Cork property developer Michael O’Flynn offers a firm handshake and a warm greeting when we meet on a glorious spring morning in the bar of the Radisson Blu St Helen’s Hotel in Stillorgan.
But he cuts a frustrated figure. He reaches for a cushion on a neighbouring sofa to support his back, which has been giving him a little trouble for a while now. And he spends much of the time with his arms folded and his forehead creased as he explains his frustrations with how the housing crisis is being managed, and outlines his issues with what he considers to be an inefficient planning system.
The O’Flynn Group that he leads is one of the biggest house builders in the country. In 2021, it completed 480 homes, in spite of a 13-week lockdown due to Covid restrictions. This was up from 300 or so in the previous year and he expects about 350 units will be finished out this year. He claims it could build 500-plus this year if it was “more viable” to build homes right not.
The group has another 2,210 units with permission and under construction, he says, and some 2,520 in the planning process. There’s also a landbank with the capacity for 2,700 subject to issues around timing, zoning and land being serviced.
O’Flynn has been building quality homes for 44 years, mostly in Dublin and Cork. He’s survived the 2008 banking and property crash, and bears the scars of being in Nama and a legal ruck with private equity group Blackstone around control of his business after exiting Nama.
The night before we meet, he went on RTÉ’s Prime Time show to give his view on the Government’s plan to use modular housing to accommodate some Ukrainian refugees. He’s not impressed of the proposed “new build, temporary modular” housing.
“I’m not a fan. They are talking about putting them on State lands. First of all, are they zoned? Why not put them on zoned land and serviced land. You could be creating the ghettos of the future if you’re not careful because it might be convenient to put them up quickly.
“Any modular new build should be permanent, have future uses, otherwise the State is throwing money out the door. I’m really surprised we don’t have a strategy that has more private sector involvement in this. I don’t see any meaningful role for the private sector in what I’ve heard [from the Government]. And the private sector is there to help.”
Housing crisis
On the broader issue of the housing crisis, which dates back to the property crash post 2008, O’Flynn says: “You’ll never solve a crisis unless you accept you have one.”
He notes how Nphet was set up so quickly to deal with the Covid-19 pandemic, with experts drawn from across the broad health spectrum. And at how quickly the Government reacted to the cost of living crisis by introducing measures to help consumers make ends meet.
“In my opinion, we have not accepted that there’s a housing crisis,” he says. “Look at the recent energy crisis, what was one of the first steps? Reduce VAT. If it was accepted by those who can make the changes we’d be a long way towards resolving it.”
He reckons that official estimates for the number of houses that we need to build by 2040 is shy by 450,000. The National Planning Framework sets out to deliver an additional 550,000 homes by 2040.
He claims there simply isn’t enough zoned land in the right locations, which has pushed up the prices of sites.
“They haven’t zoned enough land and they haven’t provided enough infrastructure in the high employment areas where people want to live. It’s quite staggering the shortage of land at this moment in time.
“We have now reduced the zoning of land without headroom compared with a time when you always had headroom. If you had enough available land, you would have land at a price that could be afforded.”
Isn’t it also the case that developers are overpaying for land in a race to get sites?
“The answer is yes. But we have a national framework that is completely flawed because it is based on the premise that 40 per cent of all development should be brownfield. That’s fine but it needs to be viable and affordable. If there was a proper economic assessment done of that policy it would be very clear that it’s not possible for that brownfield land to be developed without subsidisation or incentives. We can’t develop anything unless it’s viable.”
A brownfield site is essentially infill development in an urban location.
He was a fan of the Government’s introduction of a fast-track planning system for Strategic Housing Developments (SHD), which meant developers could apply directly to An Bord Pleanála for planning consent. But the system became mired in legal reviews and is being replaced.
“SHDs were a really good policy. But there were issues arising from the SHDs, and instead of tweaking the legislation we’ve thrown them out,” he says.
Compact housing
He is “not a fan of height”, preferring compact housing instead. “Ranelagh, Rathmines and Stoneybatter [in Dublin] are good examples of compact housing. In my opinion, except for some of the dockland areas where you’re not impacting on existing housing, compact housing is the way to go.”
To O’Flynn, there are five key ways in which the State can help to bring down the cost of housing – zone more land, plan strategically for new infrastructure, reduce the 13.5 per cent rate of VAT, reform the planning system to make it more efficient and reduce delays, and loosen the Central Bank of Ireland’s mortgage rules to allow people to borrow 4.5 times their income rather than the current 3.5 times.
“We didn’t have a strategic planning system for infrastructure before and we don’t have one now. Irish Water needs to be resourced and funded,” he says.
“We have to deal with the cost base if you want to deal with prices. Back in the day the cost of land was 10 per cent of price of a house, now it could be 30 per cent. Back then VAT was 3 per cent now it’s 13.5 per cent. You’d need no shared equity scheme [by the Government] if you weren’t’ taking so much in VAT. People think the builder pays the VAT – they don’t – the VAT at is all paid for by the end user. Why we don’t see that we need more zoned land is beyond me.”
Of course, many blame developers for the housing crisis, and the 2008 crash. There was also a lot of shoddy building work carried out in the Celtic Tiger years, which is now being remedied at great expense either by homeowners, landlords, local authorities or the State.
“I was one of the first people in the country to accept that we made mistakes ... and we’re a contributor to the crash. But we weren’t the cause of the crash, the cause of the crash was the financial system. It wasn’t us. We’re a step down. The financial system was borrowing short and lending long,” he says.
“I don’t know what we’re doing at the moment that’s contributing to a problem. We are highly responsible, we are doing everything we can to meet the regulations. Mistakes were made in the past. We cannot supply what’s needed now because the policies are wrong.”
Many taxpayers will be sceptical of the view that property developers can be part of the solution given past experience.
“Ah, the public need to move on,” he says. “Remember, the only people who are going to supply housing are the property people. It’s a bit like fixing Covid without the health people.
“I’m proud of every development I’ve done since 1978. I defy you to tell me one that I’ve done that hasn’t stood the test of time and that hasn’t been integrated into a local community.
“We made mistakes but I think we have helped this country grow, we have produced too many houses at times but I’m 44 years in this business and for 37 or 38 of those we did the right thing. We now need to move on. Without a functioning property industry you will not have a functioning economy and the sooner people realise that the better and the sooner they bring us into the room the better. Rant over.”
At 64, O’Flynn could put his many frustrations with the housing industry and the planning system here behind him by enjoying a comfortable retirement and handing over the reins to the three children who are working in the business.
Each Thursday evening he heads to a property he owns in Waterville, Co Kerry to close out his week with desk work and to unwind for the weekend.
“I still have a contribution to make. Not only to my own business but to some of the wider issues that I’m involved with, be they Cork issues or national issues. I’ll be the first out the door if I feel I’ve overstayed my time or that I’m no longer relevant. I have some great people working with me and now have some family in the business. But neither the people working with me nor the family are suggesting I should move on to retirement. Sixty-four is not like it was 30 years ago and hopefully there’s another five to 10 years in me.”
CV
Name: Michael O’Flynn.
Job: Chairman and chief executive of the O’Flynn Group.
Age: 64.
Lives: Ovens, Co Cork.
Family: Married with four adult children (three of them work in the property business).
Hobbies: Enjoys horse racing.
Something we might expect: He thinks the planning system needs reform.
Something that might surprise: Since the pandemic hit, he has left the office earlier each evening and travels less to Dublin and London. He has also stopped wearing a tie for business meetings.
