RDJ Housing Conference: Foundations 25
Reading time: 4 mins
RDJ held its annual housing conference, Foundations 25 at its Cork office at 85 South Mall with keynote speaker, John Coleman, Chief Executive of the Land Development Agency.
RDJ held its annual housing conference, Foundations 25 at its Cork office at 85 South Mall with keynote speaker, John Coleman, Chief Executive of the Land Development Agency (the “LDA”).
A wide range of industry experts and stakeholders were in attendance at this Cork event which also included a panel discussion with RDJ’s John Cuddigan (Tax), Denise Kennedy (Construction), Maria O’Donoghue (Real Estate) and Cian Fenton (Banking and Finance) who examined the current challenges and opportunities in Ireland’s residential sector covering topics such as Residential Zoned Land Tax (RZLT), funding site acquisitions and new developments, sustainable and scalable development, and what the legal landscape means for residential construction.
Keynote interview with John Coleman, Chief Executive of the Land Development Agency
RDJ Partner, Simon Lynch opened the event with an interview with John Coleman, discussing how the LDA has impacted the housing landscape in Ireland since its inception in 2018 and the key role that State-owned land provides to deliver social and affordable housing. Coleman shared details on some of the key upcoming developments in Cork in the LDA pipeline – including plans to build 350 new affordable homes at its newly acquired ESB site in Wilton, and the recently announced plan for over 140 new homes in Cork City in partnership with Cork City Council at Anglesea Terrace.
He reminded the audience that a key challenge for future developments is identifying and obtaining the right sites and acknowledged that this challenge is compounded by a finite supply of land. However, Cork is very much on the “radar” of the LDA and the agency is actively seeking out opportunities for land acquisition in the region.
Infrastructure deficits are also having a critical impact on housing delivery. Coleman confirmed that the LDA are anticipating “problems on the horizon” to deliver the expected pipeline of housing unless the delivery of substations and wastewater treatment plants keeps pace with housing development.
With regards to challenges faced by the LDA in meeting its delivery targets over the last number of years, Coleman spoke of the need for more streamlined processes, with the suggestion that the introduction of compulsory purchase powers to the LDA might increase its capacity to acquire land. He also highlighted the key role that the State and the LDA play in meeting the viability gap faced by private developers, particularly in apartment delivery. While the LDA will need to remain flexible and keep pace with the demand for housing, regulatory barriers such as planning must also be addressed if delivery is to double.
Panel discussion
RDJ Construction Consultant, Denise Kennedy was joined by John Cuddigan (Tax), Maria O’Donoghue (Real Estate) and Cian Fenton (Banking and Finance) for a discussion on the challenges typically encountered by public bodies and AHBs when participating in the housing market.
- Delays, regulations and lack of guidance - Maria O’Donoghue, Senior Associate in RDJ’s Real Estate Group highlighted delays in government funding, issues with an outdated MUD (Multi Unit Development) Act 2011, and lack of Revenue guidance on VAT, RCT and RZLT. Each of these challenges can impact on the timeframe for delivery and lead to uncertainty in the market which hampers AHBs ability to operate with maximum efficiency.
- Tax policies - John Cuddigan, Head of RDJ’s Tax Group gave a summary on the impact of adverse tax policies, highlighting market’s dislike of uncertainty and the knock on effect it can have on development. Taking RZLT, land value sharing tax and VAT, he discussed challenges faced by market operators in navigating the current tax framework – for example in assessing RZLT deferrals/ exemption criteria, zoning issues, dealing with uncertainties on VAT treatment with local authorities and AHBs, and the changing tax landscape for institutional investors in residential property. RZLT was discussed as a factor causing particular uncertainty in the market. John Cuddigan noted concerns over its scope that have led to house builders bearing the cost of same even where they are proceeding through the planning system. In practice, zoning classifications are becoming a particular issue for developers. The uncertain deferral scheme available for lands subject to planning for residential development was also discussed, with John pointing out that no deferral applies while planning permission is pending except in limited circumstances.
- Funding - From a lending perspective, RDJ Banking and Finance Partner, Cian Fenton examined the approach of banks when approving funding for new projects and site acquisitions. He noted it has been encouraging to see the number of lenders, particularly non-bank lenders, entering the Irish property market increase significantly over the past decade. This has been particularly helpful for clients with specific funding needs in today’s more technical lending environment. Cian emphasised that no matter the lender, the focus is always on addressing the risks posed to a project and how a lender will assess planning viability and service availability. He noted another critical development as the increased focus on sustainability linked financing and green loans. As most new build projects will now achieve “A” energy efficiency standard, in practice many development projects are now classified as green loans.
- A better approach - The Panel examined how government could improve its approach to housing, noting that better collaboration between various government departments would improve efficiency and reduce the backlog of delivery. Maria O’Donoghue discussed how government housing schemes should undergo a technical review to assess where improvements could be made, identifying schemes like Croi Conaithe Cities and the STAR Scheme as potential candidates for such a review. Cian Fenton noted that uncertainty with regulation creates uncertainty in loan assessments and that planning delays increase financing risks, noting that legal certainty is crucial for funding long-term housing projects. Cian also added that tax certainty is another area where the State can look to deliver to increase the flow of housing stock.
- Addressing uncertainty in the market - The Panel concluded that a key step in addressing the delivery of housing is to tackle those areas causing uncertainty in the market – recommending a fresh look at housing policy from government and a ‘lessons learned’ approach to assessing performance of the various government schemes over the last number of years. A more structured, consistent approach to taxation policy is also needed to remove an unnecessary uncertainty for market participants and potential investors. Undoubtedly, addressing planning delays and inefficiencies are also a key area of focus for the delivery of housing.
For more information on any of the topics discussed above, please contact:
- Evin McCarthy, Partner and Head of RDJ’s Real Estate Group | E. evin.mccarthy@rdj.ie
To learn more about RDJ’s Real Estate Group or contact a member of our team click here.