[Article] Levies set to slow new homes

Victor

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Levies set to slow new homes
19/09/04 00:00
By Susan Mitchell

The supply of new homes will slow dramatically because of an increase in the levies that builders must pay to local authorities, an economist has warned.

Geoff Tucker, of estate agent Hooke & MacDonald, said property prices would rise because of the increased costs faced by developers.

Local authorities nationwide raised €151million in development levies in 2002, but under the new Development Contribution Scheme, they will receive between €500 million and €700 million a year.

Tucker said the increased levies would be passed on to purchasers and raise property prices from the middle of next year. As the market is price sensitive, some property schemes are likely to become non-viable and will be postponed, he said.

``This will in fact lead to a curtailing of supply of new homes. Such a reduction in the supply of new homes will not be welcomed, particularly in Dublin where supply is still lagging demand,'' said Tucker.

The Construction Industry Federation (CIF) and the business community have expressed concern at the greatly increased charges, which were brought in this year. The levies go towards public infrastructure and facilities and vary greatly.

For example, the developer of a 2,000 sq ft house in Kildare will pay €18,000 under the new guidelines. The developer of a similar house in south Dublin is required to pay €11,500.

Some local authorities have increased their charges by as much as 300 per cent.

In February, the CIF sought a judicial review of the scheme adopted by Dublin City Council. The High Court ruled that the council's procedures were compliant in law, but the CIF will take its case to the Supreme Court in November.

Victor

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A sting in the tail from local authorities
19/09/04 00:00
By Susan Mitchell and Tina-Marie O'Neill

When a couple living in south Dublin were granted planning permission for a large extension to their existing home, they were overjoyed.

There was, however, an unexpected setback awaiting them. Dun Laoghaire Rathdown County Council demanded a payment of about €10,500, under what was termed the Development Contribution Scheme.

Given that the couple's extension will cost about €150,000, that represents a significant additional cost.

More importantly, it was something they had not budgeted for, and knew absolutely nothing about.

“We cannot afford to move, so we decided to extend. A levy of €10,500 is a huge amount of money for us; but the real problem I have with the levies [under the Development Contribution Scheme] is the fact that they are not very clear or visible from the outset,” said one of the partners.

“It all seems very underhand, and we had no knowledge of it whatsoever when we applied for planning permission. It is not actively advertised. Our architect didn't know about it - I couldn't even find it on the council's website. We got our planning permission, and were suddenly hit with a €10,500 bill.”

One of the more interesting aspects of this tale is the fact that, had the couple fallen under the jurisdiction of a different local authority, they might not have faced any charge whatsoever.

Dublin City Council, for example, would not have charged the couple a cent for their extension (apart from the fee charged for the planning application itself).

Development contributions are a well-established practice in Ireland, but for several months, the Construction Industry Federation, the wider business community and the general public have expressed concern at the greatly increased development charges.

Section 48 of the Planning and Development Act (2000) enables a planning authority, when granting planning permission, to attach conditions requiring the payment of a contribution in respect of public infrastructure and facilities benefiting development of the area of the planning authority.

This relates to public infrastructure and facilities that are provided, or that it is intended will be provided, by or on behalf of a local authority, regardless of other sources of funding.

The four Dublin local authorities - Dublin City Council, Fingal County Council, Dun Laoghaire Rathdown County Council and South Dublin County Council - decided to engage consultants to prepare draft development contribution schemes for the four authorities.

As part of the brief, the consultants were to provide a sound, justifiable, logical, equitable and accountable basis for the determination of the financial contributions. The following classes of public infrastructure - roads, water and drainage, community and parks, and regeneration - receive funding from the scheme.

A spokesman for Dun Laoghaire Rathdown County Council said the charges for the development contribution scheme had been introduced last March.

“When people are adding an extension, they pay €100 per square metre for extensions over 40 square metres in size.

"If a proposed extension is, say, 50 square metres, they pay the difference,” he said.

In other words, someone building a 50 square metre extension would pay €1,000 for the 10 square metres over the 40 square metre threshold. Dun Laoghaire Rathdown County Council charges €11,500 for every new residential unit built, irrespective of size or the type of property.

The charges imposed by local authorities throughout Ireland vary greatly, as they are arbitrary. Fingal County Council also has a 40 square metre threshold for extensions. It charges €129 per square metre for any extension over 40 square metres.

People building new houses are charged €129 per square metre.

Kildare County Council imposes no levy whatsoever on straightforward residential extensions. “We considered it, but decided against it, in the interests of fairness. We just felt it would be too much,” said a spokesman.

The levies charged by Kildare County Council for new homes under the scheme range from €11,000 to €18,000, depending on the size of the residential property. The builder of a 186 square metre plus house faces a €18,000 levy, €6,500 more than his Dublin city centre counterpart.

In Cork, anyone applying for permission to extend their existing private home will not be charged a contribution fee for the first 60 square metres of the build.

Applicants seeking planning permission for conventional houses are not subject to any contribution for the first 40 square metres, but will be charged for every square metre over that if services are available.

Rates differ depending on the location of the property.

For example, someone wishing to build a house spanning 150 square metres in an urban or rural area within Cork city and the surrounding areas where all services are existing or are planned will have to pay €56 per square metre for every metre over 40 square metres.

So the contributions for a 150 square metre house would be €6,160.

However, if the same house does not have all the services available, the contribution rates are lower, and can range between €18 and €47 per square metre.

Similarly, planned dwellings in urban or rural areas in north or west Cork have rates ranging between €18 to €44 per square metre depending on what services are available.

In Co Kerry, people who wish to build an extension to an existing dwelling where services are already connected will not be charged a contribution levy.

However, those seeking permission for private dwellings where the property will be connected to a public water supply or public sewer will be charged a standard fee of €1,265 for water and €2,535 for sewerage services.

Under the current contribution scheme, private dwellings are not required to pay contributions for roads or amenities.

Limerick County Council adopted a contribution scheme last December, based on future infrastructure developments planned for the next seven years.

Some areas of the county have undergone high levels of development in the past and the council has introduced different contribution rates to discourage more development in these “pressure areas”, and to encourage more development in rural areas.

Limerick city and its environs, as well as Castleroy and Caherdevin, are deemed to be highly developed. Therefore, rates for newly-built properties of up to 200 square metres in these areas will require a contribution of €10,500 per unit where services already exist.

Houses over 200 square metres will require an additional fee of €52.50 per square metre.

People looking for planning permission for private dwellings in smaller, less developed towns that have sewerage schemes in place will have to pay €4,700 for homes up to 200 square metres and an additional €23.50 per square metre thereafter.

Other towns and villages without sanitary services, of which there are about 70 in which the council are encouraging development, are charged a total of €3,700 for up to 200 square metres, and an additional €18.50 per square metre over that.

Individual houses outside these areas, and those which don't have access to public water mains, will be charged between €2,700 for up to 200 square metres and an additional €16 for every square metre over that.

Contribution payments are not required for people building an extension to a private dwelling in Co Waterford, except where new services are availed of. Rates for building conventional houses in the county are broken down into costs per square metre for separate services.

For example, someone looking to build a private house where services are connected will be required to pay €5 per square metre up to 150 square metres as part of a roads contribution, €10 per square metre for their water supply and €5 per square metre for community facilities.

If the house is to be connected to waste water and surface water services, a further €15 and €10 per square metre contribution is required.

This means that people seeking to build a house which spans 150 square metres will be charged €750 for roads, €1,500 for water supply and €750 for community services, and may have to pay a further €3,750 for waste and surface water services.

In Galway, contribution rates for residential units differ depending on location, and people building extensions to private houses don't pay a contribution fee.

Anyone seeking to build a house in Tuam, Athenry, Loughrea, Gort and other towns in the surrounding area can be charged up to €6,600 per unit if sewerage, water and recreation/amenities services already exist.

People applying to build a private dwelling within the boundaries of all other towns, villages and settlement areas will be charged a maximum of €4,800 if all services are available. A maximum of €2,900 is required for new units using public services in all other areas.

Victor

Continued

The increased levies, which are also charged to developers who are building housing and apartment schemes, have greatly angered the Construction Industry Federation (CIF).

“The scale of the new levies being applied is unprecedented.

“The total amount of levies raised by local authorities nationwide in 2002 was €151 million. Under the new scheme, local authorities will raise in the region of €500 million to €700 million per annum,” said the CIF, which also argues that the system by which this money is to be spent is not open and transparent.

The CIF sought a judicial review of the development contribution scheme proposed by Dublin City Council.

The industry body felt that its concerns regarding the legality and arbitrary nature of the new development levies had been ignored.

It sought a judicial review of the scheme, but the High Court ruled that the procedures adopted by Dublin City Council in preparing the scheme were compliant with the Planning and Development Act 2000.

On the surface, this would appear to be a matter between local authorities, builders and developers.

But all costs affect consumers.

One industry source said the new levies would result in a serious increase in the cost of new houses in certain areas.

“It's a cost and all costs are passed on to the buyer,” he said. “It will result in an increase in the cost of housing.”

The CIF is to appeal the decision to the Supreme Court.