HOUSING AND PLANNING

Dublin has some of the highest rents in Europe yet there are vacant lots all over the city centre. This is a clear indication of planning failure. The job of planning authorities should be to encourage sustainable development as opposed to putting hurdles in the way of those who wish to provide more housing stock to Dublin. Below are a series of reforms that could dramatically increase the supply of houses in Dublin.

There should be a fast track planning procedure for those wishing to build residential property. As it currently stands the process is as follows:

  1. A site is identified for development and a feasibility study is undertaken.
  2. A preplanning meeting is arranged with Dublin City Council (as it currently stands there is a wait time of three months for these meetings).
  3. An application for planning permission is made to Dublin City Council. The Council must respond within six weeks.
  4. A process of negotiation beings whereby Dublin City Council takes account of objections.
  5. Dublin City Council comes to a determination.
  6. Dublin City Council's decision can be appealed to An Board Pleanala.
  7. A decision of An Board Pleanala can be challenged in the courts.

This process is far too cumbersome especially when there is a housing crisis. Moreover it tends particularly hurt those trying to develop small sites. While large developers or multinational companies can hire lawyers to guide them through the process, small developers cannot afford this. 

There should be no VAT payable on new homes. At present all purchasers of new homes pay 13.5% VAT to the state. VAT is not payable on second hand homes. It makes little sense for first time buyers (most newly built homes are bought by them) to take out huge mortgages so as to pay taxes to the state. While the Council does not set VAT rates, it can certainly lobby the government for reform in this area.

The 20% corporation tax surcharge that applies to closely held companies should be abolished. At present small companies investing in property pay a 20% surcharge. This makes it very difficult to compete with large developers. Such companies also pay additional taxes on undistributed income. This removes any incentive for such companies to build up capital and invest in a sustainable manner.

Interest costs in the context of residential construction should be 100% tax deductible. As it presently stands, such interest cost are only 75% deductible. This means that if I borrow money to buy a factory, 100% of the borrowing costs can be offset against income. However if I borrow money to build a block of apartments, only 75% of the borrowing costs can be offset against income.

Dublin City Council Building Regulations should not apply uniformly to every site. According to some construction groups, Dublin City Council regulations can add €40,000 to the cost of apartments. While building regulations should provide for high standards, they should not do so at the expense of construction taking place in the first place. Take for example a Dublin City Council rule requiring 80% of apartments in a particular development to be dual aspect (i.e. have windows on two sides). Many vacant lots in Dublin are only single aspect to begin with. The regulation simply means that these lots cannot be developed into apartments. Over the last few years Dublin City Council's proposals to relax various building regulations have been met with controversy. However if it is the choice between small apartments and no apartments, the choice is clear. As a young person currently looking for rental accommodation, I would much rather live in a small but new apartment in the city centre as opposed to a larger apartment in a crumbling old building in the suburbs.

The principle underlying many of the above policy proposals is to encourage small investors to put money into the residential property sector (as part of their pension or otherwise). Most vacant lots in the city centre will not be touched by the large developers. However if moderate reforms are carried out, such sites can become attractive to low risk investors. Essentially we should encourage moderately well off older people to invest in property so as to rent it to young people.

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