Council Not Expecting to Tender for First Cost-Rental Scheme Until 2023

“Why, why why?” says Sinn Féin Councillor Máire Devine, who sits on the regeneration board for St Michael’s Estate in Inchicore.

The council-owned site at Emmett Road has been earmarked for several years as the place to host the first affordable rental scheme in Dublin city.

Devine welcomed a presentation on the plans to councillors on the housing committee last week but she is baffled by the slow timeline going forward.

A council spokesperson says that the council will apply for planning permission next year, but won’t go to tender for a builder until 2023.

The vision is for 470 homes on the land. Of them, 70 percent would be cost rental and 30 percent social housing.

There is an immediate need for new social homes for existing tenants, says Devine. “There are flat complexes around there that are in atrocious conditions and the tenants are waiting as well.”

It has been almost four years since councillors approved plans to develop St Michael’s and more than two years since the then-Minister for Housing Eoghan Murphy announced there would be cost rental homes.

In early 2019, the council appointed a design team, according to the Dublin City Architects Blog.

The council spokesperson says that the timeline is normal “for a project of this size and complexity”.

The longer it takes, though, the more likely it is that costs will rise. Councillors are already worried about the estimates for costs so far, and whether, therefore, the cost rental homes will be affordable.

A Wider Vision

Councillors’ hopes for a new model of public housing for the city appear to have been dashed by another report to the housing committee last week.

In October, councillors said they wanted to expand access to public housing to all who need it, with rents based on a household’s income as it is in social housing at the moment.

Councillors asked council officials to run the numbers to work out what it would cost to roll out affordable homes in that way to renters who are above the current income limits for social housing.

They hoped to pilot the new approach at St Michael’s Estate in Inchicore, which is already designated for a mix of social and affordable rental homes.

But last week, a report issued by the council’s housing manager Brendan Kenny and director of housing delivery, Dave Dinnigan, said that while they agree a more radical approach is needed to tackle the housing crisis, the plan put forward by the councillors is not a runner.

“It is extremely unlikely that Government will consider any long-term or continuous subsidy to the model of cost rental and therefore the idea of an income-based cost rental scheme like social housing is an unrealistic aspiration in our view,” says the report.

The rent must cover the loans to fund the developments, says the report. Costs include construction, estimated at €375,000 per home, but also management, maintenance, a sinking fund and finance costs, says the report.

The government currently provides a serviced site fund of €50,000 for affordable homes but that won’t bring down the costs enough to make the rent affordable, says the report.

(A cost rental project at Enniskerry Road in Stepaside got €80,000 per home from the serviced sites fund.)

Gilliland says there should be an increased subsidy from central government for affordable housing in the Dublin region to reflect the higher construction costs. Perhaps €100,000 instead of €50,000, she says.

If the Department of Housing funded all the communal space and amenities in the development that could bring down the costs too, she says.

Also, rents in the St Michael’s presentation are based on loans of 25 years, she says. Longer loans of 35 or 40 years could reduce them significantly too, she says.

The Minister for Housing, Fianna Fáil TD Darragh O’Brien, also announced the new Cost Rental Equity Loan scheme this week, which offers long-term loans “on favourable terms” to AHBs for cost rental homes.

Back to Affordability

The presentation on St Michaels to councillors last week suggested it would cost around €375,000 to build each home.

Even with a government subsidy of €50,000, that cost would lead to rents of around €1,300 to pay back the borrowing to cover construction.

The presentation mentions maintenance and finance costs but these are not included in the figure, says the spokesperson.

That price could go up too. “We will not know the true construction figure until the project goes out to tender which is likely not to happen until 2023,” says a council spokesperson.

“It is unlikely that the final construction cost will be as low as the €375,000,” he says.

Cost rental accommodation is aimed at people on low to middle incomes who earn above the threshold for social housing, which is €35,000 for a single person and €36,000 for a couple.

Different people cite different slightly rules of thumb for affordability for renters.

Most say something along the lines of if a household is spending more than 30 percent of its income on rent, then the rent is not affordable. (Some say net, some say gross.)

For rent of €1,300 to be less than 30 percent of net income, a household would need to have a net income of around €52,000 a year.

“That is not affordable,” says Devine. “It is way off the Richter scale.”

The council must aim to provide a one-bed home for rent of around €800 and a three-bed home for around €1,100, she says.

What is the Hurry?

Delays in building homes can lead to spiralling costs because construction costs went up each year.

The council spokesperson says it is likely that construction costs for St Michael’s Estate will have increased further by the time they go to tender.

“We hope that the Planning Application will be ready in April 2021, it may take longer,” says the council spokesperson.

An Bord Pleanála will take six to eight months to make a decision bringing it to early 2022, he says.

There is “detailed design work, costings, public procurement consultation”, he says. All that means that a contractor will not be on site until 2023, he says.

That is too late to start work, says Labour Councillor Alison Gilliland. “I absolutely couldn’t accept that.”

Architect and housing commentator Mel Reynolds says he cannot understand the approach taken by the council, which appears slow to him.

A private sector developer would do its final designs and prepare tender documents while the planning application was being considered, he says.

Council staff should have a fair idea what would be acceptable to the planning authority, An Bord Pleanála, since the council is itself a planning authority, he says.

“Once you get your planning set of drawings, you go off and you do your tender on the basis of it,” says Reynolds. “You can do your fire cert and disabled access cert in parallel.”

Reynolds also wonders why the council doesn’t roll out the same plans they have used before on other sites, which would save time and money, he says.

When a private developer builds a successful scheme, they often use the same designs again the next time, perhaps with some tweaks, he says.

Gilliland, the Labour councillor, thinks that is a good idea. Perhaps St Michael’s Estate could become a template for future council developments, she says. “If we could get a good design and replicate it.”

“For a project as big as the St Michael’s proposal it is not possible nor best practice to replicate previous plans,” says the council spokesperson. “Each project is different and we must comply with all Government standards and guidelines.”

“The St Michael’s Scheme has one of the top and longest established design teams in the country and it has a full-time DCC Project Manager which ensures that quality will be achieved and any delays kept to a minimum,” says the council spokesperson.

Private sector developers would probably be quicker, says the spokesperson. He didn’t directly answer a question as to why they are quicker.