 million Croí Cónaithe cities scheme will subvent the construction of up to 5,000 apartments in Dublin, Cork, Limerick, Galway and Waterford which have planning permission but remain unbuilt because costs outstrip market values.
Developers who have planning permission for large-scale apartment complexes have until June 21st to submit applications to the Housing Agency for the fund, which could see them secure millions of euro in State support.
To qualify, developers must agree to sell the apartments to owner-occupiers only, construction should start by the end of March next year, and the homes must be completed by the end of 2025. Each complex must have a minimum 40 apartment in blocks of at least four storeys.
To get the funding, developers must demonstrate there is a viability gap between what the apartment costs to build and the sales price they can achieve.
A national maximum of €120,000 per apartment has been set, but developers building in the regional cities will be able to argue for an increase of up to 20 per cent, bringing the State subvention to €144,000, because of the lower market values achieved in apartment sales outside Dublin.
Each application will be assessed individually, with applicants ranked on the merits of their scheme, such as quality of homes provided, their proximity to public transport and other services, and the value for money the subvention will provide to the State.
No cap will be put on how much profit the developer can make per unit, but the Department of Housing said this would form part of the assessment and a margin of 15 per cent would be “normal”.
The money will only be paid to developers on the close of sale to an individual purchaser, and payment will be subject to there still being a viability gap. If apartment prices have risen beyond the construction costs, the offer may be withdrawn.
Purchasers must sign a declaration under oath that they intend to live in the apartment, and only one apartment can be sold to any individual.
To avoid speculation, if the apartment is sold with a 10-year period, tax will be payable on any profit equivalent to the amount of the State subvention.
State-wide, an estimated 70,000 apartments have planning permission but remain unbuilt. Approximately 40,000 are in Dublin, which represents about four years-worth of housing supply in the capital.
Minister for Housing Darragh O’Brien said the scheme was designed to increase housing supply in cities and give people the choice to buy apartments.
“This initiative supports the Government’s aim of compact growth and tackling climate change by providing housing in our urban cores rather than through urban sprawl,” he said.
“Right now, there are many planning permissions for apartments in cities that have not been activated due to a viability gap between the cost of delivering an apartment and the market value for them. This time-bound targeted measure will help activate planning permissions and provide badly needed supply. Increasing the supply of owner-occupier apartments also frees up housing in the rental sector and can reduce pressure on the rental market.”