Judicial review of plans to build homes on site of former mental hospital will add €30m to cost of scheme

The former Central Mental Hospital in Dundrum, Dublin: Land Development Agency estimates judicial review will delay proposed housing scheme by at least two years. File picture: Frank Miller 

A judicial review launched against the Land Development Agency for a project at the former Central Mental Hospital is likely to add €30m to the cost of the scheme, the Oireachtas housing committee has heard.

John Coleman, the chief executive of the LDA, said there would be a significant delay to the project and described judicial reviews as a risk.

“The impact of the delay of the challenge has been to add at least €30m on to the estimated delivery cost of that scheme,” Mr Coleman said.

“We’re not out of the woods yet, we haven’t got a positive planning decision and we don’t know if we’ll get a further challenge.”

Under questioning from Cork South Central TD Seamus McGrath, Mr Coleman estimated the judicial review would delay the construction of the scheme by “at least two years”.

The scheme itself would see 852 houses built on the site of the former Central Mental Hospital in Dundrum, Co Dublin.

The LDA chief confirmed there were no other judicial reviews being taken against the agency’s sites at present.

Meanwhile, Sinn Féin’s housing spokesperson Eoin Ó Broin questioned Mr Coleman on the LDA’s position on further powers to compulsorily acquire lands for housing development.

Mr Coleman said: “I think those powers, additional [compulsory purchase order] powers, would be welcome. Our current powers are limited to where it provides access to State land.”

The LDA appeared at the Oireachtas housing committee just hours after the Government confirmed changes to its remit, increasing its powers on the acquisition of private land and allowing it to develop private housing on public lands, alongside its development of cost-rental and affordable housing.

Housing minister James Browne also confirmed the Government would begin the process of lifting corporation tax from being charged on the LDA.

Finance minister Paschal Donohoe said a decision on the matter had been made “in principle” with Mr Browne, but the mechanics of removing corporation tax on the LDA would be done in the “context of the budget”.

“What the cost of it will be will depend on the number of units that end up accessing it,” Mr Donohoe said, adding work was ongoing within his department on the matter. However, he declined to give an estimate.

Mr Browne said it was never intended for corporation tax to be charged on the LDA. He said it had led to higher rents for cost-rental tenants, while also reducing the agency’s capacity to build more properties.

Changes to the LDA will also see any project level commitments no longer being required to be reviewed by NewERA – the Government’s commercial advisory body — to increase approval speeds.

Legislation to reform the LDA is due to be brought to Cabinet in the “near future”, government sources said.

In its appearance at the committee, the Housing Agency outlined the falloff in private rental properties, saying the drop in supply would be “significant”.

Chief executive of the Housing Agency Martin Whelan said a lack of “forward investment deals” would cause a collapse in the supply of new private rental units.

According to Mr Whelan, between 2018 and 2022, institutional investors supported the delivery of 2,000 private rental units each year.

However, this has fallen off in recent years, with the State stepping into the market.

Mr Whelan also described the ongoing capacity constraints in the construction sector as a “significant barrier to delivery”.