There’s a picture on the wall of Hubert Fitzpatrick’s office – an artist’s impression of a gleaming new office headquarters. Planning for the project was secured in 2022 and it was expected to be ready to move into earlier this year.
Three objectors put paid to that timeline and the ultimate outcome of the appeal is still uncertain even after An Bord Pleanála recently gave the green light. The builder’s chief lobbyist, the Construction Industry Federation (CIF), is not immune it seems to the vagaries on the planning system.
Fitzpatrick, who took over from Tom Parlon at the head of the CIF last summer, is still enthusiastic about the project but the uncertainty around timelines is a theme he returns to time and again when we sit down to talk about the challenges for the sector in delivering on multiple ambitious Government plans.
In the background lurk estimates on the number of homes the State needs to build every year simply to catch up with demand – figures that jump by thousands every few weeks – and the difficulty in funding that development in an environment where banks are still chastened by their recklessness in the Celtic Tiger years and institutional funders are finding Ireland an increasingly inhospitable place in which to try to do business.
Catching up has become the story of successive governments since the financial crash but the National Planning Framework, under which all county development plans are drawn up, was described a couple of years ago as “the flawed bible on which our entire planning system and population growth targets are based”.
Tetrarch Homes chief executive Michael McElligott said it was based on out-of-date numbers that would see actual population overshooting the projected 2040 target by more than 600,000 people – all of them needing homes the county plans say do not need to be allowed for in planning.
Fitzpatrick says it is important that we put realistic targets on what the population might grow to, and view that plan as being “an enabler rather than a restrictor”.
“We should be providing for infrastructure to cater for the growth for the next 20-30 years, rather than for the next five to 10 years,” he says. “So we require a bit more ambition with regard to the scale of the infrastructure that’s required, and [must] ensure that the providers of the infrastructure are well-resourced to advance with forward planning of all those projects to get them shovel-ready.”
This is at the heart of the construction sector debate with Government. Too much focus, they say, is placed on the amount of land zoned for housing as though the only thing missing is a commitment by developers to get stuck in and build it.
“There is no point zoning lands if you don’t have the infrastructure servicing those lands,” Fitzpatrick notes. Without water, sewerage and grid connections, developers won’t be able to get their proposed developments through planning anyway.
‘Had we not got the private institutional investors, we would have had a lot less housing output over the last number of years and a lot fewer apartment blocks built within the Greater Dublin Area. We actually need that funding’
“There are many examples of where land has been zoned but has not been capable of being developed,” Fitzpatrick says.
“I’m aware that Irish Water, for instance, can actually provide additional infrastructure,” he says, but that projects have been put back because of a shortage of funding, creating, he says, an environment where some CIF members are transferring some of their resources to the UK where there is a credible pipeline of work available.
“If we don’t maintain investment in public infrastructure and maintain our competitiveness, are we going to attract the foreign direct investment that we require to create jobs for the people of the future? Are we going to continue to improve the wellbeing of the economy as a whole?” he asks.
“If you create a scarcity of zoned, serviced land, that is going to be driving prices up.”
The other leg of the development process is planning which, despite several changes in approach, seems inevitably to result in any major developments being stuck for years in a costly logjam.
Fitzpatrick believes major new planning legislation will be a big improvement on the current set-up but said it remains to be seen whether it gets into law before the general election is called.
Even then, he argues, the law can only make the improvements envisaged if the planning authorities, An Bord Pleanála and the courts are properly resourced to ensure we avoid future logjams.
“We need a planning process that has much greater certainty at the end of the day and if we don’t resource each of the key players in the process, it will lead to continued uncertainty and longer time frames,” he says, adding that uncertainty over timelines is an inhibitor to potential new entrants in the Irish market.
Looking at the state of the market currently, beyond his concerns about an adequate supply of serviced land, Fitzpatrick is bullish about growth in the residential sector though concerned about the availability of institutional funding coming into the sector.
The office sector is less upbeat but that, he says, is providing additional resources for the residential market, particularly the building of apartments to which he says the people involved in office building are easily transferable.
Civil engineering has capacity to grow but many firms are not tendering currently for public works projects. Developers have expressed concerns about the nature of public works contracts, specifically about managing inflationary pressures. Fitzpatrick says there has been some adjustment to public works contracts but more is required to have a fair contract in place.
Has Irish house price inflation peaked?
Regarding the ever-rising cost of housing, he points to the impact of inflation in recent years as well as supply chain issues.
“This has all added increased cost,” he says, “and standards have continued to increase in the residential sector. I mean the standard of a house or apartment today is far, far superior to what pertained six or seven years ago.
“When you factor all those costs and improved standards into consideration, it drives up cost and that cost has to be passed on at the end of the day to the end-user.”
Fitzpatrick says that while the Society of Chartered Surveyors Ireland (SCSI) annual house rebuilding survey will tell you that the “hard costs” of building a three-bed semi are in excess of €330,000 or €340,000, the soft costs – things like land purchase, planning and design, professional fees and finance holding costs – could be the same again.
Another current headache is the Government’s renewed interest in a residential zoned land tax to nudge developers into acting on land that is zoned and permissions that have been granted. The CIF insists it is not against the concept “provided it is possible to go and develop that land in the short term”.
But Fitzpatrick says the tax as currently envisaged is “an unfair tax in relation to quite a lot of zoned land that cannot be developed because the infrastructure isn’t in place and clearly that’s an issue that should be addressed by Government to bring back a bit of fairness and equity to it”.
On the issue of funding, Fitzpatrick is blunt. If we want to see more than 50,000 homes a year built to catch up with demand, more funding for the sector is needed.
“It is going to require a lot of additional capital to be available, so we need a system that’s going to attract other funders who will invest into the market,” he says. In a market where institutional investors are labelled as vultures and loudly declaimed as a feature of the market that we should not be encouraging, that creates a problem.
“Had we not got the private institutional investors, we would have had a lot less housing output over the last number of years and a lot fewer apartment blocks built within the Greater Dublin Area. We actually need that funding.”
Alongside attacks on institutional investors, Sinn Féin among others is suggesting that private sector housing incentives should be phased out. Again, Fitzpatrick says that would be a retrograde step.
“The State incentives at the moment are improving affordability for the buyer,” he said. “Were those incentives not in place, we would not have the current level of house building around the country. It we look at where we are compared to Europe, in Europe, the level of residential building activity has stalled because there is a lack of state incentives in those areas.
“We need to see the level of [building] activity increasing to meet the big challenge that is in front of us and those units will not commence if incentives are not there for first-time buyers.”
[ Is help-to-buy a vital support for house buyers or is it just pushing up prices?Opens in new window ]
But increasing activity will require more bodies on site. And the industry is still dealing to some extent with the skills that were lost in the great migration after the financial crash. Fitzpatrick acknowledges the industry needs to encourage more school leavers to entertain the notion of careers in the sector.
“Very often, parents look back at the industry in terms of the crash and they see what happened in terms of an industry as such collapsing and it has left a sour taste,” he concedes. “But I believe the current environment is a lot more sustainable than it was back in the early noughties. Lending practices, whether it be for buyers or for developers, there is a requirement for significant equity to ensure it is sustainable.”
The construction sector is regularly cited in the context of industries that are slow to innovate but Fitzpatrick says this is not the case – citing the growth of off-site modular construction and the increase in timber-frame units, which he says now account for close to 50 per cent of estate housing.
New ways of improving speed of delivery, cost of delivery and the quality of finishes are other areas he mentions.
More critically for homebuyers’ peace of mind, even as the Government considers a €2.5 billion fund to address defects in up to 100,000 Celtic Tiger-era apartment blocks, Fitzpatrick notes that there is much tighter building controls in place through the Building Control Authority.
“We’ve had major reform of standards across the sector. We’ve the mandatory inspection and mandatory certification of buildings and the whole culture of compliance has been brought to a whole new level. I’m confident that the prospect of something happening like what happened before has been minimised.
“No new building can be occupied until it has been registered with the Building Control Authority as having been certified with the building regulations and that is a huge leap forward in terms of certification compared to what would have applied 10 or 15 years ago,” he says.
‘If we want to see more than 50,000 homes a year built to catch up with demand, more funding for the sector is needed’
The industry is finally grasping the concept of sustainability with new regulations forcing the sector to do better on the issue of construction waste with the prospect of levies on soil and stone – which accounts for about three-quarters of all construction waste – dumped in landfill.
It is also adjusting to rules that will require the use of low-carbon cement in public sector contracts while working to increase resources available for Government grant-aided, energy-efficient retrofitting of domestic homes.
“I think the public are moving with the sustainability agenda and are driving it now, which would not have been the case some two or three years ago. So that is continuing to develop and evolve and I think we are going to see continued growth in that area.”
[ Could granny flats offer a sustainable, €70,000 solution to the housing shortage?Opens in new window ]
Fitzpatrick was a seasoned lobbyist even before he took the top job in the CIF and he understands the importance for the federation to have strong relationships with all its stakeholders in government and out of it to ensure the industry’s voice is heard.
“The economy needs a viable, sustainable, growing construction industry,” he concludes. “Without it, the country will not be able to deliver the houses we need, the offices we need, the schools, the hospitals and the services to cater for future population and employment growth.”
And perhaps a shiny new headquarters for the voice of the State’s construction sector.
CV
Name: Hubert Fitzpatrick
Age: 63
Position: Director general, Construction Industry Federation
Family: Married to Deirdre. They have three adult children and two grandchildren.
Interests: Walking and cycling, where he’s a weekend regular in the Wicklow hills.
Something you might expect: He’s no stranger to the planning system having had a long career in local government, working in areas including housing, planning and environmental services and even interim county manager before joining the CIF.
Something that might surprise: He also worked as a consultant with law firm A&L Goodbody.
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