Ireland after NAMA

It’s not just Ireland’s newest build of unfinished estates that requires maintenance, restoration and completion work. The Royal Hibernian Academy (RHA) have just released a statement, reported in the Irish Times, concerning the fate of some of Ireland’s historic buildings, such as the Hume Street Hospital in Dublin, bought by developed Michael Kelly for €30 million in 2006. They note that such buildings are suffering in two respects. First, that some of them are being left to the mercy of the elements, with nature doing a fair amount of damage to the structures. Second, that some of them are being visited by plunderers and vandals. For example, in the Hume Street case, the roof has been plundered of lead and building of copper piping, and no doubt ornamental fittings and other items. Belcamp College, on the north side of Dublin, was recently ransacked and set on fire.

The RHA strongly criticise NAMA for failing to ensure that developers with properties in their portfolio properly secure and maintain historic buildings. They argue that ‘conduct of omission as in itself an act of vandalism.’ They have accused the organisation of ‘not taking its legal responsibility seriously in regard to appropriate protection of several historic buildings currently under their ownership’ and said its ‘response to our approaches to them . . . has been evasive and ambiguous’. NAMA it said, would not admit to possessing the loan book on certain historic properties and would not any commitment with regards to safeguarding them. In this sense, NAMA is staying true to form, as it’s hardly a paragon of openness and transparency.

NAMA has responded by stating that it does not directly own any of the properties, only the loan books, and a spokesperson for the agency said that ‘it is incorrect to say that Nama has a direct responsibility in this area’, although it ‘has directly taken action with the property owners or with the relevant authorities to try to ensure that the properties are properly secured.’

However, properly secured is not the same as properly preserved and in response, the RHA has said that ‘section 141 of the 2009 Act that established Nama gave it the authority to seek “entry and maintenance” orders in the District Court to secure any building “at risk from trespassers or vandalism”.’ They would clearly like to see NAMA be much more proactive in forcing developers to secure and preserve Ireland’s architectural heritage.  The alternative route will be, as with the Hume Street Hospital, seeking planning enforcement notices to try to force both the developer and NAMA to take action.  That action has been taken by Dublin City Council and it requires repairs to be carried out by April 29th (this Friday).  Having to serve notice on NAMA to ensure saving some of our most historic buildings is not an ideal way to proceed, but it might well be the principle route open to the RHA and others unless a more proactive approach is adopted by the agency and developers.

Rob Kitchin

The Northern Ireland Construction Bulletin 1^st October to 31^st December 2010 has just been released by the Northern Ireland Statistics and Research Agency (NISRA). The results show a further reduction in construction activity in Northern Ireland with the total volume of construction output in the fourth quarter down by 5.1% from the third quarter in 2010. Year on year the decline is even greater with a 15.2% drop from quarter four in 2009.

The Index of Construction provides a useful view of the overall decline of construction related activity in Northern Ireland from 2005 up to now. Much like the decline in the Republic, perhaps not as rapid, the Northern Ireland index began to drop from 2007 onwards and gathered pace in early 2009. Quarter four 2010 represents the seventh consecutive quarter on quarter drop in the index.

For more information on construction related data in Northern Ireland see the NISRA Central Survey Unit website.

Justin Gleeson

Way back in October 2010 the DEHLG released the results of it’s Unfinished Estates Survey. The survey found that there were 2,846 unfinished estates across the country containing 121,275 housing units: 65% ‘completed and occupied’ (78,195), 19.2% ‘completed and vacant’ (23,250) 8.2% ‘near completion’ (9,976) and 8.1% still at ‘various stages of construction’ (9,854).

Following the results of the initial survey an Advisory Group on Unfinished Housing Developments produced a report that highlighted  350  of these estates as posing an immediate safety hazards to residents. All local authorities were contacted to assess the current ‘safety’ situation of the estates in an attempt to ensure that developers would take responsibility for vacant, unfinished homes and uncompleted site areas.

Local Authorities have since reported that a total of 180 estates across the country have now been completely abandoned by developers. The department is due to release €5million to county and city councils to deal with public safety issues on these sites in the coming weeks. It is expected that the 180 ‘abandoned’ estates will be first in line for intervention. In the IT today Willie Penrose, Minister of State for Housing, is quoted as saying “Any expenditure approved by my department must be ultimately recouped from the existing or future owners and developers of such sites in order to protect the public purse.”

Justin Gleeson

The print version of the property section in The Guardian carried a piece by Grahan Norword on the property bust in Spain (I can’t find an online version, so apologies for no link).  The headline was: ‘Building bust after the boom casts a shadow over property in the sun.’  The tagline: ‘Unhappy buyers, corrupt councillors, illegal homes – all part of the storline in a new Spanish soap opera.’  It provides some interesting figures regarding the Spanish property sector, and the story being told is not wildly dissimilar to Ireland – falling prices, negative equity, a glut of unsold new property – though there are some differences, particularly with respect to some developments being deemed illegal and being knocked, and politicians being jailed for taking bungs from developers.

The piece reports that there are approximately 600,000 new unsold homes (Ireland c. 23,000) and 200,000 part-complete unsold homes (Ireland c. 20,000). If you scale the Irish population (4.5m) to Spain (46m), then it’s clear the unsold, brand new property overhang is significantly worse in Spain (by a factor of 3); the part-complete units though are broadly comparable.  The article does not discuss the phenomenon of unfinished estates, but one presumes that a large number of households are living on either under-construction estates and/or estates with high vacancy.   The official house price fall is 17% (Ireland is c. 40% – see here for latest roundup of estimates), though estate agents are reporting 20-50% depending on area.  Holiday homes are down c. 40%.  There has been a 43% collapse in the value of Spanish construction industry and drop in land values of c. 50% (Ireland c. 70-95% depending on location).  On top of the unsold units, Spanish banks are apparently sat on a glut of repossessed homes, which they are obliged to release to the market after two years (meaning they will start to flood onto the market from later on this year).  In addition, the issue of illegal build rumbles on.  For example, 12,697 homes were recently declared illegal in the Almanzora Valley in south-east Spain, 920 of which are earmarked for demolition, leaving owners in a precarious position.

What the article makes clear is that both Ireland and Spain share some broadly similar issues with regards our respective housing markets, which perhaps isn’t a surprise when you look at the rate both countries were building properties at the peak of the boom.

Housing unit completions per 1000 population for Europe in 2007

Rob Kitchin

Carl O’Brien has a nice series of pieces in the Irish Times on the crisis and Irish towns.  He started on Saturday with a portrait of Youghal (How do you fix a broken town?) and today has a piece on Charlestown (The leaving of Charlestown).  Three other towns will be covered this week – Longford, Drogheda and Dun Laoghaire.

This passage is from the Youghal article and nicely sets out the issues facing the town and many others in the country, and the challenges we face in terms of how we plan and try to revitalise urban settlements with respect to economic development, retail provision, housing, community, sense of place, etc.

“Youghal’s town centre is dying. Unemployment has soared with the closure of old industries, and the economic centre of the town is in danger of collapse. Young people are leaving in search of work elsewhere. Poor planning decisions at the height of the boom have also left it with unsightly and largely empty apartment blocks.

The downward spiral of a town like Youghal is only a single tragedy in a much larger story. Crippling unemployment, financial insecurity and emigration are exacting a heavy toll on towns like it across the country. Statistics and indicators of economic growth or joblessness tell you only so much. They don’t show the carnage that results from the collapse of industries, or the shattering experience of joblessness.

Towns like Youghal are filled with the stories of people struggling to find work, or battling to hold on to it, of families under strain or torn apart by emigration, of generations-old family firms biting the dust.

What is worse is that the decline of these communities isn’t just explained by the sad and inevitable legacy of history. There is a sense of neglectful, or indeed deliberate, public policies by local and national government that squandered opportunities and laid the foundation for their decline.

Yet there are also stories of hope, of new businesses setting up in the teeth of the recession, of jobless people retraining and carving out opportunities for themselves, and of towns rediscovering a resilience that few realised they had.

The future of these towns is uncertain, though one thing is clear: with the Government’s coffers empty, and increasing uncertainty about our ability to lure foreign investment, they will need to draw on their inner strengths to remake themselves and prosper once again.”

The big question here is, ‘how do towns and local authorities rise to O’Brien’s challenge of remaking themselves?’  There are no easy answers, but we need to start on this path to try and head off further decline.  Up until now, the government focus has been on the macro-scale – the banking collapse, IMF/EU bailout, the budget deficit, smart economy, etc.  The fallout from these macro concerns, however, is felt on the ground in local, everyday life.  Our policies need to reflect this and to be working at a localised scale; to be addressing what is happening to people in their immediate surrounds.  We have a very long way to go to translate macro policies with tackling how the crisis is manifested in towns, villages and rural communities.

Rob Kitchin

The CSO has reported on planning permissions for Q4 2010 and 2010 as a whole.  The number of planning permissions Q4 2010 for houses is down -37.5% on Q4 2009 (3,457 to 2,159), apartments are down -47.6% (1,507 to 790) between the same periods.  The overall difference is -40.6%.  For 2010 as a whole, house permissions are down -56.7% and apartment permissions are down -50% on 2009.  With reference to 2007, and the tail end of the boom, the number of unit permissions in 2010 has dropped -81.5% for houses (62,828 to 11,604) and 68.1% for apartments (21,569 to 6,874).  The total number of planning permissions for all developments Q4 2010 was down from 5,137 to 4,373 (a drop of -14.9%).  For 2010 as a whole, total permissions were down -27.6% from 2009, permissions for extensions were down -16.4%.

Given the state of the economy and property sector this isn’t any great surprise.  Nor is the pattern of permissions, with 43.6% of all housing unit permissions in Q4 2010 for one-off houses.  For 2010 as a whole, one-off houses accounted for 48.1% of house unit permissions (5,582 units).  In 2007, one-off houses were 29.5% of all house unit permissions (18,555 of 62,828 units).  One-off permissions in 2010 are thus down -69.9% from 2007 levels.  In terms of what was actually built in 2010, one-off housing constituted 63.2% of all houses built – 7,914 of 12,514 (DEHLG 2011).

Regardless of the decline in one-off permissions from the height of the boom, a debate seems desirable on how sustainable this pattern of permissions/build is over the long term.  On the one hand are arguments relating to individual rights, culture and ‘way of life’, and on the other, the costs of servicing one-off houses, the costs to the environment and landscape, and the vulnerability of dispersed, long commuting populations to rising oil prices.  This is clearly a contentious and highly politicised issue, but then what planning issue isn’t?  Our strategy so far has largely been to ignore such debates and plough on with a laissez faire approach designed to sate local demand and leverage councillor’s votes.  As for whether we need to be awarding any permissions at all, given the vacancy and under-construction rates of both residential and non-residential property in the state, also seems like a debate worth having – on the one hand, the construction industry is in severe difficulties and needs investment, on the other the solution to over-supply is not more supply (and scare stories about there only being between 1 to 12 months supply in most areas by some vested interests lacks compelling evidence and credibility – see our post here).

One anticipates, given the state of the property market and the lack of access to credit for construction projects, that the planning permission figures for 2011 will continue their downward trend.  At least this might give us some breathing space for thinking about what kind of planning system and pattern of development we want.  The present government’s line seems to be to undo the good parts of the Planning and Development (Amendment) Act, that tried to tighten up the laissez-faire elements, and head back to the planning system that operated during the boom.  If that’s the kind of planning system we want, then we deserve what its outcomes will be.

Rob Kitchin