The Planning and Development (Amendment) (Large-scale Residential Development) Act 2021 (the LRD Act) sets out proposed new arrangements for “large scale residential developments” (LRDs), which will supersede the existing Strategic Housing Development (SHD) process, due to lapse on 25 February 2022. The SHD process was introduced in 2016, with the intention of speeding up the planning permission process for “well designed large-scale housing developments” on land already zoned for residential developments. The SHD provisions were always subject to a sunset provision, with an original expiry date of 31 December 2019. That date was pushed out to December 2021 following a review of the SHD system in 2019, and again to 25 February 2022 as a result of the Government’s COVID-19 related extensions to planning timeframes.

The LRD Act does the following:

  1. Inserts a new definition of “large scale residential development”/”LRD” into the Planning and Development Act 2000 (the PDA), which is very similar to that applicable to SHD. Specifically, the LRD Act defines a LRD as:
    • A development comprising 100 or more houses;
    • Development of student accommodation units that includes 200 or more bed spaces; or
    • A development of a combination of student accommodation and houses, where such development includes at least 100 or more houses or 200 or more bed spaces.

A key change from the definition of SHD is that the LRD provisions will allow for up to 30% of the gross floor space of the proposed development to be for commercial use – up from 15% under the SHD framework.

  1. Provides for applications for LRDs to be made to local planning authorities in the first instance, as opposed to An Bord Pleanála (the Board). This is in contrast to SHD applications, which go directly to the Board. Following the planning authority’s decision on a LRD application, an “LRD appeal” to the Board will be available. Consequently, LRDs will be subject to a potential “two-step” consenting process once the Bill is enacted, with judicial review also available following the Board’s decision.
  2. Establishes a mandatory, time-bound consultation process with the planning authority before the developer submits its planning application. Following that consultation, the planning authority must issue an “LRD opinion”, which states whether the relevant documents submitted constitute a “reasonable basis on which to make an application for permission for the proposed LRD“. The Regulatory Impact Analysis submitted with the General Scheme of the Bill in July 2021 noted that the intention of this process is for developers to submit higher quality applications, and in turn to reduce the number of appeals to the Board.
  3. Provides for an exception to the above framework where the application is located within a Strategic Development Zone (SDZ), the zoning of which facilitates the proposed use. In such instances, the developer may submit the relevant application directly to the planning authority without first needing to obtain a LRD opinion. The new pre-application consultation processes are not mandatory in these circumstances, and the new definition of “LRD appeal” does not apply to such applications. This position is currently the case for applications for planning permission within a SDZ.
  4. Sets out a transitional framework for existing SHD applications. Once the LRD Act commences, the existing SHD process will remain relevant where:
    • There is an application for SHD already pending
    • The developer has already completed pre-application consultation with the Board, and the Board has already given its opinion. A SHD application can then be made within 16 weeks of commencement of the LRD Act, i.e. a deadline of 16 April 2022, (allowing for the additional nine day period under section 251 of the PDA). Developers must notify the Board of their intention to take this route
    • Requests for consultation have been made on or before Friday, 17 December 2021.  Applications can be made within 16 weeks of the Board’s opinion. Again, developers must notify the Board of their intention to take this route.

The LRD Act also removes the current mechanism for amending an existing SHD permission under section 146B of the PDA. Accordingly, holders of SHD permissions will not be able to alter them using this route.

For further information on this topic, please contact Alison Fanagan, Consultant, Jason Milne, Partner or any member of A&L Goodbody’s Environmental and Planning team.

The Residential Tenancies (Amendment) (No.2) Bill was signed into law on 11 December 2021. Its main provisions are summarised in this post.

What is the Bill seeking to achieve?

This Bill has 3 primary purposes, as follows:

  1. An amendment to the current provisions around rent increases in RPZs, so that those increases will now be to the rate of general inflation evidenced by the Harmonised Index of Consumer Prices (HICP) or 2%, whichever is the lower – in other words, rent increases track inflation, subject to a cap of 2% per annum;
  2. The introduction of what the Government refers to as “tenancies of indefinite duration” by removing the landlord’s ability to terminate a Part 4 tenancy on a no fault basis at the end of the 6 year period;
  3. A temporary waiver in respect of annual registration fees in respect of each further Part 4 tenancy that exists on the commencement of the requirement for the annual registration of tenancies with the RTB (expected in Q1 2022).

Rent increase provisions

These provisions amend the current prohibition on any rent increase in an RPZ from exceeding general inflation (as recorded by HICP) to insert a new condition that the rent last set cannot increase by more than 2% per annum pro rata.

A review of this provision is to be carried out between 12 and 15 months after it comes into operation with a report on that review to follow within 3 months.

As was the case previously, the rent-setting restrictions do not apply where a there has been no tenancy of the property for the immediately preceding 2 year period (or 1 year for protected structures). There are no other changes with regard to the setting of rent / RPZ, exceptions, notice provisions etc..

The section also provides for the deletion of the Minister’s power to prescribe an index other than the HICP for the purposes of restricting rent increases in RPZs. The view of Government is that this power is no longer necessary, given the new provisions.

The provisions around rent review commenced upon enactment.

Tenancies of unlimited duration

The Government made a commitment in the Housing for All plan to introduce what it refers to as tenancies of unlimited duration. Having taken the advice of the Attorney General and “taking account of constitutionally protected property rights”, it has introduced the provisions set out in section 5 of the Bill in order to achieve this aim.

Section 5 provides for enhanced tenancy protections on the basis that once a Part 4 tenancy is established it is for an unlimited duration, and not subject to expiry at the end of a six-year term should the landlord exercise their right to terminate the tenancy as currently provided for under section 34(b) of the 2004 Act.

The concept of “further Part 4 tenancies” is also to be removed, as these will no longer be of relevance – where any existing Part 4 tenancy is renewed, rather than commencing a further 6-year Part 4 tenancy it will now become a tenancy of unlimited duration.

As a result of these provisions all Part 4 tenancies will, over time, become of unlimited duration. As existing and further Part 4 tenancies terminate, expire over time or are renewed, this process will involve the creation of a new tenancy of unlimited duration in respect of a dwelling, should it remain in the rental sector.

Existing tenants may seek the consent of their landlord to have their current tenancy treated as a tenancy of unlimited duration. However, the landlord will not be compelled to grant their consent. Where consent is not granted, the existing protections of the Act will apply until the term of the Part 4 tenancy expires. The stated aim of Government is “to transition to tenancies of unlimited duration, while respecting the constitutionally protected rights under section 4 of the Residential Tenancies Acts, 2004 to 2021”.

There are no changes to the bases upon which a landlord can otherwise terminate a Part 4 tenancy – for example, the sale of the property, its substantial refurbishment etc.. The change that the Government has made is therefore a limited one, removing the landlord’s ability to terminate on a “no fault” basis at the end of the 6 year period.

Section 6 provides that the duration of tenancy under any tenancy of unlimited duration and under any preceding Part 4 tenancy and/or further Part 4 tenancy would be treated as one tenancy in calculating any termination notice to be given. This is intended to maximise the termination notice period to be given to a tenant.

Both provisions will apply prospectively in respect of tenancies commencing from 11 June 2022.

Waiver of annual registration fees

Section 7 amends section 134 of the 2004 Act, regarding the obligation to apply to register a tenancy. It provides that, subject to conditions, where a landlord applies to register a further Part 4 tenancy before the commencement date of the requirement for annual registration under sections 22 and 23 of the Residential Tenancies (Amendment) Act 2019 (expected in quarter 1 of 2022), and where that tenancy still exists on that date, no annual registration fee shall apply in respect of that further Part 4 tenancy only. Any new tenancy of unlimited duration that commences will be liable to an annual registration fee.

To be eligible for the temporary fee waiver, any outstanding registration fee associated with the relevant application to register a further Part 4 tenancy prior to the roll-out of the annual registration must be paid within one month of the commencement of the requirement to register tenancies annually. The temporary annual registration fee waiver is being provided for existing further Part 4 tenancies in recognition of the registration fee payments already made to date in respect of relevant tenancies.

The commencement of this provision requires ministerial order, with the Government’s stated intention being to commence it at the same time as the commencement of the requirement under the Residential Tenancies (Amendment) Act 2019 for annual registration of tenancies with the RTB. This is expected to take place in Q1 of 2022.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

The construction sector has welcomed the easing of COVID-19 restrictions since April as sites have fully re-opened across the country. However, despite the surge in activity, the industry now faces new problems in the form of price inflation.

The Irish Times reported in April that the price of materials has been increasing from between 5% to 20% across timber, insulation, plastic piping and other key construction materials. Indeed, an Irish Home Builders Association market survey published in May 2021 was found to be outdated within two months of issue, such was the pace of price inflation. In August, project management company Turner and Townsend reported increases of 35% in the price of some building materials and ongoing complaints from builders and their suppliers that prices for key materials are rising across the board.

The increase in materials prices can be attributed to a number of factors outlined below.

Factor
COVID-19
  • COVID-19 has exacerbated the issue of both demand and supply and for nearly 18 months there was a slowdown in the production of materials due to national and international lockdowns. The spread of the virus also impacted the ability of raw materials providers to harvest or mine and now, as we emerge from the pandemic, there has been a huge spike in demand leading to price inflation.
  • In a recent Construction Industry Federation survey, 80% of builders noted steel price increases, while over 20% experienced difficulties in obtaining steel. Turner and Townsend reported that builders believe that labour costs will grow by over 4% and material prices by nearly 7% over the next 12 months.
National issues
  • There has been an increase in the amount of people renovating or extending their homes and the demand for new builds. The Irish Times reported that planning applications for extensions increased by 45% in the last quarter of 2020 in comparison to the same period in 2019. In May, the Irish Times reported on a number of building material suppliers being forced to limit or suspend their orders.
  • Shortage in timber supplies is also posing particular issues in Ireland. The Irish Times has attributed this to the backlog in approving forestry licenses. Government officials are issuing less than half the new forestry licences needed to tackle an ongoing shortage in timber supplies.

Global demand

 
  • Reuters has reported a backlog of uncompleted work in the US due to shortages of raw materials and labour. A survey conducted in May 2021 by the Institute for Supply Management found companies and their suppliers continue to struggle to meet increasing levels of demand and reported that “record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments” of US manufacturing.
Brexit
  • Brexit has further complicated supply chain issues internationally, with tariffs applying to both imports into the UK from the EU and imports into the EU from the UK. These tariffs vary by product and have led to further price increases. As a result of the introduction of a border for trade to/from the UK, supply chain lead times have increased. Getting to grips with new customs compliance measures has driven costs for construction companies upwards, as they seek to understand the new regulatory environment.
Blockage of Suez Canal
  • The blockage of the Suez Canal in March 2021 for nearly a week was another significant shock which blocked supply chains from Asia to Europe and beyond for several weeks following the incident.

From a legal perspective, as the price of construction materials continues to soar, parties to construction contracts or who are in the process of negotiating such contracts are becoming more focused on who should bear the risk of such cost increases.

The Royal Institute of Architects Ireland standard form contract places the risk of price inflation for materials on the employer under clause 36 (although for larger projects this position is often reversed, with the contractor shouldering the risk). Going forward, if the cost of materials continues to soar, developers and contractors should consider at the earliest opportunity how the risk of price inflation for materials and labour can be best managed and also how it will be allocated under the construction contract.

For further information on this topic, please contact Siobhan Kearney, Senior Associate or any member of A&L Goodbody’s Construction & Engineering team.

3 September 2021 has been appointed as the commencement date for the following elements of the Affordable Housing Act 2021​:

Part 2: Affordable dwelling purchase arrangements (other than subsections 2(c), (6) and (7) of section 6 which relate to housing authorities (i) potentially entering into arrangements with the LDA and (ii) being required to have regard to its own housing services plan);

Part 4: Provision of funding to purchase equity share in dwellings;

Part 6: Amendments to Part V of the Planning and Development Act 2000;

Part 7: Miscellaneous (relates to agreements with financial institutions in respect of affordable housing under the Planning and Development Act 2000 and the Housing (Miscellaneous Provisions) Act 2002); and

Part 8: Repeals.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

It won’t have passed you by that the Government’s Housing for All strategy was published yesterday. It is available to read in full here.

​The strategy consists of 4 key pathways:

  1. Pathway to Supporting Home Ownership and Increasing Affordability;
  2. ​Pathway to Eradicating Homelessness, Increasing Social Housing Delivery and Supporting Social Inclusion;
  3. Pathway to Increasing New Housing Supply; and
  4. Pathway to Addressing Vacancy and Efficient Use of Existing Stock.
Many of the key actions under each pathway have already been taken e.g. introduction of the Land Development Agency, the shared equity and cost rental schemes brought in by the Affordable Housing Act 2021, the expansion of Part V requirements from 10% to 20%, the extension of rent pressure zone designations to 2024 and the linking of RPZ rents to inflation.​​
However, it also touches on further developments which are yet to come e.g.:
  • ​the introduction of indefinite tenures for residential leases (note this is stated to be “subject to legal advice”) – expected Q4 2021;
  • strengthening of the oversight of tenancies by the introduction of an annual registration process – timeline unspecified​​;
  • increased enforcement of registration of tenancy requirements through measures such as the expansion of data-sharing arrangements between Revenue and the RTB – expected Q1 2023;
  • amendment of the residential tenancies legislation to provide for default conciliation as part of the dispute resolution process – expected Q1 2022;
  • examination of the potential for creation of a system of deposit retention based on best international practice – expected Q2 2023;
  • implementation of minimum BER standards for the private rental sector – expected Q1 2025;
  • ending long term leasing of social housing by local authorities and Approved Housing Bodies and focus on delivery models which ensure long term ownership of social housing homes – expected by end 2025;
  • ​develop active land management powers with fairer sharing of the increase in land values resulting from zoning decisions via a new system of Land Value Sharing (securing a proportion of the value uplift of a development site, tracked from zoning to planning permission) – expected Q4 2021;
  • develop proposals for new Urban Development Zones – expected Q4 2021;
  • introduce new planning process for large scale residential developments to replace the Strategic Housing Development process – expected Q4 2021;
  • reform of judicial review process and introduction of new division of the High Court for planning and environmental cases to reduce planning delays – expected Q2 2022;
  • comprehensive review and consolidation of planning legislation – expected to commence Q1 2022;
  • introduction of a new tax to activate vacant lands for residential purposes, to replace the vacant site levy – expected Q4 2021.​;
  • introduction of a new vacant property tax (on residential homes) – collection of data to commence Q2 2022;​​​
  • commencement of s9 of the Local Government Rates and Other Matters Act 2019 with a view to empowering local authorities to offer rates-based incentives for the conversion of suitable vacant commercial properties to residential use – expected Q1 2022;
  • development of new regulatory controls requiring short-term and holiday lets (ie Air BnB type arrangements) to register with Fáilte Ireland with a view to ensuring that homes are used to best effect in areas of housing need – expected Q2 2022;
  • regulatory reform under Multi Unit Developments legislation to ensure owner management companies are financially stable and provide for expenditure of a non-recurring nature (i.e. sinking funds) – expected Q4 202​​2;
  • examination of measures to accelerate conveyancing as part of the sale and land transfer process – expected Q4 2022.​
We will keep you advised as each of these developments come on stream.
For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

Two Statutory Instruments have been published relating to the Affordable Housing Act 2021 (the Act):

1.  SI No. 424 of 2021: Affordable Housing Act 2021 (Commencement) (Parts 1 and 3) Order 2021

This appoints 19 August 2021 as the commencement date for Part 1 (​Preliminary and General) and Part 3 (Cost Rental Dwellings) of the Act; and

2.  SI No. 425 of 2021: Affordable Housing Act 2021 (Cost Rental Designation) Regulations 2021

These regulations provide for the process whereby the owner of a dwelling can apply to the Minister for Housing, Local Government and Heritage to have that dwelling designated as a cost rental dwelling under Part 3 of the Act. Their provisions can be summarised as follows:

General

Application for designation as a cost rental dwelling is to be made to the Minster for Housing (the Minister). An owner can apply for the designation of multiple dwellings under the one application. An application cannot be formally submitted in advance of the applicant acquiring title to the property.

The applicant must declare:

  • that they will comply and will take all reasonable sets to procure that their successors in title will comply with the obligations of an owner of a cost rental dwelling under Part 3 of the Act; and
  • that all factual statements contained in their application are true and correct to the best of the applicant’s knowledge, information and belief and that the applicant has taken all reasonable measures to confirm that the information provided is true and correct as at the date of the application.

Accompanying documentation

Any application must be accompanied by documentary evidence to establish:

  • The applicant’s title, which in the case of lease must mean that the remaining term must be equal to or exceed the minimum cost calculation period (40 years). This is to be evidenced by either a certified copy folio or a certified copy of the deed to the owner;
  • Any incumbrances affecting the dwelling;
  • The written consent of the holder of any estate or interest in the dwelling or any incumbrancer (the form of which is provided for in Schedule 4 to the Regulations, as replicated at Appendix 4 to this memo);
  • The estimated market rent for the dwelling, to be evidenced by a statement provided by a person licenced to provide letting services under the Property Services (Regulation) Act 2011;
  • The capital costs incurred in acquiring, developing and otherwise making available the dwelling for designation as a cost rental dwelling on the indicative designation date;
  • The funding arrangements for meeting the capital costs; and
  • The arrangements for payment of any costs to be incurred in financing expenditure to meet the capital costs, including fees and interest payments incurred through debt financing.

The application must include a cash-flow statement showing the estimated rental income and estimated expenditure for each year of the proposed arrangement.

Additional information can be requested by the Minister. Where such additional information is provided, the applicant must make a revised declaration that all factual statements contained in the application are true and correct to the best of the applicant’s knowledge, information and belief and that the applicant has taken all reasonable measures to confirm that the information provided is true and correct as at the date of the application.

Cost rental designation

Once the application has been successfully processed and approved, the applicant will receive a cost rental designation document.

Where the owner is happy to proceed with the cost rental designation of the dwelling on the basis of the details set out in Part A of the cost rental designation document (which includes details of the minimum cost rental period, the cost calculation period and the initial maximum rent), they are required to signify their consent by completing part B of the document and returning it to the Minister within 7 days.

Where the owner is not satisfied to proceed, they can request that the Minster amend certain details in the document (what these details are is unspecified in the Regulations).

Once the Minister’s seal has been applied to the document, the designation is complete.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

The Land Development Agency Act 2021 (the Act) was signed into law by the President on 21 July 2021. This Act gives legislative underpinning to the Land Development Agency (LDA) which was established in 2018.

The LDA has been created to coordinate public-owned land for more optimal uses where appropriate, with a focus on the provision of housing. The Act formally establishes the LDA and provides for everything from its functions and powers to its corporate structure and funding.

In this post we look at some of the main features of the Act.

PART 2: LAND DEVELOPMENT AGENCY

Part 2 of the Act details the functions of the LDA. These predominantly relate to the management and development of “relevant public land” and preparation of that land for development to facilitate the provision of housing for the public good;

The LDA is also empowered to provide certain services to local authorities, as follows:

  • the preparation of masterplans and carrying out of appraisal of the development potential of sites;
  • the application for development consents, permissions and other approvals in relation to sites;
  • the provision of infrastructure to service sites for housing;
  • the provision of housing and carrying out of ancillary works as part of wider urban development; and
  • the management of cost rental housing.

Local authorities can request the LDA to provide such services in relation to the development of sites for housing and urban development that are either (i) large scale, multi-tenure or mixed-use development sites or (ii) located in a town with a population of at least 30,000.

PART 7: REGISTER AND ACQUISITION OF RELEVANT PUBLIC LAND BY AGENCY

Register of Relevant Public Land

The LDA is tasked with establishing and maintaining a register, to be known as the Register of Relevant Public Land (the Register), to record details of both land owned by the LDA and “relevant public land”.  Relevant public land is defined as all land within a town with a population of more than 10,000 which is owned by a local authority or other public bodies listed in Schedule 1 and 2 to the Act.

The Register will be available on the LDA’s website and will contain the following information:

  • a description, including area and location, of the land;
  • an ordnance survey map or other suitable map approved by the LDA showing the relevant public land;
  • information as to whether the land is:
    • the subject of a planning application to develop 5 or more dwellings; or
    • land which has been exempted from the provisions of Part 9, which sets out the requirements for development of dwellings on relevant public land.

Information which can be requested

The LDA can request information from a relevant public body, to include:

  • an analysis by the relevant public body of whether the retention of relevant public land owned by that body is necessary for the performance of its functions;
  • information regarding current and previous use of the land; and
  • information regarding the costs incurred by the relevant public body in using or maintaining the relevant public land and any profit or loss made by the body in that use or maintenance.

The LDA can also inspect the land, as required.

Report to Government

The LDA must report to the Government on relevant public land and on land owned by it within 12 months of the relevant provision of the Act coming into operation and every 2 years after that. The report must detail, in respect of each parcel of land:

  • the objectives of the development plan and local area plan in force for the area where the land is located;
  • any masterplan affecting the land;
  • the potential for development of the land in conjunction with contiguous sites that also constitute relevant public land or land owned by the LDA;
  • the cost of provision of infrastructure and development costs estimated by the LDA to be associated with the use to which the land may be put;
  • the priority, having regard to the nature of the land, proposed to be given to its development relative to other relevant public land or land owned by the LDA and the period within which that development is proposed to take place; and
  • any housing strategy for the area where the land is situated.

Right of first refusal on relevant public land

A relevant public body cannot dispose of relevant public land unless it has given notice of the proposed disposal and offered the land for sale to the LDA within the period of 12 months immediately prior to the disposal. The LDA is entitled to seek further information with regard to the proposed disposal. The LDA must decide whether to acquire or refuse to acquire the land within 8 weeks of the latter of (i) receipt of the notice of the proposed disposal or (ii) receipt of any further information requested from the public body.

Direction to acquire land

Alternatively, the Government can direct the LDA to acquire land owned by a public body, in which case it has 4 weeks to notify the relevant body that the land in question will be acquired.

Valuation

Land is to be acquired at market value. Market value is to be determined by a third party according to a process to be prescribed by the Minster for Housing. Minister O’Brien, in introducing the Bill to the Dáil, stated that “in effect this is an affordable land value which in reality will be a minimal price”.

Vesting orders

Where land is acquired in accordance with the above powers, the Minister for Housing can make a vesting order in relation to the land in question which will operate to vest the land in the LDA without any further conveyance, transfer of assignment.

Disposal of land by the Agency

The LDA can dispose of land owned by it with the consent of the Minister for Housing (having consulted with the Minister for Public Expenditure and Reform) where that land is no longer required for the purposes of the Act / the performance by the LDA of its functions. The consent of the Minster is not required where the LDA is providing housing for rent or purchase.

PART 8: COMPULSORY PURCHASE

Power to acquire land compulsorily

The LDA can compulsorily acquire land (i.e. land  owned by a party other than a “relevant public body”) if in its opinion the land is situate in an area in respect of which the applicable housing strategy identifies a need for housing and the land is necessary:

  • to provide access to relevant public land or land owned by the LDA, or
  • to facilitate the provision of roads, water or other services or utilities required by housing on relevant public land / land owned by the LDA.

As such, the LDA’s compulsory purchase powers are essentially site assembly powers where the development in question is anchored around a publically-owned site. Such compulsory acquisition is only possible where the LDA has first made a reasonable attempt to acquire the land by agreement.

PART 9: REQUIREMENT IN RELATION TO DEVELOPMENT OF DWELLINGS ON RELEVANT PUBLIC LAND AND FORMER RELEVANT PUBLIC LAND

Requirement to provide dwellings for cost rental / sale

Part 9 deals with the provision of affordable housing on relevant public land and former relevant public land. There will be a requirement for a proportion of housing provided on such land to be made available for affordable housing by the LDA or any other developer acquiring such land.

Where an application for planning permission is made to develop 5 or more dwellings on land which is relevant public land on the date when section 75 of the Act comes into operation, the relevant local authority (or An Bord Pleanála on appeal) can require that the applicant enter into an agreement providing for the percentage of the housing to be built and:

  • designated and leased as cost rental dwellings; or
  • transferred on completion to (i) the ownership of the planning authority or (ii) the ownership of eligible applicants nominated by the housing authority in accordance with a direct sales agreement within the meaning of the Affordable Housing Act 2021.

The specified percentage applicable to such agreements is:

  • 80% in relation to housing to be built on land located in the area of a town with a population of 150,000 or more; and
  • 50% in relation to housing to be built on any other land.

In both cases the units are to be constructed by the applicant. The agreement will also identify the units to be transferred / designated.

These provisions apply in addition to the requirements of Part V of the Planning and Development Act 2000 (as amended). The applicant must, when making its application, specify the manner in which it proposes to comply with the requirement were the planning authority to attach such a condition to the permission and, where the planning authority then goes on to grant such a permission, it must have regard to those proposals.

The specified percentage provided for in the Act is subject to change, upwards or downwards subject to a cap of 80%, by the Minister for Housing having regard to the likely future demand for cost rental dwellings and dwellings for sale in the State. The Minster has the ability to set different percentages for different geographical or administrative areas.

Exemptions

This requirement does not apply to planning applications for development consisting of the provision of houses by a body approved for the provision of housing to households assessed as being qualified for social housing support, where such houses are to be made available for letting or sale.

The Minister for Housing can also exempt public land from this requirement where the land:

  • is owned by a body which the Government is satisfied is required to act in a commercial manner and the sale of which has been consented to by (i) any Government Minister that holds shares in the body and (ii) the Minister for Public Expenditure and Reform, subject to the re-investment of the proceeds of such sale by the body for the purposes of the performance of its functions;
  • is referred to in Schedule 3 to the Grangegorman Development Agency Act 2005 and is owned by TUD (these are the properties previously owned by DIT); or
  • is owned by a local authority that wishes to dispose of the land in order to use the proceeds of sale for the purposes of the performance of its public functions.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

Part 6 of the Affordable Housing Act 2021 will introduce important changes to Part V of the Planning and Development Act 2000, which is the mechanism which allows local authorities to obtain a certain percentage of land zoned for housing at existing use value as opposed to development value.

These changes are as follows:

  • The Part V contribution will now apply to cost-rental as well as social and affordable housing.
  • The percentage of a new development to be transferred to the planning authority in satisfaction of Part V has been increased from 10% to 20%. It remains possible to satisfy this in ways other than a transfer of the land the subject of the permission (e.g. transfer for other land or the grant of leases).
  • Where the Part V requirement is being satisfied by virtue of a lease arrangement, that can now be by a lease to persons nominated by the authority (e.g. Approved Housing Bodies).
  • The new 20% requirement will apply to all planning permissions granted after 1 August 2021.
  • Transitional provision have been included where the permission is granted during the period beginning on 1 August 2021 and ending on 31 July 2026 but where the land to which the application  for  permission  relates  was  purchased  by  the applicant, or the person on whose behalf the  application  is made,  during  the  period  beginning  on  1  September  2015 and ending on 31 July 2021.  In such circumstances, the Part V requirement will continue to be 10%.
  • The size of development at which one can seek exemption from Part V has been reduced to fewer than 5 dwellings (where previously it was fewer than 10 dwellings).

For further information on this topic, please contact Jason Milne, Partner,  Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Environmental and Planning or Real Estate teams.

There are two main schemes contemplated by Part 2 of the Affordable Housing Act 2021:

  • Direct sales agreements; and
  • Equity share scheme.

This post will consider how each scheme is intended to operate.

Direct sales agreements

Housing authorities can enter into arrangements with an entity to provide dwellings for affordable housing such that that entity can sell units directly to eligible applicants nominated by the housing authority (removing the need for them to take the asset onto their books first).

The entities with whom the housing authority can enter into such arrangements are:

  • Those with whom the housing authority has a contract for the provision of dwellings for the purposes of affordable housing;
  • Approved Housing Bodies;
  • The Land Development Agency;
  • Public private partnerships with whom the authority has entered into an arrangement; and
  • Those with whom the authority has entered into a Part V agreement

(collectively referred to in the Act as direct sales developers).

The terms of such arrangements will include:

  • A requirement that the dwellings specified in the agreement be sold directly to eligible applicants nominated by the housing authority in accordance with a scheme of priority;
  • The terms and conditions (including as to price) on which the dwellings are to be sold;
  • A requirement that the direct sale will not be completed until the eligible applicant has entered into an affordable dwelling purchase arrangement with the housing authority;
  • Terms relating to arrangements for the completion of sales, notification of sales to the housing authority etc..

Where the total amount due to the direct sales developer is less than the amount due to them under the arrangement that they have with the housing authority, the shortfall is to be made up by the housing authority. The inverse also applies, with the developer to transfer to the housing authority any profit that it makes from the direct sale over and above the amount due to the developer under its arrangements with the housing authority.

Equity share scheme

Housing authorities can also enter into arrangements with the ultimate purchaser whereby the authority makes a contribution to the acquisition of the unit (a discount from market value in the case of the sale of a dwelling provided by the housing authority, including through a Part V agreement, or a financial sum in the case of the purchase of an open market dwelling) and is then entitled to an equity share in the dwelling – this being the so-called “equity share”.

The share will be the proportion that the affordable dwelling contribution bears to the market value of the affordable dwelling on the date on which an enforceable agreement is made for its purchase by the eligible applicant. The market value for the purposes of this section will be as determined by the housing authority.

General provisions

Before making dwellings available under an affordable dwelling purchase arrangement or by way of the equity share scheme, the housing authority must notify the public of its intention to do so.

Where an applicant is married, in a civil partnership or in a relationship with someone with whom they intend to reside in the affordable dwelling, they have to apply together and not as individuals.

Applicants will only be eligible if:

  • their combined financial means are within the parameters to be set down by ministerial regulation;
  • they are first-time buyers; and
  • they are entitled to reside in the State.

The requirement to be a first-time buyer is qualified such that it will not apply where an individual:

  • previously bought with a previous partner and that relationship has now ended and they are now applying to purchase on their own or with a new partner;
  • lost their prior home as a result of an insolvency or bankruptcy process; or
  • previously owned a home which, due to its size, is no longer suited to the applicant’s current accommodation needs.

Housing authorities will establish schemes of priority to determine the order of priority to be applied to eligible applicants where a scheme is oversubscribed.

Equity share mechanics

A housing authority can facilitate the purchase of affordable dwellings by means of a contribution (the affordable dwelling contribution) which:

  • In the case of (i) affordable dwellings made available by a housing authority for the purpose of sale to eligible applicants under affordable purchase arrangements and (ii) dwellings to which a Part V agreement applies that are being made available for sale, will be the difference between the market value of the affordable dwelling and the price paid by the by the applicant; and
  • In the case of open market dwellings (i.e. dwellings for which the housing authority is providing financial assistance to eligible applicants to purchase), will be the amount of the financial assistance provided by the housing authority towards the price paid by the applicant.

Government can make regulations providing for the price to be paid by the applicant for an affordable dwelling and the amount of the contribution to be paid by the housing authority.

The housing authority will be entitled to a beneficial interest in the property (the affordable dwelling equity) which is to be the proportion that the affordable dwelling contribution bears to the market value of the property.

Terms of the arrangement

The housing authority and applicant will enter into an affordable dwelling purchase agreement which will contain certain specified details e.g. record both the affordable dwelling contribution and the affordable dwelling equity, make provision for redemption payments, set the date after which the affordable dwelling equity can be realised by the housing authority, contain covenants around maintenance of the property etc..

The owner will be prohibited from selling or charging the property without the prior written consent of the housing authority, not to be unreasonably withheld.

The affordable dwelling purchase arrangement must be registered as a burden on the title.

The housing authority can enter into priority arrangements with lenders lending to the homeowner, but only where the authority considers that such an arrangement will (a) enable the applicant to obtain a loan for the purposes of purchasing the dwelling or (b) to refinance or obtain further advances on an existing loan.

Redemption of equity share

Redemption and release of the affordable dwelling equity can take place by way of:

  • The making of redemption payments by the homeowner;
  • Payment by the homeowner following a sale of the dwelling (which requires the housing authority’s consent);
  • Realisation of the equity following a “realisation event” e.g. default by the homeowner, bankruptcy of the homeowner, destruction of the property etc..

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.

The Affordable Housing Act 2021 (the Act) was signed into law by the President on 21 July 2021. Commencement of the Act requires further ministerial order.

The Act is referred to by the Government as “the most comprehensive standalone affordable housing legislation in the history of the State” and does the following:

  • Allows local authorities to build, acquire and make available homes at prices which are below open market levels;
  • Introduces the shared equity scheme which is designed to help bridge the gap between the market value of a home in the private market and what an individual or couple can afford;
  • Introduces the cost-rental letting model into Ireland; and
  • Makes changes to Part V of the Planning and Development Act 2000, most importantly amending the current 10% minimum requirement for social homes and increasing this to 20% for social and affordable homes.​

The Act has yet to be published by the final version of the Bill can be found here.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer or any member of A&L Goodbody’s Real Estate team.