The Action Plan for Housing and Homelessness outlines ambitious steps to address the obstacles that have arisen in regards to delivering social, affordable and private housing. There has been a tendency in recent years to exclude those who are involved in the provision of housing from discussions about problems and solutions, including developers.
The process which led to the report was open and inclusive, leading to a plan which, for the first time, identifies key areas where obstacles arise, and endeavours to find solutions to those problems.
Too often people are quick to suggest so-called causes or solutions without understanding the complexity of the housing sector. The action plan recognises that “providing housing is the result of complex interactions in terms of land supply, development finance, market viability, industry capacity, various regulatory systems and, above all, the needs of house buyers and tenant.”
This sums up the scale of the challenge, but the act of recognising these interdependencies is a step forward. The fact that the action plan has been broadly welcomed by organisations working with homelessness and housing bodies, as well as the developer and construction sectors, is telling. I believe it provides a good starting point for alleviating the crisis, and, if properly implemented, may provide the basis for real and positive change in the housing market.
To achieve anything in life, you must first come up with a plan but then you must implement it. This plan includes 84 lined action items. Implementing the proposals in the plan will require all stakeholders – including local authorities, housing bodies, An Bord Pleanála, funders and developers – to raise their game and embrace change.
Establishing a Housing Delivery Unit, overseen by Minister for Housing Simon Coveney, introducing a Planning Regulator and establishing a special Cabinet Committee, chaired by An Taoiseach, are encouraging as they suggest strong oversight and a real intention to act.
Given the extent of shortfall in supply, which has arisen over the past eight years, not only must change happen but it must happen fast. In the past, I have made very clear my views on the unnecessary costs, delays and uncertainty associated with the current planning process and the obstacles these create for housing delivery.
I believe one of the most significant proposals is the introduction of fast-track planning for large-scale housing developments, which is going to bring forward significant housing proposals, especially given the Housing Delivery Unit oversight. While I would like to see more detail on the infrastructure delivery proposals, the planning reform and infrastructure proposals together are significant steps.
The lack of available and serviceable zoned land continues to be a problem in many metropolitan areas, despite protestations to the contrary, and this has to be tackled to deal with national housing requirements and perhaps the proposed National Planning Framework is a suitable mechanism to address same.
Accessibility to housing is directly related to affordability. Affordability is determined by a purchaser's ability to access funds. While the action plan seeks to curtail certain elements of the cost of delivery, the issue of affordability will also require a review of the mortgage lending rules by the Central Bank. I believe the current combined rules relating to loan to income and loan to value are unnecessarily harsh. Even if it becomes viable to deliver new houses sub €300,000, as Minister Coveney suggests, first-time purchasers will need to save deposits of circa €30,000, while still paying rent.
Without some relaxation of these rules, owning a house may not be achievable for many seeking to purchase their first home. The proposed new taxation measures to help first-time buyers are welcome but waiting until Budget 2017 to introduce this will stymie the market until then. In my view, a VAT reduction would have been a better option, as it would have resulted in an immediate reduction of the cost price of housing. In the context of the mortgage lending rules, the cost price rather than tax rebates determines whether a person can get a mortgage.
The VAT rate on housing in the UK and Northern Ireland is 0%. We must aspire towards that objective over time, if we are to make housing affordable and adhere to reasonable mortgage lending criteria.
The target to provide 47,000 new social houses by 2021 is welcome and necessary, as is the proposed collaborative approach to delivering multi-tenure developments by public and private sector operators.
The over-reliance on the private sector for the delivery of social housing was never feasible as is demonstrated by the figures in the action plan which show that, of all new houses delivered in 1975, 67% were by the private sector and 33% by the non-private sector, while in 2014, 95% were delivered by the private sector and only 5% by the non-private sector.
Minister Coveney and his department have brought forward a radical plan to tackle a crisis in housing provision. The Department of Finance must now play its part and put in place the necessary finances and resources to support the plan. There can be no delay as our economy is crying out for these reforms to assist our competitiveness, create employment and most specially to provide urgent access to housing. The new plan needs to be implemented in a way that avoids the mistakes of the past and protects consumers and the economy.
Michael O’Flynn is Managing Director of the O’Flynn Group