Tipperary Council told it's more viable to build private housing in neighbouring counties

Tipperary County Council is drawing up a shopping list of measures to send that it wants the next Government to introduce to stimulate private house building in the county following a special meeting of the local authority attended by a Construction Industry Federation delegation.

The Council is drafting a letter to send to the Department of Housing setting out actions it is recommending to encourage private developers to build home in the county in the wake of the CIF’s presentation to councillors at the Special Council Housing meeting in Clonmel

One of the key actions the Council wants taken will be increasing the popular First Homes Scheme price ceiling for Tipperary.
First Home buyers can avail of the shared equity scheme for properties worth up to €350,000 in Tipperary but that price ceiling is higher in neighbouring counties of Kilkenny, Cork, Limerick and Waterford as they are designated as higher demand areas.

This disparity has meant it’s more viable for developers to build new private housing schemes in these counties rather than Tipperary.

The meeting heard that while the building of social housing in the county has greatly increased in the past number of years, the building of private housing schemes hasn’t taken off.

And many of the housing developments that have been built by private contractors in the county have been sold to the Council for social housing.

In her presentation, Joanne Treacy of the CIF’s Southern Region cited increased building costs, the availability of serviced and serviceable zoned land, difficulties with accessing finance from the banks and the cost of finance, restrictive planning policies and lack of capacity with water, waste water and electricity infrastructure as barriers to private house building.

She outlined that local authorities can aid the viability of private housing development by reducing levies and charges, streamlining the planning and taking in charge processes, ensuring the availability of serviced and zoned land for housing and providing infrastructure to service sites for housing.

The CIF said councils could also assist by collaborating with approved housing bodies and local builders to facilitate development on lands that have planning approval.

Carrick-on-Suir Cllr David Dunne of Sinn Féin noted that while developers were finding it difficult to get finance for housing, the public were also finding it hard to secure mortgages from the banks.

He cited the case of a constituent whose Help to Buy Scheme application was refused even though she worked in two jobs and wanted to buy a modest ex-council home for €93,000. “To me that is madness,” he said.

Fellow Carrick Cllr Kieran Bourke of Fianna Fáil, who is a former building contractor, said it was very frustrating to be in the construction industry at the moment.

Developers had to demonstrate 15% profit from their housing developments to secure finance from the banks. They also had to fund the installation of services such as water, sewerage and electricity, which also brought up house prices.

He also highlighted inadequate water/waste water infrastructure around lands zoned for housing as an issue, which the Government needed to address.

Newcastle Independent Cllr Máirín McGrath pointed to the low price cap for Tipperary in the First Homes Scheme as a big issue. She noted the CIF presentation highlighted the average costs of building a three-bedroom semi-detached house in Tipperary was €371,000 but the house price cap to avail of the First Home Scheme in the county was lower.

She said a developer had more incentive to build a housing scheme in Ballymacarbry than across the border in Tipperary as the price cap was higher in Waterford.

“The lack of fairness between our neighbouring counties has to be addressed because there is no incentive.

“I know developers are building in neighbouring counties but the much lower cap in this county is no incentive to build.”
Independent Cashel Cllr Liam Browne, however, expressed concern that increasing the First Home Scheme price cap will result in higher house prices in the county. Ways of bringing down house prices were needed, he argued.

He criticised the Council for buying houses at a high cost off private developers for their social housing stock when the local authority could be building the social houses themselves.

Clonmel Cllr Siobhán Ambrose said the building of social housing has significantly increased in Clonmel but this was not the case with private house building.

A “huge, huge gap” has developed between private and social housing provision and young people were “crying out for new housing”.

“It's very difficult to understand because we have very strong industries and we have a lot of young people on very good incomes,” she told the meeting.

“Parents are coming to me all the time saying if you hear of any private scheme let us know. That is how desperate they are because they (private housing schemes) are not happening. These are people who have very good disposable incomes but there is nothing to buy.”

Cashel Fianna Fáil Cllr Roger Kennedy said councillors get the planning lists and in his view the planning process wasn’t holding up housing development. The biggest issue he saw was the availability of finance for developers and for consumers buying the houses.

Responding to councillors, CIF Director of Housing Conor O’Connell suggested the Council call in all the builders in Tipperary that have live housing planning permissions into a room and ask them what were the impediments they are experiencing, pinpoint the zoned lands for housing that can be delivered and Uisce Éireann capacity maps. “Whether it’s social, affordable or private housing it would be a good start point,” he said.

He highlighted how developers could be two years into the process of getting a housing scheme off the ground when they are alerted about inadequate water supply/sewerage infrastructure capacity in an area.

It would be helpful to developers if this ‘unknown’ could be dealt with as soon as possible in the process of planning a housing scheme.

Mr O’Connell urged the Council within the next 12 months to look at their development plans and identify the lands that can be developed within the lifetime of the plans.

He said it takes a long time of between one to two years to get through the planning process and the costs of delivering housing schemes has increased quite dramatically and there were issues with the time it took to get infrastructure connection agreements. The timeline for the process needed to be shortened.

The CIF director praised the Temporary Development Contribution Waiver Scheme that applies to all permitted residential developments that commence on site between April 25 2023 and December 31 this year for incentivising private house building.

“The number of units commenced is at a record level not seen since the early 2000s. It has contributed very significantly to our members being able to go to financial institutions to get finance.”

He echoed Cllr Bourke’s concerns about the 15% profit margis banks require developers to achieve and noted that in the past few years any rise in profit margin has been used up in in the rise of materials costs.

Clancy Construction MD John O’Shaughnessy and Tom Gallahue, Director of Teamar Property Developments were also part of the CIF delegations.

Mr O’Shaughnessy said unfortunately Clancy Construction were not building private housing schemes in Tipperary because it was not viable to do so at the moment. It was more viable to do business in counties like Kilkenny, Limerick and Wexford that in Tipperary.

“I am born and reared in Tipperary and would love to build houses in Tipperary but it’s a challenge.”

In relation to planning, he highlighted it was not viable for private developers to devote 40% of housing scheme to two-bedroom homes. He argued the requirement should be half this amount.

Mr O’Shaughnessy also highlighted the struggle contractors are experiencing daily to hire staff and there was a particular shortage of engineers.

Tom Gallahue said he came from the smaller side of property development and securing finance was the biggest issue in his experience. “You are really funding everything yourself,” he told councillors. He echoed Mr Shaughnessy's concern about labour shortages in the building sector.

Council CEO Sinead Carr said the CIF presentation and debate showed the delivery of housing is extraordinarily complex and not easily solved. She noted the pressure was on the Council’s elected members to solve issues, an awful lot of which were outside their hands to solve.

She expressed the hope that councillors could lobby their parties and Government on a number of issues highlighted at the meeting.

Responding to Mr O’Connell, she said the Council had met with CIF members about lands that were zoned and served with planning permissions for housing.

If housing wasn’t being built on these lands, the only logical reason she felt was because it was more viable to do so in other counties like Kilkenny and Waterford where the cap on the First Homes Scheme was higher. This means developers target adjoining counties.

She indicated the Council would request the Government to amend the cap in the First Homes Scheme for Tipperary to make it more attractive for developers to build private housing schemes in the county.

To reduce delays in starting housing projects, she proposed aligning the Uisce Éireaan water and waste water services connection processes with the planning process for housing developments.

Ms Carr suggested the Council also look at proposing a tax incentive as such measures worked well in the past when used in “an appropriate and limited” manner.