The need for an all-encompassing strategic approach to housing policy is clearly evident in the continued accommodation supply crisis.
The Irish government is actively taking steps to tackle this concern with important policies such as ‘Housing for All’ aiming to promote home ownership. While this is a positive step in the right direction, it’s also vital that we look at the rental sector, and how the sector has a role in helping to alleviate the current lack of available housing.
Peter Horgan, Managing Director of Grayling Properties, shares his insights on how in order to deliver sustainable and affordable rental schemes, we need to focus on designing for the future – optimising the gross-to-net ratio and maximising the number of units per floor. In Ireland, Build-To-Rent (BTR) and co-living planning designations helped achieve this and must be re-introduced if we are to tackle the rental crisis. On top of this more regional autonomy is necessary to allow areas to decide what policies fit their needs. BTR was removed due to arguments that there was a proliferation of these types of schemes in Dublin City. However, no regard was given to our regional cities where none of these schemes have been built and where rental inflation has gained pace. Recent data from Daft highlights this with rental inflation in Galway and Cork City running at 15.7% and 10.2% YoY respectively, while in Dublin it has slowed to 4.3% as new BTR schemes come to the market.
SUPPLY AND DEMAND IMBALANCE
Property website Daft.ie previously reported that, although rental accommodation has slightly increased in previous months, availability across Ireland is still “extremely tight”. This “extraordinary shortage” has resulted in less than 1,800 homes available to rent across Ireland as of the 1st of November, showing that the imbalance between supply and demand is still prevalent.
To help ease this imbalance, the government should consider well-regulated, high-density rental products and schemes such as co-living and BTR in city centres. Currently in Ireland, the viability of city centre residential is limited due to height restrictions, land costs, and the removal of planning designations such as BTR and co-living. This lack of availability is an issue in cities across Ireland, not just Dublin – at the time of writing, only 44 rental properties are available in Cork City and 27 in Galway City. With the recent news of the government’s plan for an elected Mayor in Limerick and a possible Dublin plebiscite, it’s an opportune time for the cities in Ireland to be given more regional autonomy regarding how best to tackle housing issues. In a European context, Ireland is an outlier in terms of the lack of regional autonomy for the planning and development of its cities.
Madrid recently altered its regulations to promote co-living within a new residential category called ‘shared residence’. This move meant that Madrid became one of the first cities to approve a regulation that covers existing models, such as co-living, aimed specifically at young professionals and students. Copenhagen is another European city that has recognised the need for single/couple occupancy units and used its regional autonomy to implement it. In its 2020 Municipal Plan, Copenhagen adjusted its minimum size regulations to allow 50% of new developments to have a minimum size of 40sqm. These are prime examples of regional autonomy, and how it can positively affect cities and deliver what is needed for that City.
BTR schemes are purpose-built residential accommodations built specifically for long-term rental. The schemes are managed by professional landlords or property management companies, allowing them to provide a consistent level of service and support to tenants. The BTR planning designation allowed for a greater mix of studios and one-bed units which are particularly required in our city centres where we have a lot of young professionals, and the greatest demand is for single/couples occupancy. This flexibility in the mix helps to deliver more efficient buildings with better gross-to-net ratios thus driving down cost per apartment and allowing for more affordable rents. These schemes are required to have significant amenity space which helps maximise human connections within the built environment. Popular in mainland Europe where long-term renting is more widely spread, the housing sector in Ireland needs more BTR as the renting demographic moves more towards younger people and long-term renting.
The schemes can offer solutions to the current demand and supply issues faced by cities and large towns across Ireland by providing an increased volume of rental properties that fit tenants’ needs. BTR can also help to professionalise the rental market. At the moment, the majority of rental properties are managed by individual landlords. This can lead to discrepancies in the service and support received by tenants. Privately managing a rental property as an individual landlord is not always viable money-wise. If they sell up, it means there are even fewer properties available on the rental market.
We believe the Irish government should urgently reintroduce BTR to help with the current housing crisis and housing supply issue.
Co-Living is a real estate term that is on the rise across the globe, especially in cities like San Francisco and Hong Kong where housing can be expensive and inaccessible. Co-living is a modern form of communal living – residents rent a private studio and share communal areas with other residents.
In a recent article, Savills stated that in the UK the activity in the co-living sector has more than doubled since the pandemic, with 51% of European investors planning to invest in co-living over the next 3 years. They believe that this increased popularity is also due to the emphasis on community and resident interaction, and how it can support a sustainable lifestyle.
Co-living can give life to vacant properties and provide a practical solution to overcrowded cities and growing populations sustainably. With Rathmines House, an upcoming co-living development that Grayling Properties will launch, we will help introduce co-living to Dublin City, and at the same time increase the supply of accommodation in this highly-sought-after area. In co-living developments, shared resources and spaces can reduce individual carbon footprint, need for appliances, waste and energy use. It also offers tenants the flexibility of not being tied to long-term leases and having to furnish an apartment themselves.
Co-Living falls under the net of banned BTR schemes in Ireland. We believe, at a minimum, that it should be reintroduced for the conversion of stranded or derelict office buildings. Rathmines House is an example of how a disused office building can help to tackle the housing-supply issue. The building, previously used by the Technological University Dublin, is being renovated into a high-quality residential development with 110 self-contained studios and best in class communal spaces. It will contribute to the development of the Rathmines areas while providing much-needed accommodation for professionals at the same time.