Action on the Housing Market
9 March, 1999
Introduction
The Taoiseach, Mr. Bertie Ahern, T.D., the Minister for the
Environment and Local Government, Mr. Noel Dempsey, T.D.,
and the Minister for Housing and Urban Renewal, Mr. Robert
Molloy, T.D., have announced a range of further Government
initiatives in relation to the housing market. The new measures,
in conjunction with measures already taken, aim to maximise
and expedite housing supply, secure house price stabilisation,
address affordability issues and ensure balanced growth of the
market in the future. The new initiatives include:
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arrangements to enable the early release of up to 16,000
housing sites in the Dublin "Northern Fringe" by use of
temporary sewerage facilities;
steps to ensure that the Serviced Land Initiative delivers
maximum results on schedule;
additional investment to remove any significant
infrastructural constraints to housing development;
measures, including increased staffing, to enable An Bord
Pleanála to reduce backlog and delays in determining
appeals;
examination of the potential use for housing of lands in
State ownership;
Consideration by the Minister for Finance of the
amendment to the Finance Act to withdraw the
requirement that, in order to qualify for the lower (20%)
Capital Gains Tax on the sale of land for residential
development, planning permission must have been
granted; and
decision in principle to establish a commission to examine
issues relating to security of tenure in the private rented
sector.
The statement follows a review of the effects of the
Government's Action on House Prices (April 1998) and recent
developments in the housing market, following which a report,
entitled The Housing Market: An Economic Review and
Assessment, prepared by Peter Bacon and Associates,
Economic Consultants, has been published. The main
recommendations of the consultants' report are summarised in
this document, along with the Government's policy response to
the recommendations. An outline of progress since publication of
Action on House Prices is given in Appendix 1, and house price
data for the December quarter, 1998, are shown in summary
form in Appendix 2.
The consultants emphasise the need for a strategic plan for the
location and scale of development in the overall Dublin/Mid East
regions having regard to the potential of towns outside the
Dublin conurbation, and for more balanced distribution of
population and economic activity nationally. Strategic Planning
Guidelines for the greater Dublin area are being announced on
25 March, 1999.
The further measures now being undertaken, those already
introduced under Action on House Prices, and the various other
initiatives underway, provide a comprehensive and coherent
response to the major issues that arise in the housing market.
Prompt and effective implementation of the various measures
will be accorded high priority to copperfasten the significant
progress already being made towards price stabilisation,
increasing housing supply and ensuring availability of land to
underpin this.
Main Recommendations in The Housing Market: An
Economic Review and Assessment (March 1999)
and
Government's Policy Response
Recommendation - Land Servicing
Interim/temporary arrangements, including temporary treatment
facilities, should be used to make zoned land immediately
available for housing, particularly land awaiting construction of
the Dublin North Fringe Interceptor Sewer.
Policy Response
The Department of the Environment and Local
Government have requested local authorities to permit,
where appropriate and subject to necessary
environmental safeguards, the use of temporary facilities,
to allow residential development to proceed quickly in
advance of the provision of the necessary permanent
facilities. This has potential to bring forward up to 16,000
housing units in the short term in the Dublin North Fringe.
Recommendation - PPP Arrangements
The potential use of PPP arrangements to develop the North
Fringe Interceptor Sewer should be examined.
Policy Response
The Department of the Environment and Local
Government will examine the possible use of PPP
arrangements for this development. Consideration of
funding will not delay commencement of the project and
any necessary public funding for this project will be
provided under the forthcoming National Development
Plan.
Recommendation - Serviced Land Initiative
Local authorities should ensure that deadlines for
commencement and completion of Serviced Land Initiative (SLI)
schemes are met.
Policy Response
The Department of the Environment and Local
Government have requested local authorities to expedite
delivery of SLI schemes, which will provide an estimated
100,000 additional serviced sites, over and above land
coming on stream under the main Water and Sewerage
Investment Programme. Local authorities estimate that at
least 38,000 sites are scheduled to get to construction
this year. Schemes providing 24,000 serviced sites are
due to start in the Dublin Region (Dublin local authorities,
Kildare, Meath and Wicklow) alone in 1999, with an
estimated 8,200 of these to reach completion this year.
Procedures have been streamlined to minimise delays.
Progress on schemes will be monitored very closely to
identify any possible delay factors as early as possible
and ensure that these are addressed immediately. This
will help to ensure that deadlines are adhered to and that
the Initiative delivers maximum results as quickly as
possible.
Recommendation - Roads and Public Transport
Infrastructure
Any infrastructural constraints to residential development
(including roads and public transport access) should be
identified with input from all interested parties (including local
authorities and developers). A report detailing the infrastructure,
cost and potential housing involved to be produced within six
months.
Policy Response
Arrangements to identify infrastructural constraints in
major growth centres will be put in place in the near
future. The Government is committed to provide
additional resources to remove any significant constraints
to housing development with minimum delay.
Recommendation - Public Transport
Specific proposal should be formulated at an early date for
improvement in public transport facilities to locations having the
scope for growth (without adverse planning, social and
sustainability effects) and a supply of land suitable for
development.
Policy Response
Proposals for improvement in public transport facilities to
relevant locations will be given particular attention in the
consideration of the strategic transport needs of the
country as a whole in the context of the preparation of the
National Development Plan and the forthcoming Strategic
Planning Guidelines for the Greater Dublin Area. On 4
March, 1999, the Minister for Public Enterprise
announced that feasibility and cost studies would be
undertaken without delay on proposals for short and
longer term development of the suburban rail networks in
Dublin and Cork.
Recommendation - Capital Gains Tax
The requirement of prior planning permission in order to qualify
for reduced CGT on disposal of development land should be
withdrawn and arrangements introduced to recover any tax due
if land is not developed.
Policy Response
The tax code is being amended to provide, in the case of
disposals of land which are made between 10 March,
1999, and 5 April, 2002, that the concession whereby the
reduced CGT rate of 20% applies to disposals of land to a
local authority for the purposes of the Housing Acts,
regardless of whether planning permission exists, will also
apply to disposals of land for such purposes to voluntary
housing bodies and the National Building Agency, and to
disposals, to any party, of land which is zoned for
residential purposes.
Recommendation - Planning Appeals
An Bord Pleanála should be asked to submit proposals in
relation to their efficiency, effectiveness and adequacy of
resources.
Policy Response
Delays in planning appeals stem from the unprecedented
increase in the intake of cases, the level of appeals
having doubled within the last five years. Last October,
the Minister approved proposals submitted by the Bord for
staff and other resources. However, the Bord has
experienced considerable delay in recruiting additional
staff, particularly Planning Inspectors. The Bord recently
submitted proposals for additional staffing resources,
which have now been approved by the Minister.
Agreement has also been reached between the Bord and
the Department on a number of additional measures, e.g.
greater use of outside consultants and approval to the
appointment of an additional member of the Bord, to help
reduce the backlog and the delays generally in
determining appeals.
Recommendation - Housing Density
The Minister for the Environment and Local Government should
issue a Directive to planning authorities under the Planning Acts
on increased housing densities, incorporating conclusions and
recommendations of the recent consultants' report on densities.
Policy Response
The Department of the Environment and Local
Government have published draft Planning Guidelines on
housing densities for public consultation. Local authorities
have already been instructed to implement them even in
draft form. The final Guidelines will be issued by the
Department as soon as possible, and local authorities and
An Bord Pleanála will be obliged under law to have regard
to them.
Recommendation - Affordable Housing Mix
The provision of more affordable housing for first time buyers
can be achieved through changes in densities and designs,
involving the provision of a proportion of better designed and,
possibly, smaller units, integrated with wider developments at
appropriate locations (e.g. city locations, adjacent to high quality
public transport and other amenities). This approach should be
encouraged and local authorities should avail of all possibilities
under the Planning Acts (e.g. through planning control and
density policies) to ensure that demand for different house types
and sizes is satisfied.
The need to strengthen the Planning Acts to support the
objectives of modern housing policy, including the provision of
affordable housing and a necessary mix of house types and
sizes, should be considered in the context of the forthcoming
Planning Bill.
Policy Response
Some local authorities have already been making moves
in this direction and the Residential Density Guidelines
will further assist them in doing so. The Department fully
supports this objective and is considering, in conjunction
with the Attorney General's Office, how the forthcoming
reform of Planning legislation can be used to reinforce the
powers of local authorities to deliver on it.
Recommendation - Affordability Initiatives
Initiatives to promote affordability for those unable to obtain
adequate mortgage finance to purchase at current house prices
could be considered in appropriate circumstances. Possible
options include extension of the local authority shared ownership
scheme; implementation of a local authority scheme for
provision of affordable housing; or a private sector shared equity
scheme. Such measures should be considered only in the
context of sustained price stabilisation and significant increase in
housing supply.
Policy Response
A new Affordable Housing Scheme was recently
launched, through which local authorities will provide, on
land available to them, additional new houses to help
lower income households purchase their own homes. An
essential element of the scheme is that it is directly linked
to the delivery of additional supply of housing. Other
approaches which would involve access to additional
mortgage funding without the necessary pre-requisite of
an increase in housing supply will not be promoted at this
stage.
Recommendation - Mortgage Lending Multiples
Possible change in mortgage lending multiples, from a gross to
net income basis, could be considered in appropriate
circumstances. The Central Bank would conduct consultations
with mortgage lenders, regarding the details and timing of
possible changes. Changes to be implemented only when there
is evidence of general easing of supply pressures in housing
market.
Policy Response
The Department of the Environment and Local
Government will consult with the Central Bank and
mortgage lenders on this matter which must, however, be
largely contingent on increased housing supply and
sustained house price stabilisation.
Recommendation - Urban Renewal Incentives
Local authorities should consider whether residential allowances
under the 1999 Urban Renewal Scheme should be subject to
conditions relating to accommodation such as design,
construction, size, and mix of house types and sizes and
amenities to be provided.
Policy Response
In September 1995, guidelines issued covering the overall
standard of design, construction and mix of residential
accommodation being provided in designated areas.
Local authorities were instructed to ensure that all future
developments in designated areas complied with the
guidelines. The period since the guidelines issued has
seen marked improvements in the standard of apartments
being provided in designated areas. Revisions to the
Guidelines will, however, be made and implemented as
necessary to improve standards further.
Separate guidelines for the preparation of integrated area
plans under the new Urban Renewal Scheme also
emphasise the importance of ensuring a pleasant longterm environment, to encourage residents to make a longterm commitment to town centre living. Under the Urban
Renewal Act of 1998, local authorities must certify that
developments are consistent with the relevant integrated
area plan before they can qualify for tax incentives.
Recommendation - Voluntary Housing
Proposals should be sought from the Voluntary Housing Sector
for expansion of its role to provide owner occupied and rented
accommodation.
Policy Response
The Department of the Environment and Local
Government will, at an early date, discuss with, and invite
proposals from, the Voluntary Housing Sector on ways of
expanding the voluntary housing programme for both
owner-occupation and renting, with the objective of
increasing voluntary housing output to 4,000/5000 per
annum. In the light of the outcome, it would be envisaged
that the Affordable Housing Package announced on 2
March would apply to voluntary bodies.
Recommendation - Landlord and Tenant Legislation
Landlord and Tenant legislation should be reviewed to address
possible barriers to investment in the private rented sector and
the issue of appropriate balance of tenure rights.
Policy Response
In order to assist with consideration of policy responses in
this area, the Department of the Environment and Local
Government have recently requested the Attorney
General's Office to have the scope for improving security
of tenure in the private rented sector examined by an
expert in the area, having regard to constitutional rights
and the complex legal issues involved. The Government
have decided in principle that a commission should be
established to examine issues relating to security of
tenure.
Recommendation - Tax Relief for Tenants
The maximum tax relief for tenants in private rented
accommodation should be increased in line with the trend in
rents.
Policy Response
This proposal requires further consideration in the context
of overall budgetary policy, having regard particularly to
the cost of the additional relief.
Recommendation - Strategic Planning
Local authorities in the Dublin/Mid East regions should review
their Development Plans to harmonise their policies and
objectives with those of the forthcoming Strategic Planning
Guidelines.
Policy Response
The Minister for the Environment and Local Government
has already stated that he expects all of the local
authorities concerned to review their Development Plans,
even those recently adopted, to ensure that they are in
line with Strategic Planning Guidelines. Following
publication of the Guidelines on 25 March, 1999, the
Department of the Environment and Local Government
will formally request the local authorities in Dublin and the
Mid East to ensure that the policies and objectives in their
Development Plans are consistent with those in the
Strategic Planning Guidelines and that the strategy in the
Guidelines in relation to the location and scale of
development for Dublin and the Mid East will be
implemented effectively at sub-regional level through the
Development Plans in the medium term.
Recommendation - National Development Plan
The forthcoming National Development Plan should address the
issue of geographical balance of economic activity and
population distribution.
Policy Response
The Government is addressing the issues of achieving
better geographical balance of economic activity and
population distribution in the National Development Plan
2000-2006, and the current proposals for regionalisation
of the country for EU Structural Funding and State Aid
Purposes.
Recommendation - Land Use
A comprehensive land use analysis of the Dublin and Mid-East
Regions should be undertaken.
Policy Response
The local authorities in the Greater Dublin Area are in the
process of reviewing, or have reviewed, their
Development Plans. On completion of the Strategic
Planning Guidelines, which will provide an overall
strategic context, the authorities will be required to ensure
that those Development Plans are consistent with these
Guidelines.
The Department have recently carried out a detailed
examination of serviced residential land supply. In the
Greater Dublin Area, the position is as follows:
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64,226 housing units available at end 1998,
a further 39,968 units available by end
2000,
a further 41,789 available by end 2003,
giving a total to the end of the six-year period to 2003 of
146,000 housing units. Even allowing for an increase in
housing output, the additional land coming on stream in
the period up to 2003 will mean that supply of serviced
land will continue to improve.
Recommendation - National Spatial Development Strategy
A National Spatial Development Strategy should be formulated
to facilitate development of policy in regard to distribution of
population and economic activity.
Policy Response
The Government has decided in principle to draw up a
National Spatial Development Strategy.
Appendix 1
Recent Trends in House Prices
An immediate priority in Action on House Prices (April 1998) was
to curb serious overheating and house price inflation, which had
built up over the previous three or four years, particularly through
removal of speculative demand, calming of price expectations
and implementing measures to increase housing supply.
House price data for the December quarter, 1998, are given in
summary form in Appendix 2. This demonstrates evidence of
moderation in the trend of house price increase:
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The rate of annual increase in Dublin is lower than at any
period since the third quarter of 1997
Prices increased much less sharply in the second half of
1998 than in the first, especially in Dublin.
The consultants' report confirms a wide consensus that the
Government actions have played a key role in achieving price
slowdown, which they point out, represents a positive
achievement against the background of continued economic
growth and low interest rates. There is also wide agreement that
there are further beneficial effects to come from the measures
already taken. The further steps now being announced will
reinforce these effects within a strategic and forward-looking
policy framework.
Housing Supply
Increased housing supply, particularly in Dublin, is the
cornerstone of policy for price stabilisation and balance in the
housing market. This means bringing forward land for housing
more quickly, dealing effectively with constraints on this or
delays to development, and maximising the potential of available
land.
Considerable progress has been made with housing supply
since the publication of Action on House Prices:
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42,349 new housing units completed in 1998 - up 9% in a
single year
significant housing schemes are in the pipeline
a marked increase in planning permissions - to record
levels in 1998.
Registrations under the HomeBond guarantee scheme for new
houses were up 7.3% in 1998, and the January 1999 total was
12.7% higher than in January 1998, pointing to continued
increase in housing output.
The Serviced Land Initiative is estimatred to yield 100,000
housing sites nationally in 1999 and 2000 - these sites are
additional to sites which become available in the normal course
under the main infrastructural investment programmes.
The total estimated potential supply of housing land in Dublin is
higher than previously reckoned - 90,000 sites compared with
the consultants' 1998 estimate of 79,000.
Housing Density
Increased availability of land for building needs to be
accompanied by optimal use of that scarce resource. Density is
a critical factor in this. The consultants report positive effects of
the steps taken to promote increased density under Action on
House Prices, for example, in recent Development Plans in the
Dublin area. Local authorities have been instructed to implement
recently published Planning Guidelines on housing densities
even in their draft form.
Housing Affordability
Measures introduced under Action on House Prices are already
helping to assist affordability for lower income house buyers,
particularly through withdrawal of investor incentives, reduced
stamp duty and improvements in the local authority shared
ownership scheme. Further innovative approaches to the issue
of housing affordability are now being pursued, including:
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the recently launched Local Authority Affordable Housing
Scheme which specifically addresses the issue by
providing additional new houses for lower income
purchasers without fuelling house prices.
the objective of achieving a better mix of affordable type
units in new developments is being promoted. The scope
for reinforcing the powers of local authorities in this regard
is being examined in the context of Planning Law reform.
Private Rented Sector
The measures being taken to increase the overall supply of
housing and stabilise house prices will help to relieve pressures
in the private rented sector. In addition,
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The scheme of "section 23" type incentives announced in
Budget 99 for the provision of student accommodation will
help to expand the supply of good quality and affordable
accommodation for students and will also ease pressure
on the overall rental market
The recently announced Urban Renewal Scheme
provides for allowances for rented as well as owner
occupied accommodation.
Appendix 2
Average House Prices - December quarter, 1998
The changes in average house prices between the December
quarter 1998 and the September quarter 1998 and between the
December quarter 1998 and the corresponding quarter in 1997
are as follows: (with previous quarterly and annual changes in
brackets)
House
type
Average
Price
Change on
Sept Qtr '98
Change on
Dec Qtr '97
(Sept on
June
Qtr)
(Sept'98
on
Sept'97)
New House Prices
Nationally
£106,514
+
9.1%
(+ 1.8%) +
23.3%
(+ 20.1%)
Dublin
Area
£132,941
+
4.6%
(+ 2.2%) +
25.8%
(+ 32.4%)
Second-hand House Prices
Nationally
£116,403
+
5.5%
(+ 8.2%) +
29.2%
(+ 36.6%)
Dublin
Area
£148,745
+
0.8%
(+
10.1%)
(+ 41.7%)
+
27.4%
File Updated On: 29:05:2000