The decision by Dublin city councillors to stop the sale of land beside Oscar Traynor Road, a few miles north of Dublin city centre, to a private developer has scuppered plans for a 853-unit private/public development. It also displays the big questions about the future of Irish housing policy. How do we build homes quickly and affordably? Either way, this will be seen as an important moment in Irish housing policy.
So what does this long-running saga tell us ?
1. The pace of development
The story of the development is the story of the Irish housing market. Originally religious lands, the Oscar Traynor plot was acquired by the council in the 1970s. It lay idle and subsequent plans, according to a council report on the site, included that it might be used for road widening, or as a depot for construction work on the Port Tunnel.
Following the completion of the tunnel in 2007, a public/private partnership to develop the site was proposed, but collapsed once the financial crisis hit in 2008. It was 2015 before it was judged that the development sector had the capacity to build such large projects again, the report said.
A plan was then drawn up involving three sites, one of which was the 17 hectares at Oscar Traynor Road, and councillors voted in favour of the strategy in early 2017. Assuming planning was obtained, following an application to an An Bord Pleanála, the houses would, the council estimated, have been delivered between 2023 and 2024. After this week's developments, according to Brendan Kenny, Council assistant chief executive, it will take another five to eight years to get to the same stage as the project is at now.
Time will tell on this. Delay in building in itself has an economic cost, given the desperate need for houses of all types.
We can see the recent history of the Irish housing market here – the impact of the financial crisis, and the delay in progressing anything in the wake of it. And even after approval of the project by the full council in early 2017, it took nearly four years before the plans got the stage of being ready to go to planning.
Any solution to the housing crisis will have to involve a significant speeding up of this process.
2. Questions about the scheme
Following a detailed tendering and design process , Glenveagh was chosen to develop the site. It was the transfer of council land to Glenveagh (necessary to progress the scheme) that councillors this week voted against by a majority of 48 to 14 – supporting a Labour motion backed by Sinn Féin, the Green Party, the Social Democrats, People before Profit and some independent councillors.
Why did this happen? The majority of councillors argued that the deal represented bad value and did not deliver homes that were genuinely affordable, due to the built-in profit margin for the developer. They thus want the council to take the project on itself and are calling on the Government to support this.
Labour councillor Allison Gilliland said in an article in the Irish Sun: “Effectively, we want to remove the middle-man and take control of what happens on our lands.”
The council sees it differently. Kenny argues that the council does not have the resources to be a developer of such a major scheme in its own right. Council documents estimated that it would cost it more to deliver the properties on the site itself than via the Glenveagh deal.
The land is valued on the Vacant Sites Register at €44 million. And so there has been focus on the fact that under the deal Glenveagh was to pay the council €14 million in cash. Glenveagh would also have been responsible for planning and financing the development, building a large range of facilities, including a community centre/creche, extensive landscaping, a park, play areas and so on. As part of the deal, 30 per cent of the housing was to be social and 20 per cent affordable. So the simple cash payment is only part of the deal. However, the full financing details, including the proposed profit margin, were not revealed.
3. The key issues
The Oscar Traynor debate comes down to a couple of key questions. Can a council-led project deliver a better outcome? If so, under what circumstances and how long will it take?
Ronan Lyons, TCD economist and an expert in housing says the council vote "strikes me as the perfect being the enemy of the good". All supply will help lower housing costs, he says, and accelerating building is vital, given Dublin needs tens of thousands of new homes, especially for smaller households.
“Central to the challenge is the inability of the Irish housing system to convert plans into homes – in part due to votes like this one.”
Lyons has long been a supporter of a detailed study of the costs of building in Ireland to try to inform these debates.
Orla Hegarty, an architect and assistant professor in UCD, disagrees and says the councillors were not voting against building houses, but were opposing moving land out of public ownership. She says keeping land in public ownership gives more flexibility, can deliver better value and the council's argument that it would take another five to eight years to develop "does not stand up to scrutiny".
“If the state has inefficient, cumbersome systems that delay and add cost, then fix the systems. EU procurement rules show how to do this by unbundling large contracts into smaller lots, opening up the market, supporting competition and reducing the administrating burden.”
If the model moves away from public/private partnerships, this involves the private sector being involved as contractors, building properties, but not as developers of public land.
Data published this week in repose to a parliamentary question from Sinn Féin’s housing spokesman Eoin Ó Broin shows that in most counties the cost of acquiring houses from developers either via Part V, where councils can buy houses in a new development, or turnkey acquisitions, was well above the cost of building them.
As council building has been low, there are different housing mixes and the bulk of social housing has been provided by acquisition, the figures need to be treated with care. But they do show that in some cases councils, helped by the fact that they own lands, can build cheaply – and voluntary housing bodies have also completed some impressive deliveries in recent years.
Ó Broin says resources need to be given to local authorities to allow them to take on the role of developers and that the government approval process for local authority building needs to be simpler and quicker. The Government has recently raised the cap of development value where local authorities can avail of a quicker approval process from €2 million to €6 million.
Given the huge housing needs, a mix of strategies will have to be undertaken involving the public and private sectors in the years ahead – for example local authorities will continue to purchase properties for social housing from the private sector for years to come. The Land Development Agency, responsible for developing public land, will also have a role. Lyons says European experience also shows the potential of voluntary housing bodies.
But we still lack a detailed plan to make this all happen and set the ground rules for all sides.The old system, driven in part by the need to keep borrowing off the State balance sheet, was undoubtedly too developer-friendly in some cases. However, achieving some route for public and private to work together remains vital.
4. The key issue of price
The key is to find a way to build quickly – and affordably. The Oscar Traynor row highlights the push and pull. A central issue was that the affordable houses were to be provided at around €325,000 to €385,000 – the Help-to-Buy Scheme would reduce the cost to purchasers. Opponents say this is not genuinely "affordable". The Minister for Housing Darragh O'Brien appeared to express some reservations about this too in the Dáil. The Minister has now asked for a report on the scheme from the council and told RTÉ Radio 1's Claire Byrne show that he does not believe it will take as long as the council said to progress the site.
The question is that if homes are to be delivered more cheaply will this be achieved by eliminating the developer’s margin – or via more public subsidy for the site? And how long it will all now take?
There were already significant public subsidies built into the Glenveagh plan. Some councillors have suggested that the exchequer could also fund the public areas of the development – which Glenveagh was to take on. There may be an argument for this, but in assessing the real cost of delivery all the public costs need to be put on the table and included in the calculation. Financing for the overall housebuilding scheme would also be needed.
Ó Broin argues for a financing mechanism similar to that used for another council property – St Michael’s Estate in Inchicore – which is set to be part-financed via a loan from the European Investment Bank and will be a pilot for a model of providing so-called cost rental to tenants.State financial backing and support would also be needed for this,
The Minister has said a Fianna Fáil motion to delay a decision on the development to allow more negotiation and clarification might have been a better way forward. As there was a suggestion the developer would be prepared to sell more properties back to the council as part of the deal, this might indeed have been worth scoping out – particularly as councillors feared a sale of a large block to an investment fund.
Local democracy has voted down the Oscar Traynor land sale. Whether a better way forward can be found – and how long it will take – will be a key pointer to future housing policy in the State. There is no doubt that the balance is moving towards more State involvement, but we are still feeling a way to how to make this work.
