It's hard to estimate how much potential living space is lying derelict over city centre shops at present, but as Mr Dom Hegarty, chairperson of the Department of the Environment's expert advisory panel for the new Living Over the Shop Scheme says: "there's a hell of a lot property up there!"
Evidence of the economic boom is most noticeable at street level in Dublin, but raise your eyes to upper levels of buildings and you notice that many are in varying stages of dilapidation. Compare this to the rooftops of Paris and Rome, where flower boxes sit alongside chimneys, or New York, where every inch of space is maximised.
Unlocking the residential potential that exists in vacant space over city centre commercial premises is the idea behind the new Living Over the Shop scheme launched by the Department of the Environment. It replaces a similar scheme which failed to take off in 1994.
Generous tax incentives will be the carrot proffered to encourage shopowners and businesses to convert the upper floors of their premises for residential accommodation. Owner-occupiers can offset 100 per cent of the cost of refurbishment and new building over 10 years against total income; investors can set 100 per cent of costs against Irish rental income - including income from other lettings.
There are also capital allowances for associated commercial development. Sections of streets in Dublin, Cork, Waterford, Limerick and Galway will be earmarked for development .
In Dublin, Capel Street, Thomas Street and South Great George's Street, and in Cork, North Main Street were designated in the original 1994 pilot scheme. But while the project had marginal success in Cork, the initiative met too many stumbling blocks in the capital.
The scheme came under fire from planners, estate agents and a KPMG report which listed taxation flaws and lack of consultancy and promotion as the main reasons for failure.
It was a matter of timing, according to Mr Dom Hegarty. "This time it will be totally different. The value of property has increased considerably, as has demand for housing. The economic boom has changed mindsets, and that is a big factor. Back in the early 1990s people saw the city centre as a place from which to escape after work; now people see city centre living as an attractive option," he explains.
Under the 1994 scheme, property owners on designated streets could refurbish overhead accommodation and write off 100 per cent of the costs against tax over 10 years, but the tax breaks did not apply to building new properties/extensions on the designated streets. Incentives for investors were not included in the previous scheme. This time a streamlined approach to incentives is being applied with both new build and refurbishments carrying the same allowance.
Minister for Housing and Urban Renewal Robert Molloy points out that this waste of potential residential accommodation is a luxury we can no longer afford given the pressures that exist in the housing market.
"Many of these properties have considerable amounts of unused or under-used upper floors. Not only is this space being lost but the properties themselves are suffering from progressive dereliction," he said. The Minister pointed out that although the results of the 1994 scheme were somewhat mixed, local authorities need to build on the experience with a view to developing a model that will prove effective in the context of Ireland's cities.
One of the main provisions of the scheme will have to be the size of accommodation, and experts maintain this factor will be crucial to the long-term success of the scheme.
"New apartments in the city centre are too small for families. We are looking to develop units in excess of 600 sq ft, and there will be guidelines to tackle minimum floor areas," says Hegarty.
Industry commentators point out that small business owners are not property developers, a fact that accounted for the slow take up of incentives last time.
Restrictions on time and capital are two main reasons, but shop owners would also have perceived the task of developing accommodation as a daunting one. There was no architect available to advise on compliance with fire, safety and planning regulations, or to give approximate costs and explain tax details.
Senior planner at Cork Corporation, Ian Riordain, believes that the scheme enjoyed more success in Cork because there was more promotion and public awareness: "The areas targeted under the 1994 provisions were traditional residential areas of the city, and as well as advertising the scheme in the local press the authorities here developed two grant-aided projects which the public could go and visit. This show home was also featured on RTE's Our House and it raised the profile of the scheme." Riordain believes that around 2,000 people moved back into accommodation above designated shops."
The Living Over the Shop Scheme aims to apply an integrated tax incentive package to promote sustainable development patterns. The use of existing buildings and infrastructure relieves pressure on greenfield development.
New build incentives will apply in limited and specific circumstances to use the residential potential of empty space and to facilitate the provision of essential residential facilities to a limit of 30 per cent of total floor area.
Local authorities are being asked to nominate streets for the scheme, taking into account the existing use of the buildings, the potential vacant upper-storey space and the attractiveness and feasibility of creating residential units. Dublin is allowed 3,000 m; Cork 3,000 m, and Waterford, Limerick and Galway 1,500 m each under the provision of the schemes. Lengths of street selected must not be less than 25 metres.
