Business

Yes, housing’s in crisis - but adding a builders’ fee is not the answer

Passing the cost of fixing outdated sewer network for 660,000 properties on to new home buyers is not an equitable approach

A drop-off in housebuilding was the main drag on the sector, but was partially offset by a rebound in commercial and civil engineering activity. Picture by Ben Birchall/PA Wire
Much of the new housing in Northern Ireland is provided by small builders, producing 15 or 20 homes a year. Should they be required to pay up to £300,000 in advance to obtain water and sewer connections at some indeterminate time in the future?
By David Little

There is a housing crisis in Northern Ireland. It’s not an overnight occurrence, but rather something which has built up over an extended period of time. So we’re trusting that the publication of a Programme for Government will see housing as one of the Executive’s priorities for the remainder of this mandate, up to 2027.

As chair of the Forum for Better Homes NI, which was established to consider the issues facing Northern Ireland and to provide solutions, I meet with people working across the public, private and not-for-profit sectors. All face the same challenges of seeking to find suitable land, as well as navigating a cumbersome and slow planning system.

As has been widely publicised recently, there is a lack of capacity in water and wastewater infrastructure. All are committed to playing their part in helping the region make the transition to net zero, at a time when there is a skills shortage in the construction industry and rising building materials costs

According to the Department for Business and Trade, from July 2020 to 2022, construction material costs increased by 46%. The phasing out of the use of red diesel in the construction sector has added an estimated £5,000 to the cost of building a new house.

In his column on July 25, Newton Emerson suggested the solution to both Northern Ireland’s housing crisis and the long-standing and chronic underfunding of our sewerage system could be easily solved by forcing house builders to pay upwards of £150 million a year in fees to the Department of Infrastructure, which in turn could provide the necessary funds to Northern Ireland Water (NIW). Given the multiple challenges which house-builders face, this is not feasible.

Much of our new housing is provided by small builders, producing 15 or 20 homes annually. Should they be required to pay up to £300,000 a year in advance to obtain water and sewer connections at some indeterminate time in the future? Housebuilding is not viable without reasonable assurance on finance costs and cash flow, and such a requirement would certainly further depress housebuilding volumes.

Passing the total cost of fixing an outdated sewer network, serving 660,000 existing properties, on to new home buyers is not an equitable approach. As pointed out by another Irish News commentator, Sarah Creighton, on August 5, the number of houses being built has been falling and currently stands at 50% of industry targets.

Newton states that the housing industry, both social and private, should be delivering 10,000 new homes a year. There are significant constraints which make this impossible. The area plans are going through a lengthy updating process and there is further reform required for the planning system, in addition to the water infrastructure capacity issues.

Both housing associations and private developers have to make the sums stack up, and including Newton’s proposed additional costs will make this significantly more difficult. For private developers, that means costs have to be covered by the eventual sales prices achieved. For housing associations, the costs either have to be covered through commercial borrowing, and Housing Association Grant received from the Stormont Executive, or through rental income which is paid for by those who live in their homes.

Amid the current housing crisis, passing the cost of fixing outdated sewer network for 660,000 properties on to new home buyers is not an equitable approach
David Little, chair of the Forum for Better Homes NI (DARREN KIDD)

There are difficult decisions ahead for the Executive, but the urgent need for more housing needs to be addressed. The consequences of fewer new homes being built over the last ten years are clearly evident in the escalating rents in the market and the growing numbers of people on the housing waiting list for social housing.

The Forum for Better Homes NI wants to work with everyone to deal with these challenges and ensure that our region can address this housing shortfall.

  • David Little is chair of the Forum for Better Homes NI