The Government earlier this week made an intervention in a High Court action it is facing over one of the most significant housing policy decisions taken since it came to power.
It was characterised in the Dáil as a “dramatic climbdown”, but how did things get here, and what exactly is going on?
In July, Minister for Housing James Browne announced wide-ranging changes to design standards for apartments as part of a push to close a so-called “viability gap” in the sector.
The problem, as diagnosed by Browne and the Government and the building sector, was that big-money international funds had abandoned Irish apartment construction and the absence of associated capital was slowing building to a crawl.
RM Block
Department of Finance statistics showed that in the month the rule changes were announced, just 201 apartments were commenced – a 78 per cent decrease on the same period a year earlier. There was also a large fall-off in planning applications for apartments, dragging the annual figure down.
The apartment design standards were one of three big interventions as the Coalition went for broke trying to jump start the sector. None of them has come without political controversy.
In June, Browne announced reforms to the rental sector which he said would drive investment and supply. These are expected to take years to force down rents, which are likely to continue drifting upwards in the meantime.
In the budget, corporation tax cuts and VAT changes for apartments were introduced, leading the Opposition to brand it a budget for big builders.
The design standards were no different. While builders praised them, critics argued they would lead to smaller and darker apartments. There was always the risk of a court challenge and, sure enough, one emerged. It was taken by four local councillors (three from Opposition parties) and former Irish Times environment editor Frank McDonald.
The case caused major gnashing of teeth in Government Buildings, with the Coalition left scrambling to counter its effects. It has been technical stuff, with the case resting largely on a failure to undertake a strategic environmental assessment for the new guidelines, which the applicants claim was necessary.
The proceedings have also been occasionally colourful. In his High Court affidavit, McDonald outlined how he took the case while he could instead of “spending my time reading novels and drinking champagne on our planted terrace”.
Market observers and participants have been clear since its inception that it could have a chilling effect, as developers baulk at the related uncertainty and ask could the new rules be relied on? What would happen to developments designed in line with them if the court struck them down?
In other words, a stall – the exact opposite of what Browne would have wanted.
On Monday, the High Court was told that the Government is moving to replace the guidelines with a National Planning Statement – which will involve an environmental assessment.
Labour leader Ivana Bacik described this as a “dramatic climbdown”, with one of her party’s councillors, Darragh Moriarty, among those who took the challenge.
More accurately, it might be a rushed attempt to backfill what should have been done in the first place. By replacing its own revised guidelines, the Government is trying to put in place a hastily constructed safety net.
If it loses the case, an alternative regime built on more solid foundations may end up in place. Equally, if it is appealed or referred to Europe, this may provide a confidence fillip to the sector to forge ahead amid ongoing uncertainty over the new rules.
Meanwhile, the Government continues to argue in court that the assessment was never needed in the first place and promises to defend the case to the hilt – an impressive slice of what Boris Johnson used to term “cakeism”.
All the while, the housing crisis rumbles on, and pressure continues to build to move from rhetoric to results.
