28,786 units in large developments await ABP permission

There are 28,786 proposed units in a series of large housing and apartment developments currently awaiting a planning permission decision from An Bord Pleanála, according to a new analysis.

The Annual Construction Sector Report from consultants Mitchell McDermott found 59% of the applications before An Bord Pleanála for Strategic Housing Developments (SHD) last year did not receive a decision.

Permission was granted for just 12,715.

The SHD system was a fast-track planning process for schemes of 100 apartments or houses that closed to new applications early last year and was replaced with the Large-Scale Residential Development scheme.

“Everyone knows the board has had its issues this year, but to have so many units delayed amid a housing crisis is unacceptable,” said Paul Mitchell, director, co-founder and an author of the report.

“You would imagine this backlog could easily be addressed by drafting in additional temporary resources from private practice here or from the UK and we believe this should be done straightaway.”

The sizeable backlog at the planning board meant there was a 79% drop in the number of judicial reviews lodged against SHDs last year.

The analysis found that a total of 31,125 units in SHDs that got planning permission over the past five years have been subjected to judicial reviews.

“Just 10% or so have gone ahead, 10,727 units were quashed, while 17,805 are still awaiting a decision from the courts – a total of 28,532 units,” said Mr. Mitchell.

The blockage in the planning system last year was coupled with a significant increase in construction costs, which drove the cost of a two-bed mid-range apartment up by 9.6% or €21,000 to €25,000, according to the report.

As a result, the so-called “hard” or material cost of building such an apartment has now reached over €240,000, the research found.

The main drivers were brickwork which jumped 39%, concrete which climbed 27% and mechanical and electrical services which rose 18%.

When other costs such as site works, margin, VAT and other indirect costs are added, the total cost of delivering this average apartment reached €460,000.

However, in more positive news, Mitchell McDermott predicts that generated construction inflation will moderate to between 5% and 7% this year, down from 12% last year.

The report highlights delays in decision-making at An Bord Pleanála

“Delays due to judicial reviews, and spiraling construction inflation have all contributed to the dramatic drop off in commencements we are seeing,” said Mr. Mitchell.

“The fact institutional investors have begun moving away from property investment as interest rates continue to rise has created a very challenging environment and one in which the Government will clearly struggle to hit their Housing for All targets of 33,000 units per annum.”

However, the report estimates that in reality, 50,000 units a year are now needed, along with a planning system that moves more quickly.

The analysis also points to the volume of units that have received planning permission but have not begun yet and could be used to ramp up output.

It says that over the four years to last year, 103,057 SHD units were granted planning permission, but 28% or 28,755 have yet to begin construction.

“Our analysis found the issue surrounding non-commencements is not clear-cut but viability features front and center,” Mr. Mitchell said.

“33% of these developments are related to regional apartments which are simply not viable,” he said.

“Another 17% haven’t proceeded due to viability challenges. In 17% of cases the site was sold while in a further 10% of cases permission had only recently been granted,” he added.

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