Builders see way out of housing clause

Builders may be able to avoid the provisions of the Planning and Development Act 1999 which require them to transfer up to 20 per cent of residential development sites to the planning authority in return for building permission - but only for the next nine months, at most.

The proposals, contained in Part 5 of the Planning and Development Bill which were last week upheld by the Supreme Court, have already been signed into law by the President, Mrs McAleese.

However, according to the Act, local authorities must devise and incorporate a housing strategy and incorporate it into their development plan. Until that strategy is incorporated, the local authorities will be unable to condition building permissions to transfer land or housing units to the authority, the Department of the Environment has confirmed.

Some authorities, notably those in the Dublin area, have already instigated the development of a suitable housing strategy which may speed up the implementation of the Planning and Development Act, while builders in country areas may have until next summer before the provisions come into force.

However, under a clause known as the "use it or lose it clause", any planning permission granted between the publication of the Bill last August and the adoption by the relevant planning authority of its housing strategy must be built upon within two years, as opposed to the usual seven.

This would give developers a reasonable opportunity to build on permissions obtained before the coming into force of housing strategies under the Bill.

But it would also prevent developers applying for permission for multiple developments now, in order to avoid the deadline, as they would be unlikely to be able to build them all within the two year time-frame.

For landowners and property developers, as well as the planning authorities themselves, the Act is a complex piece of legislation. For this reason the Minister for the Environment, Mr Dempsey, has hired consultants to draw up a model, which local authorities can use in preparing a housing strategy and deciding the levels of contributions to social and affordable housing projects.

The model is based on Co Louth, covering the planning authority areas of Louth County Council, Drogheda Corporation and Dundalk Urban District Council. The model strategy is to be prepared by this October, after which planning authorities have nine months in which to incorporate a similar version into their development plans.

The Irish Times understands the strategy, which is being prepared by a consortium of consultants involving PA Consultants, Brady Shipman and Martin and Fitzpatrick and Associates, will identify the overall need for social and affordable housing in the county and encourage different house types and sizes in housing developments.

It will include policies which ensure the rehabilitation, refurbishment, and maintenance of the existing social housing stock and the effective use of existing stock; have regard to the Strategic Planning Guidelines for the Greater Dublin Area (1999); and ensure the amount and location of zoned residential land to meet the housing needs for the county for the period of the development plan is identified.

Under the model, housing development would be integrated with public transport and other infrastructure plans including education, employment, health and amenities.

The model dictates that all strategies should encourage the development of mixed and balanced communities and have policies to counteract social segregation. The term social and affordable housing includes housing to meet the needs of the travelling community.

So how will it work? The Minister has made it clear that, in lieu of transferring land to a local authority, a developer could provide houses at an agreed price to the local authority. The cost of the houses to the local authority would only allow the site cost to be charged at existing use value.

"Existing use value" however also needs explanation. If a builder can demonstrate land was bought before the publication of the Planning Bill on August 25th, 1999, then the local authority must take into account the amount the developer paid for a site - often way above existing uses as auctioneers have long recognised development potential. However, if the developer bought the land after August 25th, 1999, the planning authority is not obliged to pay any more than existing use value, usually agricultural values. Voluntary housing bodies will also be able to make arrangements with developers for social housing but again based on existing use value of the land.

For developers and builders, it will be essential to ascertain from the planning authority the levels of social and affordable housing required and the percentage of development land liable to the provisions of Part Five.

This is because the local authorities are being allowed to determine this by reference to their perceived need - a feature which is likely to lead to some variation.

The planning authority will have an obligation, however, to ensure sufficient land is zoned for housing and will have to indicate in advance what proportion of land will be required for social and affordable housing.

In response to builders' concerns, there is a requirement on local authorities to keep undeveloped land that is transferred in a proper manner so that it would not cause a problem for the developer or the residents.

The provisions of Part Five will apply to all developments in excess of four dwelling units

An "eligible person" was defined as persons whose mortgage repayments would exceed 35 per cent of income net of income tax and PRSI. In the case of a two-income household, one half of the second net income would be taken into account for the purpose of determining eligibility. For example, on this basis, a single person with a gross income of £25,000 would be able to afford a mortgage of £87,000 and a married couple with one income of £30,000 would be able to afford a mortgage of £120,000 (at 4.5 per cent interest rate).

In the case of a couple with two incomes of £20,000 and £10,000, the maximum affordable loan would be £106,000. This criterion captures the three critical variables and approximates to local authority practice in determining eligibility under the existing loans and shared ownership schemes.

A "clawback" on affordable houses is also provided for. A full clawback of the local authority's equity will be liable for any sale within the first 10 years, with equity being abated at the rate of 10 per cent a year between the 10th and 20th year, so that after 20 years occupation, the clawback would disappear entirely.