Housing challenges harming Ireland's attractiveness and competitiveness

Ibec, the group that represents Irish business, says Government must urgently deliver a suite of ambitious policies to speed up the delivery of much-needed housing, and improve viability and affordability.

As it launches a major new housing report (attached below) ttoday as part of its ongoing “Better Lives, Better Business” campaign, Ibec says in a recent CEO survey over 70% of companies identified the availability of housing for staff as a challenge to their business operations in 2023, with 30% identifying it as a major challenge. Over 27% of businesses identified the impact of housing availability on employees as one of their top 3 external priorities for their business. 

Marking the launch of the report, Ibec Executive Director of Lobbying & Influence Fergal O’Brien said: “The crisis in the availability of affordable housing in Ireland is becoming the critical barrier to the continued growth and development of business investment. An inadequate supply of affordable housing is the single largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible. 

“The housing crisis has increasingly become a concern in relation to cohesion in the workplace and society more broadly. Younger workers, in particular, are financially pressed by ever-higher rents and the receding prospect of homeownership. This ultimately spills over into issues around well-being and productivity in the workplace, while in the longer-term, if left unchecked, will also create emerging challenges in terms of pension adequacy and people’s broader stake in society over the coming decades.

“From an employer perspective, there is a need to reinvigorate the policy drive around the availability and affordability of housing in the context of these challenges. This will require a suite of measures to improve the viability and affordability of homebuilding, such as addressing emerging financing deficits, reform of the planning and procurement system to speed delivery, a ramping up of ambition in affordable and cost-rental housing, and significant investment in skills and modern methods of construction. From an affordability perspective, our proposed fiscal measures would reduce the cost of a typical €400,000 new home by €30,000 and this could be achieved with immediate effect.

Ibec’s new housing report outlines the following key recommendations:

To bring a stronger collective momentum to addressing the housing crisis:
1. Intensify work through the Labour Employer Economic Forum (LEEF) to address sustainable solutions for the delivery of adequate supply of affordable housing in the private market and through public provision.

To increase public housing delivery:
2. Set a more ambitious role for local authorities and Approved Housing Bodies (AHBs) through the delivery of social, cost-rental and broader affordable homes with a target of 20,000 units annually before the end of the decade, with greater delivery of affordable and cost-rental units.

To reduce purchase costs to buyers:
3. Create a State fund, ultimately funded by the Local Property Tax (LPT) but initially by the Exchequer, to subvent the cost of Section 48 and 49 special and supplementary levies for new residential units, where the infrastructure benefits users across the local community rather than just the new home purchaser. 
4. Introduce a VAT refund order worth 5% of a new home for purchasers of new build homes on a temporary basis under Section 103 of the VAT Act to help offset the rising costs of construction and supply chain challenges in the sector. 

To address the funding deficit:
5. Significantly increase funding through the Irish Strategic Investment Fund (ISIF) and Home Building Finance Ireland (HBFI) to ensure adequate development finance in the market.
6. Improve access to domestic sources of funding for affordable residential development, linking domestic savings to the development of affordable homes, by implementing a risk appropriate income tax incentive for investments in designated residential development funds, mirrored on the Employment Investment Incentive Scheme (EIIS) and in line with the 2017 report of the ‘Working Group On The Tax And Fiscal Treatment Of Rental Accommodation Providers’.

To improve delivery timelines:
7. Progress the Planning and Development Bill which has the potential to improve the timeliness and efficiency of the current planning system and ensure bodies such as An Bord Pleanála, the soon to be established Planning and Environment Division of the High Court and other relevant agencies have the resources needed to recruit and retain significant numbers of additional staff with relevant expertise in order to reduce planning backlogs and improve timeliness. 

To maintain a functioning rental sector:
8. Implement improved tax treatment of landlords’ expenses, while also ensuring greater security for tenants – through the multiannual rollout of greater resourcing for local authorities and the Residential Tenancies Board (RTB) to meet a 25% annual rental inspection target, a deposit protection scheme, and a national car testing (NCT) equivalent scheme for the accommodation rental sector. 

To boost offsite construction activity:
9. Engage and collaborate with manufacturers and the construction sector to ensure that a portion of future social and affordable housing be completed using offsite construction methods, to create a strong level of demand certainty for investment in modern methods of construction.

To address skills shortages and productivity:
10. Continue to increase investment in Further Education and Training Centres to address waiting lists as quickly as possible, build out digital and other relevant skills in modern methods and introduce accelerated capital allowances for investments in advanced automation, Building Information Modelling (BIM), robotics and digital technologies in the construction sector.