The recently announced National Development Plan 2021-2030 (NDP) will support the largest public housing programme in the history of the state. The overall plan identified funding of €165bn over the next 10 years. The funding allocated to housing in the first five years of the plan accounts for almost 30% of all investment expenditure at €17.6bn. The scale of this investment demonstrates the challenges facing the housing sector and the acute need for investment.
The NDP reinforces the critical goals laid out in the government’s Housing for All strategy, which was launched in September 2021. With Ireland’s population forecast to grow by over 1m in the period from 2016 to 2040, there is a need to accommodate around 600,000 new households by 2040. To achieve this the Department of Housing plans to deliver almost 400,000 new homes in Ireland between 2020 and 2031. This is equivalent to 33,000 new homes per annum. The scale of the task is evident when set against a backdrop of actual new home completions of c. 20,500 in 2020.
The National Planning Framework targets growth in our city population by a minimum of 28% by 2040. Minimum growth of 50% is anticipated in each of Cork, Galway, Limerick and Waterford.
New Home Completion Targets
The NDP identifies a number of key strategic pillars to supporting housing development:
The LDA and AHBs are some of the main tools for delivering the housing targets. The goal is to increase the number of houses owned by local authorities and AHBs to provide homes for the most vulnerable in society. It is clear that the plans encourage a state-owned housing portfolio, which is a far more economical model of delivery for the Exchequer.
With the wide range of housing needs, there will be significant opportunities for the private sector to support the delivery of housing in the years ahead. From a site development perspective, the various government initiatives provide different options to finance and realise a scheme. For example, units can be sold to a local authority under its social fund and then managed by the AHB.
While historically developers could retain housing stock and refinance construction facilities with investment facilities and collect the annual rental income from the AHB or local authority, this will not be an option in the future. Capital markets will flex to the new systems.
With high costs of developing funding, it is important that developers forward-plan housing sales to allow for efficient use of capital. Having a guaranteed take-out sale to a local authority should underwrite the business case and financial viability of a scheme.
At Crowe, we have vast debt advisory experience for residential and mixed-use development schemes. Our dedicated real estate team can work with you to structure development finance and manage a transaction with a local authority. We will ensure that you receive a high-quality, cost-effective service, tailored to your needs. To find out how Crowe can help your business navigate the opportunities and challenges presented by the changed landscape, please contact a member of our real estate team today.