Housing and reviving our cities

Time for solutions

A chara, – Our cities are too spread out and new residential developments, especially owner-occupied, in our city centres are almost non-existent. To have thriving communities in our cities, including in our city centres, with a great quality of life, and to reduce the burden of commuting to work, apartments for owner-occupiers need to be built in much greater numbers, within the current city confines and in the hearts of our cities. Copenhagen is a good example of what success looks like.

Build-to-rent is less desirable than build-to-sell, unless we adopt cost-rental models with life-long security of tenure. We need a much higher number of build-to-sell apartments, so that people can own their homes and feel secure.

Currently, from personal experience, it’s not at all financially viable to build apartments to sell in most parts of Dublin. If it were, developers would be building them as the demand is certainly there and there are many already granted planning permissions. For clarity, if a developer chooses to build apartments for sale, in most city locations, they will end up making a big loss.

A series of changes would help significantly.


Eliminate VAT on new residential apartments (and houses only if there’s no way to avoid it). If a residential developer competes for a site with an office or hotel developer, only the residential developer gets stuck with 13.5 per cent VAT on their sales. Because offices and hotels are put to VAT-able uses, there’s essentially no VAT on these asset classes. This sharply tilts the balance in favour of office and hotel developers to the disadvantage of residential developers in city centres. For reference, for many years, there has been no VAT on residential property in the UK. In Dublin, city centre sites go almost exclusively to uses other than residential, as the VAT rules favour other uses.

Apply part V levies to office, hotel and all other planning permissions so that the burden of providing social and affordable homes is not solely placed on residential developers. If it were shared by office, hotel and other developers, residential developers could compete more successfully for city centre sites. I believe Westminster City Council and some other UK councils apply the equivalent of part V levies to offices, hotels and other planning permissions, and not only to residential permissions.

Remove part V for smaller sites that can take only, say, 50 apartments.

The Government should provide low-cost development finance to residential (build-to-sell) developers, in line with the Government’s cost of borrowing, until the apartments are sold, when the loans can be recouped. The cost of providing these loans would arguably be far lower than the cost of failing to provide owner-occupied housing.

Development finance, which would ultimately be paid for by apartment buyers as part of their purchase price (if such apartments could be built, which they can’t), is too expensive in Ireland. The State has a vested interest in facilitating would be owner-occupiers to acquire their first home, by easing the financing costs during the (prolonged) planning and development phases.

Give better tax breaks for owner-occupier targeted city-centre residential conversions and “over the shop schemes”. These tax breaks should be designed to “overcorrect” until they’re seen to be effective. If the incentives were designed effectively, we would see widespread “over the shop” conversions under way.

To date, it seems that lots of time and State money have been spent designing mean-minded schemes that have no practical effect in the real world. Do it right or don’t waste taxpayers’ money. The many benefits of thriving, lived-in city centres are obvious.

Planning delays are costly and add no value. The added costs are ultimately borne by the owner-occupier. The Government should set up a review group with the aim of drastically reducing planning delays, increasing planning certainty and creating real accountability for local councils and An Bord Pleanála if they fail to determine cases on time.

Although the Central Bank is independent of elected officials, there needs to be accountability. Overly conservative policies designed not to repeat the mistakes of the Celtic Tiger are contributing to an equally problematic national problem. Monthly rental payments now often exceed mortgage payments for equivalent apartments, so affordability is not always or often the issue. The Central Bank should allow 95 per cent mortgages for first-time buyers. Limiting mortgages to 80 per cent for first-time buyers is a significant part of the problem of why we aren’t delivering enough owner-occupied apartments.

By aiming to solve one problem – over-exuberant lending during the Celtic tiger years – the Central Bank is systematically and inexorably helping to create a national problem of equal proportions. How can our young people save up 20 per cent deposits while paying eye-watering rents at the same time?

If these measures were implemented, I believe the number of city centre build-to-sell, owner-occupied apartments would increase significantly. This would be radically good for our cities and for our society.

Undoubtedly, there are other solutions too. We just need to have the will to find them and implement them. – Yours, etc,



Dublin 6.