At the recent monthly meeting of Dún Laoghaire-Rathdown County Council, councillors pushed for more details about what prices housing will be sold at on the large site at Cherrywood, once it is built out.
The site is one of the largest earmarked to benefit from the Local Infrastructure Housing Activation Fund (LIHAF) of more than €200 million, announced back in August by then Housing Minister Simon Coveney.
Private developers have plans for some 8,000 homes there.
Aimed at speeding up the delivery of housing on large sites by funding infrastructure on sites that are blocked from development at the moment, the fund came with a proviso that there should be some kind of commitment to affordability.
But even though the government has allocated some LIHAF money, including €15.19 million for road upgrades and a bridge at Cherrywood, it has not yet pinned down what affordable means in euro and cents on the sites that are set to benefit.
(Coveney was questioned about this in the Dáil late last month.)
At the recent Dún Laoghaire-Rathdown County Council meeting, independent Councillor Anne Colgan put forward a motion, asking that councillors be shown details about what the council intend to secure at Cherrywood by way of affordable housing for buyers.
“I think there is a huge obligation on the executive to make sure that they discharge this responsibility to achieve public value for public money,” said Colgan.
On 3 April, Coveney said local authorities “have received commitments from housing developers with regard to affordability”.
In the Dáil late last month, Coveney said final agreements weren’t in place, but were expected to be by the end of June, and that the department would “not sign off until we see the detail of the affordability commitment developers will have to make”.
What’s on the Table
Dún Laoghaire-Rathdown County Council’s application to the Department of Housing for the LIHAF money that was later earmarked for Cherrywood didn’t promise any specific figures for the sale prices of homes at the Cherrywood site.
But the document notes that the average price paid by a first-time buyer in the county in 2015 for a new property was more than €467,000. In South Dublin, by contrast, it was €325,000.
The idea is that the LIHAF funding would make it more viable to build, by reducing the burden of the development contributions for each residential unit, the document notes.
At the monthly meeting of the council last week, Senior Engineer Anne Devine said that LIHAF wasn’t really about an affordability scheme, but for an “affordability dimension”.
She expects the landowners or developers to come back with an offer for an “affordability dimension” that is based on showing how the LIHAF funding will mean the homes built at Cherrywood will be less costly than they would be without it.
She expects “that they will demonstrate how their homes will be cheaper”, she said. Devine said that they are only in the early stages of negotiations of around this.
Independent Councillor Colgan said that that fact that the department had set this kind of calculation as acceptable criteria for affordability meant that the council arguably would have less room for manoeuvre in the ongoing negotiations.
“I think the dilemma here is that the department has actually opened that door,” she said.
“Whether this cost-reduction would be equal to some notion of affordability is mired in uncertainty,” said Colgan.
There is no government-set concrete definition of affordability, although many who work in the area suggest that it would be somewhere around €280,000 to €300,000, she said. “To achieve that in Dún Laoghaire-Rathdown and Cherrywood is a difficulty.”
Some councillors said at the meeting that they were concerned that even with a cost reduction, these will be still be out of reach to most people. In other words, that the LIHAF funding for Cherrywood would end up as a subsidy for the higher end of the real-estate market.
“We are the most unaffordable county in the country, in which you can look for a house,” said Ḟianna Fáil Councillor Kate Feeney. There are people saving for years for deposits, and the prices are going up and up, she said.
Feeney said she didn’t see how the LIHAF funding was going to help with that and ensure affordability: “I don’t think that as it’s currently laid out, I’m not sure how we guarantee that.”
Said independent Councillor Michael Merrigan: “The formula used for affordability (…) would mean that everybody, or nearly everybody who is looking for affordable accommodation in this county would be locked out of it.”
Council Chief Executive Philomena Poole said: “I really do think that the additional units that will be available through Cherrywood (…), will reduce the cost of housing, because it will increase the supply.”
Across the City
In contrast to Dún Laoghaire-Rathdown, South Dublin County Council had more details in its application for LIHAF funding, around the likely costs of homes built on sites that will benefit.
(Although it’s important to note that there aren’t yet any legal agreements in place with landowners or developers at the moment around this, so the estimates could change.)
At Adamstown, the local council expects more than 2,100 units to be delivered by private developers on the site over three years. The project has been allocated €20 million in LIHAF funding for infrastructure for the site.
Of the homes built on the site, 212 would be social housing through the deal known as Part V, and 425 would be build-to-buy, costing between €270,000 and €320,000.
Another 1,062 units would be three- and four-bed homes for sale for between €320,000 and €400,000. In addition, 318 units would be built to rent, and 106 units would be an unspecified, “other”.
In its application for the LIHAF money, the council noted that these meet one of the acceptable criteria for affordability set by the Department of Housing: that more than 40 percent of homes should cost 10 percent less than the average cost of market housing in the area, including under €300,000.
An analysis of affordability carried out by DKM Economic Consultants found that a single person on twice average earnings, or a couple who are each on average earnings, would bring in around €73,200.
They would therefore be able to afford a home that costs €292,750, the analysis notes. By this standard, some of the homes in the Adamstown SDZ would be affordable to these people.
The analysis also used a calculation that took into account that average earnings in Dublin were 18.2 percent higher than in the state as a whole in 2014.
In that case, it found that a single person on twice the average Dublin earnings, or a working couple on the average Dublin earnings, would be able to afford a home that costs €351,036. “Adamstown will provide properties which are comfortably in this range,” the report says.
It also noted that a single person on average earnings, and on 150 percent of average earnings does not earn enough to raise a mortgage in the Dublin market, even with a Dublin premium. “It is assumed that purchasing a home remains an unattainable proposition for these individuals,” it says.
For single people, therefore, the report looks at whether the rents would be affordable in the development. With the LIHAF funding, the build-to-rent units are expected to cost €1,250 a month for a one-bed apartment, €1,400 a month for a two-bed apartment, and €1,800 a month for a three-bed apartment.
“The analysis shows that in most cases, for a single person and a working couple, the monthly rent is 25 per cent or less of net income,” the report finds.
The analysis, though, assumes that a single person on an average income would share a two-bedroom apartment, rather than renting themselves.
At a second site in South Dublin County Council area that has been earmarked for €3 million of LIHAF funding, at Clonburris, the infrastructure would unlock 2,000 units in the short-term, the application says.
One of the landowners, Cairns Homes – which is expected to deliver 960 units there – has said that “with the support of LIHAF can deliver three and four bedroom houses in the price range of between €225,000 to €275,000”, the report says.
(That’s significantly cheaper than the average building costs set out in a May 2016 report by the Society of Chartered Surveyors Ireland.)
“These build cost efficiencies are created through scale, enabling them to deliver housing, which is up to 24% cheaper than the SCSI average, independently verified, cost of construction,” says the report.
At a third site, at Ballycullen-Oldcourt, the cost of homes is expected to range from €240,000 and €250,000 for two-bed apartments, to between €370,000 and €400,000 for four-bed apartments.