Deep problems in planning system complicating delivery of new housing

It was shortly after 4.30pm on the second Friday in July when a letter went via email to Dave Walsh, chairman of An Bord Pleanála (ABP), from the office of Minister for Housing Darragh O’Brien.

“Dear Dave,” wrote the Minister, in correspondence released under the Freedom of Information Act. “I wish to notify you that I have received a letter from Mr Paul Hyde this afternoon informing me that he has resigned as a board member of An Bord Pleanála. I have acknowledged Mr Hyde’s letter.”

Hyde, who was deputy chairman of the board, had been under pressure for months amid questions over his personal declarations to the planning body and alleged conflicts of interest in some decisions.

He has always denied any wrongdoing. But he faces prosecution in Dublin District Court in relation to allegations he gave false particulars to the board, after a Garda investigation into his conduct.

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With a worsening housing crisis, the affair has thrown light on deep problems in the planning system that are complicating the delivery of new houses and apartments.

This has sharp political implications for the Government, whose single biggest policy challenge is to tackle surging rents and purchase prices by boosting the flow of new homes. Construction has stepped up after coronavirus lockdown, with Central Statistics Office data this week showing 20,807 dwellings completed in the first nine months of 2022, more than the 20,560 completed throughout 2021.

More than two years after the Coalition took power, however, housing is still the open wound that is targeted relentlessly by the Sinn Féin-led Opposition.

For the Government to achieve the radical increase in housing supply that it needs to overcome the shortage, a smooth planning system is crucial. But the building of thousands of new homes is on hold because of court actions and procedural delays, raising doubt over the final outcome of many planning cases and the timing of the ultimate decisions.

With construction cost inflation at the highest rate for almost a quarter-century, such delays throw project cost calculations into disarray. Figures from the Society of Chartered Surveyors Ireland show the annual rate of construction inflation was 14 per cent in July with tender prices rising 7.5 per cent in the first half of 2022, the fastest rate since the body started tracking such data in 1998.

Now construction industry figures say planning turmoil has led international investors to question the viability of some large Irish schemes they are involved in.

“We have had experience of international investors commenting that Ireland is effectively uninvestable,” said one large Irish developer, echoing the views of others.

“Planning risk is a stand-alone agenda item. It’s up there at the very top of investment committee papers. If you don’t get past planning risk, you don’t get into yields. You don’t get into values.”

Adding greatly to the strain is the fact that An Bord Pleanála’s decision-making board is operating below capacity with only five members instead of the usual nine.

Some of the strains flow from delayed decisions under fast-track strategic housing development (SHD) laws, the very mechanism that was supposed to speed up the delivery of housing by bringing applications directly to ABP instead of local authorities. Hyde was chairman of the unit in the planning authority that handled SHD cases, many of which remain before the board even though the window for submitting new applications has expired.

With no appeal procedure other than taking a judicial review case to the High Court, the laws have led to a cascade of litigation against the planning authority. SHD approvals featured in 32 of 83 legal actions against ABP in 2020; 47 of 95 actions in 2021; and 18 of 45 in the first half of this year.

“The delay in SHD decisions emanating from An Bord Pleanála has certainly put some projects at risk of not being funded,” said Peter McGovern, director at architects Henry J Lyons.

“It is only possible to fund projects that have a full grant of permission. The current delay in decisions directly impacts housing development. Uncertainty and delay in the system as well as the continued risk of judicial review will inevitably push investors to look at alternatives.”

Others say investor jitters are driven more by concern about the global economy post-Ukraine than by Ireland’s planning woes, but the relentless tide of controversy has undermined faith in ABP and its decisions.

“It’s in a difficult space at the moment but it can be rectified and it’s a priority,” O’Brien told The Irish Times.

“We need a robust independent Bord Pleanála that commands the confidence and respect of the people. We also need an efficient planning system and planning legislation so we can deliver homes for the people and the infrastructure that we need,” the Minister added.

In the eyes of ABP’s many critics, however, the problem right now is that the body’s recent performance seems like the very opposite of efficient.

This raises questions over the pipeline of new houses the Government is banking on in the second half of its five-year term ahead of the next general election that will determine the fate of Fianna Fáil, Fine Gael and the Greens.

However, many fear that the delivery of new housing will slow, not quicken: “Against a backdrop of global economic turmoil and interest rate increases, the delay in decision-making in the system is inevitably going to lead to fewer housing completions over the next two to three years,” said McGovern.

“Of 24,000-plus residential homes on our drawing boards right now, 6,000-plus are under construction. This indicates that only 25 per cent of the housing projects we are responsible for are likely to be completed in the next few years,” he added.

“As a direct result of delays and disruptions through the planning process, there is now a gap in the flow of housing projects moving through to tender and construction in our practice. The backdrop of economic uncertainty means these projects are potentially not just delayed but are at serious risk of being shelved until the market rebalances.”

Adding greatly to the strain is the fact that ABP’s decision-making board is operating below capacity with only five members instead of the usual nine. Moves are under way to fill the gaps, but the growing backlog will take time.

Development takes four years from idea to construction, says Pat Farrell, chief of Irish Institutional Property, an industry group.

“You have to have a reasonable expectation that you’re going to have certainty and stability in policy over that period, particularly planning policy. If you look at the current planning system there is a serious challenge there and it’s not just residential development.

“Global macroeconomic factors obviously mean that the whole funding and pricing model has changed and that means that while there’s still a considerable amount of funding available for real estate that money is going to be more discerning and selective in terms of what it is investing in going forward.”

In addition to all that, internal board procedures within ABP are in sharp focus after a report for the Office of the Planning Regulator called for “urgent reform” and raised questions about the code of conduct that governs potential conflicts of interest.

“In some instances a board member may only consider a particular street as being their immediate neighbourhood, while in contrast another board member can view an entire county in which they resided as off-limits for decision-making,” the regulator’s report said.

Walsh, the ABP chairman, has said the body recognised the need for “greater clarity” on the definition of a board member’s immediate neighbourhood. The question is under discussion for a revised code of conduct.

Three of the recent concessions that were linked to Paul Hyde’s strategic housing development work quashed planning approval for more than 1,400 new homes in south Dublin

Rising pressures on ABP were all too evident in moves this month to concede a series of High Court challenges to its approval for housing, infrastructure and development projects.

Such concessions underlined what many say is a sense of disarray in the planning system. Of 83 judicial review applications against ABP decisions in 2020, 32 were lost or conceded. In 2021, 40 of the 95 applications it received were lost or conceded.

“The Irish instinct for litigation appears to have gone into overdrive around this issue,” says one business figure with property interests. “There’s an advanced jurisprudence on judicial-review issues which has the effect of overturning a variety of decisions.”

This has real-time implications, not only for housing delivery but for investor confidence in Irish housing projects more generally.

Three of the recent concessions that were linked to Hyde’s SHD work quashed planning approval for more than 1,400 new homes in south Dublin.

ABP said such moves were made in response to appellants claiming the involvement of a board member in the cases raised questions of objective bias “due to a familial connection” between that board member and a person involved in the planning application process. This was a reference to Hyde and his brother Stefan Hyde, a fire-safety expert who has worked on SHD applications.

Senior property figures say such concessions are very serious for ABP.

“The decision to quash the three planning grants on the basis of objective bias in the board has sent shock waves throughout the sector. If the competent authority can’t get it right, it puts a big question mark over the that word competent,” said the developer.

“Before, we had to get investors comfortable, saying: ‘This is the site we’re looking to buy; these are residents in the locality and this is how we might address those risks.’ Now we have a risk that we as developers effectively can’t address, which is that the board might mess up, that the board might fail to address its duties adequately and then we fail even to get off the starting block.

“You now have the real risk of the planning authority itself — the competent authority — failing to carry out its duties correctly.”

In planning circles, the mood is glum. “If I were there to see such a constant stream of high-profile concessions, it would have to be impacting on morale in the organisation and the sense that it is achieving its mission at all,” said one planner.

“The board is struggling in that area, struggling in terms of output. It has to be really forensic in its approach. The planning process is becoming so complex. It’s like wading through treacle,” the planner added.

“Obviously being subject to challenges because of procedural issues, if you’re perennially in a situation where it is two steps forward one step back, that puts it even more sharply in focus.”

The Irish Planning Institute, the professional body for planners, said planning was not the only problem besetting the “horribly complex” housing market.

“The challenges in planning are because of the significant change that has happened in the past 10 years both to standards and legislation, but also the involvement of the judiciary and the under-resourcing of planning as a profession,” said Gavin Lawlor, vice-president of the institute.

“All of that has added complexity and delay in the delivery of planning permissions.”

O’Brien has said he is planning new legislation to overhaul the system. But early release from disruption and delay seems unlikely.