Latest news with #MartinWhelan
Extra.ie
3 hours ago
- Business
- Extra.ie
Housing Agency warns private rental supply will soon collapse
Supply of private rental units will fall significantly due to the collapse in institutional investment, the Housing Agency has warned. Martin Whelan, Housing Agency CEO, will tell the Oireachtas Housing Committee today that there are significant 'capacity constraints' on the construction sector as the country tries 'to scale up to 50,000 new homes each year'. Mr Whelan will tell the committee this will require an extra €7billion a year while the cost of soaring equity within the housing market has increased by one fifth. Pic: Getty Images The committee will also be told that between 2018 and 2022, institutional investors helped pay for 2,000 private rental homes each year, but this has plummeted. 'Since 2023, there has been almost no new forward investment deals in Ireland, which means the supply of private rental units will fall significantly,' he will tell the committee. A report by the Department of Finance last year on residential development found that €20billion a year is needed to build 50,000 homes each year, with €16.9billion of this coming from institutional investors who told the Government to ditch Rent Pressure Zones (RPZs) if they want their money. Pic: Crispin Rodwell/Bloomberg via Getty Images Institutional investors have highlighted the country's RPZs as a barrier to investing here. Last week, the Cabinet agreed to extend RPZs nationwide but also to allow rents to be reset when a new tenancy begins. Emergency legislation is due to be agreed by Cabinet today to speed up the process in a bid to prevent thousands of renters facing rent increases before their tenancy is covered by RPZ rules. Mr Whelan will tell the committee: 'The availability of this type of equity financing is particularly important for meeting supply targets for residential development over the medium term.' Pic: Getty Images Mr Whelan will point to investors' equity, noting its 20% increase is impacting the viability of building projects. Mr Whelan will tell the committee that the 'high cost environment' for construction, particularly for apartments, 'remains a major obstacle to delivering viable homes' for both the private market and cost rental schemes. The Housing Agency is delivering targeted subsidies, low-cost debt and equity programmes designed to help bridge this viability gap. The committee will be told that between 2023 and 2024, the number of planning permissions granted for apartments decreased by almost 39%, while the number of house approvals was down just 2.7% over the same period. Mr Whelan will say: 'Between 2018 and 2022, fewer than half the number of apartments granted planning permission were built. Over this period, there were 44,000 apartments built compared to 95,000 apartments granted planning permission.' The committee will be told that a three-bed semi costs €450,000, a two-bed apartment in a suburban location costs just below €550,000, and a two-bed apartment in an urban location costs around €600,000. Capacity constraints will also be flagged as a major issue.
Irish Examiner
10 hours ago
- Business
- Irish Examiner
'Undercapitalised' developers struggle to scale up house building, TDs to hear
Developers have struggled to scale up housebuilding due to many being 'undercapitalised' since the financial crisis, the Housing Agency will tell TDs today, Tuesday. The Oireachtas housing committee is due to host the Housing Agency and the Land Development Agency during its meeting on Tuesday afternoon, with both due to highlight challenges to housebuilding. In his opening statement, Housing Agency CEO Martin Whelan will tell TDs that ongoing capacity constraints within the construction sector are 'significant barriers to delivery'. These constraints include a shortage of zoned, serviced land as well as the current structure of the Irish development and construction sector, Mr Whelan will say. 'On the private side, few housebuilders outside the largest and institutionally-backed entities have a good pipeline of ready-to-go sites, and even when they acquire land that is zoned and with planning, infrastructure shortcomings and blockages can impede delivery,' Mr Whelan will tell the committee. 'Undercapitalised since financial crisis' On the capacity of the construction sector, Mr Whelan is due to say that most developers have 'remained undercapitalised since the financial crisis'. 'This significantly limits their ability to scale up development activity, with many operating on a project-by-project basis rather than on a programme of concurrent development projects,' Mr Whelan will say. 'On the construction side, where we appear to be at, or close to, full capacity, the challenge is one of productivity — how can the industry do more with existing resources?' In particular, Mr Whelan will cite the need to further adopt the use of modern methods of construction. The Housing Agency chief is also due to call for an increase in the number of staff in local authorities and approved housing bodies to deal with the rise in the number of social homes. This is to support 'good estate management and tenant services', Mr Whelan will say. CEO John Coleman is expected to tell the Oireachtas housing committee about challenges facing the Land Development Agency, including a lack of zoned, serviced land, the cost of delivering apartments, and legal challenges to planning permissions. Picture: Mike Shaughnessy He will tell TDs the Housing Agency has been working with an 'industry consortium' to develop a social and affordable housing apprenticeship, which aims to address the skill shortage in the area. It is expected apprentices will begin enrolling next year, he will add. On capital investments, Mr Whelan will tell TDs and senators that to reach 50,000 houses a year, there will need to be approximately €20.4bn worth of finance allocated to housing, of which €8.2bn must be equity. More apartments needed In particular, he will say this requires more apartments to be built, which require more equity to be provided. He will cite research from the Central Bank, which says equity finance fell from an average of €2.5bn in 2021 and 2022, compared with €450m in 2023 and 2024. 'The availability of this type of equity financing is particularly important for meeting supply targets for residential development over the medium term,' he will say. The CEO of the Land Development Agency (LDA), John Coleman, is expected to tell the committee there are a number of challenges facing the agency, including a lack of availability of zoned, serviced land, the cost of delivering apartments, and legal challenges to planning permissions. He will also highlight 'a lack of investment in the rental sector', as well as viability challenges to unlocking brownfield sites for development due to remediations costs associated.
