Government considering measures to 'inject adrenaline' into apartment building sector

The government is considering new measures in the budget to inject “adrenaline” into the apartment building sector in a bid to boost housing supply.

But Tánaiste Simon Coveney insisted the government will adopt a cautious approach in an effort to avoid the mistakes of the past where tax incentives contributed to the creation of ghost estates.

Mr Coveney was reacting to the latest homeless figures which show that for the seventh month in a row, the number of homeless people in Ireland exceeds 10,000. Just over 3,800 are children.

He said the figures show that the government needs to do more to accelerate the supply and delivery of all housing types: “The challenge of homelessness in Ireland will only be solved by an increased supply of housing."

While apartment construction has ramped up in Dublin, he said the pace of delivery needs to increase in other cities, like Cork.

“There are some apartments being built in Cork but I think we need to inject...adrenaline into the system, if you like, in terms of getting apartments built and we need to be very careful with how we do that because you can make mistakes by introducing tax incentives to encourage certain types of building,” Mr Coveney said.

“We have seen that in the past and we have seen ghosts estates all over the country. So I think the government will be very cautious in this area. But I think there is a recognition that we need to look seriously at how we can help the building of more apartments to match all of the offices that are being built at the moment in the city centre.”

Mr Coveney defended the government's record but accepted that much more needs to be done: “This year we will add over 10,000 social housing units to the stock and next year it will probably be 12,000. So we need to continue to accelerate that program so that families that are homeless today can have social housing options.

“We also need to ensure that we have a functioning rental market that also gives options for families - whether they are supported by the state or not."

He said rents are too expensive in Ireland: “Again it’s a supply problem - and so we are looking at ways in which we can drive more construction of apartments in city centres. It will be one of the things that we are looking at carefully in advance of this budget.

“If you look at a city like Cork, there are a number of developers and builders that have permission to build large-scale apartment complexes around the city. They are not building them at the moment because they can’t make the numbers add up and we need to look at that to see if we can improve the economics of that.”

Mr Coveney said the government is very aware that focusing on one sector could have a distortion impact on other sectors, but he said they are looking at specific measures to fast-track the delivery of apartments.

In 2017, the government changed the planning laws in a bid to fast-track, through An Bórd Pleanála, the delivery of housing projects above a certain size. But the Irish Examiner revealed last week that construction has started on fewer than half of the large-scale housing and apartment schemes approved under this process.