Public sector’s lack of trust in builders ‘holds back housing’

LACK of trust between the public sector and private builders has been blamed for stymying collaboration that has delayed the delivery of housing.

Mark FitzGerald, the chairman of estate agents Sherry FitzGerald, said tribunals and other historic issues had damaged trust between the public sector and builders, who need to start working effectively together to deliver sufficient affordable housing in years to come.

“History doesn’t build any houses,” he said. “We’ve got to build a trust and from that trust you’ll get collaboration.”

The programme for government does not include a target for new homes to be built over the next five years, he said, only for social housing, but an overall target would help builders plan. Housing output is expected to be well down this year, but Mr FitzGerald said demand remains high. His firm is selling 150 homes a day since reopening on June 8th, he said. He made the comments on an online industry forum organised by PwC.

On the same call, Michael Stanley, CEO of listed developer Cairn Homes, said Central Bank lending rules should be reviewed to reflect the new economic reality and also said there’s been poor use made of land within Dublin.

“Over the last five years alone we have built or are building approximately a million square feet of office accommodation. That’s enough for 100,000 employees. In that five-year period, we’ve built about 3,000 apartments [in Dublin], which is enough for about 6,000 residents. There’s an extraordinary mismatch in our city.”

But Mr Stanley said he expects between just 12,000 and 14,000 homes to be built this year. He said macroprudential and lending rules are important, and acknowledged that there should be a “sensible lending policy”.

But the rules could be varied depending on demographics and geographic areas to make it easier for people to buy, he said.

But he said lending rules – which generally limit the amount someone can borrow to 3.5 times their gross income – are a “pretty blunt instrument” that haven’t been changed since they were introduced in early 2015. They are reviewed on an annual basis.

“They don’t recognise that circumstances can change for borrowers,” said Mr Stanley.

“They’re intended to avoid banks, correctly, over-lending to people for residential accommodation. But we’re now in a low-interest environment for longer, we’re seeing very little HPI (house price inflation) and we’re unlikely to see that for the next couple of years. Incomes are unlikely to grow in the short term. Banks are certainly more prudent and there’s improved buyer affordability.

“The requirement in Dublin or a city like Cork might be very different from the other regions,” he said, urging a review based on geographic regions.

Cairn Homes is currently seeking permission for 611 apartments on former RTÉ land in south Dublin. The plans are being opposed by billionaire Dermot Desmond, who has claimed the development could become “modern-day slums”.

Call for Central Bank rules to be varied to make it easier for people to buy