Government getting ready to bail out the developers again

The Government is now considering the possibility of “advance purchasing” large numbers of private-sector apartment blocks that already have planning permission but haven’t yet been built for one reason or another. If Ministers were to proceed with this proposal, it would represent the biggest bailout of the property development sector in Irish history.

The ballpark estimate is that developers have accumulated planning permission for at least 70,000 residential units – the vast majority of them apartments – granted by An Bord Pleanála or local authorities over the past four years that haven’t been “activated”. This phenomenon is at least partly due to the hoarding of land for its speculative purposes.

But there is another major reason: the construction of high-rise, high-density apartments has become “economically unviable” because of higher interest rates and escalating inflation in the cost of building materials.

The high-rise, high-density model – predominantly for exclusively build-to-rent (BTR) schemes – has turned out to be unbuildable due to the multiplicity of smaller apartments, generally studios or one-bedroom units, involved in most schemes. Each one requires kitchen and bathroom facilities, as well as extra fire safety precautions such as sprinkler systems.

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There is a bitter irony in all of this, because it was as a direct result of lobbying by the property industry that the planning system was upended in 2016 to permit developers bypass local planning authorities and make direct applications to An Bord Pleanála for large-scale housing schemes of 100 units or more.

If sustainable residential communities are to be created, the BTR schemes that have planning permission would need to be redesigned to include a better mix of apartment sizes

The changes were brought in by the then minister for housing Simon Coveney and they became even more prevalent after his successor, Eoghan Murphy, bowed to further pressure in 2018 and introduced mandatory ministerial planning guidelines that dumbed down apartment design standards to facilitate BTR schemes and promoted more high-rise development.

These changes opened the floodgates to a torrent of applications to An Bord Pleanála for high-rise, ultra high-density apartment blocks in Dublin and elsewhere that were usually approved.

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The strategic housing development (SHD) process brought An Bord Pleanála, for the first time, into direct contact with developers and their agents; architects, planning consultants, chartered surveyors, structural engineers and others involved in what was aptly dubbed the “planning-industrial complex”.

Its physical legacy is already visible in random high-rise eruptions on the skyline, including numerous BTR apartment blocks built at ultra-high densities. What’s waiting in the wings to be “activated” is yet more of the same type of schemes, largely comprising small flats on long corridors with no private amenity space and views out in only one direction.

They are what the Government would be bringing into being if it was to embark on an “advance purchasing” programme of apartment developments with ready-to-go planning permissions, thereby “de-risking” private-sector developers – as the property lobby wants – and clearing the way for new homes to be built at scale, irrespective of their quality as places to live.

The densities of many of the these unbuilt schemes are extraordinarily high. As the Dublin Democratic Planning Alliance has pointed out, these range from 330 units per hectare (uph) at Davitt Road in Inchicore to 347 uph at Clarehall on Malahide Road, 609 uph on the Circle K garage site in Donnybrook and 626 uph at Newmarket, in the Liberties.

If sustainable residential communities are to be created, the BTR schemes that have planning permission would need to be redesigned to include a better mix of apartment sizes, with more two- and three-bedroom units, rather than an overwhelming preponderance of cell-like studios or one-bed apartments, intended to extract the maximum level of profit from rent.

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The Department of Housing has now revoked the “specific planning policy requirements” introduced in 2018 to permit lower design standards for BTR schemes. In a circular quietly issued to all planning authorities on December 22nd, it said “all apartment developments shall now adhere to the same standards ... regardless of the development type”.

Advance purchasing of apartment blocks intended for the BTR market will also be extremely expensive, compared with units built directly by local authorities or approved housing bodies. For example, 14 two-bed social housing units in a high-rise scheme now under construction at Eglinton Road in Donnybrook were priced at €762,916 each – and that was back in 2020.

It would be infinitely preferable if the Government were to adopt the latest idea put forward by industry lobby group Property Industry Ireland calling for European-style “low-rise, medium-density” housing at 40 to 80 uph as a more viable way of realising the declared objective of the National Planning Framework to achieve compact growth in cities and towns.

The fact that this idea is now being put forward by the industry itself is an implicit admission that the whole SHD process – now mercifully ended – was an abject failure and that previous advocacy of the “high-rise, high-density” model helped in no small way to lead Ireland down the wrong road in terms of sustainable urban development.

Frank McDonald is a former Environment Editor of The Irish Times