State will bulk buy apartments, confirms Michael McGrath

Big developers have called on the Government to give them subsidies up front at the start of the development cycle to secure finance. File picture: Denis Minihane

Finance Minister Michael McGrath has said the State will enter new arrangements to bulk buy apartments in a bid to accelerate housing construction.

It comes after Taoiseach Leo Varadkar held a housing conference with charities, approved housing bodies and developers earlier this week to hear suggestions on how the Government could help ease the worsening crisis.

Both Mr Varadkar and Housing Minister Darragh O’Brien have acknowledged that a shortfall in commencements will impact the number of homes being built in 2024. Developers have warned the Government that projects are not viable due to rising interest rates and increased material costs.

Big developers have called on the Government to give them subsidies up front at the start of the development cycle to secure finance.

Speaking to reporters in Cork, Mr McGrath confirmed the Government will create new arrangements to ensure the building of apartments. Currently there are 70,000 apartments that have received planning permission in towns and cities.

“We recognise there are genuine viability challenges for a lot of private developments around the country, in particular high-density apartment developments in our cities. The truth is without State intervention and involvement, very many - if not most - of the developments that already have planning permission simply won’t happen,” Mr McGrath said.

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“We want compact development. We want to build up populations living within our city centres, so the State is going to have to become more involved to make sure it can continue the progress in increasing supply because we’re very much aware of the headwinds the sector is facing in terms of viability challenges, increased costs, labour shortages.

“I think you will see new arrangements entered into whereby the State is essentially committing to fully backing developments and taking those units for social housing, affordable rental and purchase as well.”

Mr McGrath said it was expected that Mr Varadkar would seek to shine the spotlight on a number of issues while returning to the Taoiseach's office when asked if there is tension between Mr Varadkar and Darragh O’Brien over the progress of the State’s Housing for All plan.

Hospital overcrowding

On addressing the overcrowding crisis in hospitals, Mr McGrath said Health Minister Stephen Donnelly is working with the HSE in a bid to accelerate the recruitment of additional staff and create more capacity.

He said there is frustration over the length of time it takes to build extensions to hospitals in order to create capacity, and he said it was important to acknowledge that the combination of Covid-19, RSV and flu right now is “exceptional in nature.”

“The number of presentations that we’re seeing at our ED [emergency department’s] is way above and beyond what was expected even in a worst-case scenario by the HSE,” he said.

“The key demand that I’ve been listening to over the last couple of weeks from experts is the need to add capacity."

He said the Government's aim is to see winter without a crisis in hospitals but said despite adding almost 1,000 additional beds to the system in the last two-and-a-half years, the population is growing more quickly than expected - as well as an aging population which adds pressure to the system.