Dublin City Council will struggle to provide cost-rental and affordable purchase housing schemes at low prices because of very high construction costs faced by the council, its head of housing Coilín O’Reilly has said.
The city council is the only one of the four Dublin local authority areas where cost-rental housing has yet to be delivered, with estates already tenanted in Fingal, South Dublin and Dún Laoghaire.
The cost of construction in the city is a “significant worry” for the delivery of cost-rental housing, as well as affordable-purchase homes, Mr O’Reilly told councillors on Wednesday.
He was responding to an independent report which found the council has been paying up to 44 per cent more than private developers for the construction of social housing.
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The report by public management consultancy Seán Ó Riordáin and Associates Ltd and Trinity College professor of economics Ronan Lyons was commissioned by the council following concerns it was charged a “premium” for the construction of social housing, with costs significantly higher than those achieved by approved housing bodies (AHBs) and private developers.
Mr O’Reilly said the “bigger worry” now related to the council’s ability to provide cost-rental and affordable housing schemes.
“Costs now are a significant worry for delivery,” he told the council’s housing committee. “Inflation is running at nearly 30 per cent from 2019. The bigger worry for inflation is around cost rental and affordable sale because obviously, that they are expensive to build means that they are expensive to sell.”
[ Cost-rental schemes attract 400 applications in first 24 hoursOpens in new window ]
The Land Development Agency this week advertised cost-rental houses in Citywest, in South Dublin, for 57 per cent below market rates. Mr O’Reilly said cost-rental schemes in the city, when they are built, were projected to be 25 per cent below the market, while affordable purchase schemes would be only 15 per cent below the market.
“The reality is that things are expensive at the moment and don’t look like they’re going to come down with any urgency or immediacy,” Mr O’Reilly said.
Mr Ó Riordáin and Mr Lyons’s report found the council had been “severely restricted” in the ability to control costs within Government and EU procurement rules and systems.
Mr O’Reilly said the EU procurement process also meant the council could not exclude known “bad” builders from selection to develop council housing schemes
“If somebody has done a bad job for you before you can’t take that into account. Every procurement process is a brand new process, so you could have done 100 [successful] projects with a developer or a builder before and you can’t take that into account either, and you can’t ask for a discount based on that.”
There were a large number of reasons the council paid more for housing development, including the nature of the sites, additional facilities and the higher specification required by the council.
“One of the things that is frustrating in the public context of the cost of housing is the assumption that a two-bed apartment in location A costs the exact same to deliver as a two-bed apartment in location B. The reality is there are 1,000 different inputs that go into that apartment and the costs can vary,” he said.
“Specifications for housing are higher. We don’t apologise for that fact and it is important we do keep them to a high standard ... We can’t be flaithiúlach in how we deliver them either, but it is about delivering to a high standard. One of the considerations we use is the life cycle cost of that, ie what it’s going to cost us to maintain it into the future.
“We probably are being quoted more and that’s to do with the standards but also the processes,” he said. “If you know that you are going to have a Dublin City Council clerk of works on site from day one looking at every screw you put in, every floorboard you put down, every door you hang, and is going to correct you and question you on it, we do pay a premium for that.”
