Walking the city streets you might not realise it, but the city of Dublin is meticulously planned.
The city is the product of a City Plan that details exactly what can be built, in what place, and to what standard.
A new plan is released every six years. The first one, said Richard Shakespeare, DCC’s assistant chief executive with responsibility for planning, was an A5 booklet, “and now it’s a tome. The 2016 plan was a tome, and the new plan will be a slightly larger tome.” The latest plan will run to more than 1,200 pages, including appendices.
The latest plan, which is to run to 2028, is in the middle of being finalised by Dublin City Council (DCC). The new plan is controversial.
Property developers hate it. Chief among their complaints are new rules around built to rent (BTR) apartments. In a submission to the council, the developer Ballymore said:
“The combined impact of all of the proposed requirements for BTR planning applications would be to effectively defeat the possibility of a BTR planning application in the city.”
The Office of the Planning Regulator, whose job it is to ensure city plans are in keeping with national ones, has asked DCC to remove and amend two of the most controversial BTR rules.
Though nothing has been decided yet, the council looks to be intent on going ahead. “At the moment you have a coalition of Fianna Fáil, Greens, Labour and Social Democrats. My sense is that [the most controversial BTR changes] will be maintained in the development plan,” said Councillor Ray McAdam of Fine Gael, who is chair of the DCC planning committee.
The BTR changes amount to a couple of pages in a 1,200-page document. But they’ve gotten attention because the vast majority of new homes getting built in Dublin are BTR. 80-90 per cent of planning applications are for build to rent schemes. And given the large size of each individual scheme, BTR makes up the vast majority of new units. If developers are right, changes to BTR rules could shut down the majority of new housing delivery in Dublin City.
DCC is of the view that BTR has gotten too successful. DCC chief executive Owen Keegan said on a webinar this year, “While BTR has a role, the near-total dominance of this typology has adverse long-term consequences for the creation of sustainable communities, which the city council considers requires a wider range of housing types and mixed tenures in the city.”
The Currency contributor Ronan Lyons made a detailed submission to the council, protesting some of the proposed changes. He wrote that rents in Dublin tend to fall when there are more than 4,000 properties on offer at a given time, and rise when there are fewer than 4,000. The following chart shows the relationship between the number of apartments available for rent in Dublin and the change in rents.
In his submission, Lyons writes that shutting down the BTR pipeline would make the city less affordable: “The overwhelming evidence from both sale and rental markets in Dublin, therefore, is that availability is the key determinant of subsequent price changes: supply matters.
“The existing pipeline of build-to-rent apartments is likely to amount to between half and two-thirds of the backlog of missing rental homes in Dublin needed to bring rents back to affordable levels,” he added.
The following chart gives a sense of how important BTR has become to housing delivery in Dublin. (Though it’s unclear whether the BTR permissioned units, shown in light pink will ever see the light of day.)
The two groups – planner / architects and developer / economists – talk past each other. I know this for a fact because I see it every day in my Twitter mentions. Architects and planners slug it out with those – like me – who think it should be easier to build things in Ireland.
Twitter spats are one thing, but this fight over the City Plan is the real deal. The stakes are high. If the developers are right, DCC is about to drive rents up. If DCC is right, developers are going to scar the city with dense ghettoes of rental apartments.
The plan will determine the look and feel — and the price — of the city for years, not just for the lifetime of the development. As one senior planner told me, "once something gets built, you can't take it down".
Cards on the table, I'm in the Ronan Lyons "build lots of homes" camp. What follows is my attempt to understand how opponents and supporters of BTR see things; how the plan gets made; what's going to happen; and how the City Plan might end up changing the city.
Affordability is not our primary responsibility. Our plan is about land use and building typology.Dublin City Council chief planning officer John O'Hara
How the sausage gets made
The public-facing part of the planning system is planning permissions. It's the one most people are familiar with.
More important than the permission process is the local authority plan. The plan gets updated every six years or so. It's the document to which the planners refer when deciding on planning permissions. It says explicitly what can be built and what can't.
Where does the plan come from? The plan is drawn up by full-time officials at the council and is amended, and eventually approved, by councillors. The amendment process is a year long. It then must be approved by the Office of the Planning Regulator, to ensure it's in line with national planning goals.
Who has the power? It depends on whom you ask. DCC assistant chief executive Richard Shakespeare said, "It's the city councillors' development plan. My planning team do what they consider is the most appropriate and they give recommendations."
But the document is 1,200 pages long, and it's prepared by the officials. Councillors only work part-time. They say they don't have the time or resources to keep abreast of such a big, constantly evolving document. Social Democrats councillor Patricia Roe said: "This was a stunt [council officials] pulled — they changed the zoning on a number of maps. They changed it without saying anything. And this was noticed by councillors at the last minute. And that's how that was rushed through on the night."
City planner John O'Hara said: "[The councillors] are right to trust [the professional officials]. Where it got complex is the number of councillors. The growth in the number of bodies who want to load their views onto a development plan is amazing. EU, UN, disabled access, every sector thinks they can load their responsibilities onto the development plan. And if you leave anything out, you're the world's worst. This should be a user-legible plan. The sin of omission in a development plan is the biggest sin of all."
Ultimately the Office of the Planning regulator, and the minister, have the power to change plans that aren't in line with national policy. But as we've seen, the plans are huge and very detailed. Local Authorities still have lots of leeway to steer development the way they want.
The developers say the new plan increases the cost of BTR in (depending on how you count them) ten ways. Their biggest complaint is a requirement in the city plan that 40 per cent of all BTR developments be built to the — higher — build to sell standard.
Developers say this requirement will make each block much more expensive to build, which in turn will mean that much fewer blocks get built in the first place. This is the concept of viability.
Viability determines how much market-rate housing gets built. If something can be built profitably, money will be found to fund it, as happened in the last boom when annual funding for housing construction ballooned to €50 billion in the mid-2000s.
The build to rent boom kicked off in 2018 when standards for BTR apartments were lowered to the point that they could be built profitably — the point at which they were viable. And even today, BTR is only viable in a handful of the most in-demand locations in Dublin City.
Brian Moran is managing director of Hines Ireland, a big BTR developer. "Apartments are only viable in certain locations in our cities such as Docklands and Cherrywood," he said. "I recently looked at a site on the Naas Road, on the Luas, with planning, for 1,000 units. But it wasn't viable."
"I am of the view that increasing supply doesn't lower prices."Dublin City Council Chief Planning Officer John O'Hara
How does the 40 per cent build to sell requirement hit viability? I'm quoting Moran at length here because it's a key question:
"The cost per square metre is roughly the same for BTR and BTS. But, in a BTS scheme, the majority of units must be 10 per cent bigger. In addition to that, other layout requirements mean the net to gross efficiency will not be the same. One of the reasons BTR works is that it has a better net to gross than BTS.
"The result is that adding 40 per cent of BTS to a BTR development would add 10-15 per cent to the cost of each apartment, without any uplift in value. And in addition to that, given the cost of development and lack of demand for apartments to purchase, there'd be about 10-15,000 of extra interest cost, service charges, property tax, insurance, and maintenance costs while we waited to sell the vacant un-let, unsold units. A change of this nature will undermine the viability of many apartment projects, even if there is no land cost."
Three further developers I spoke to, who asked not to be named, offered the same figure of a 10-15 per cent increase in construction cost as a result of the 40 per cent build to sell requirement.
I spoke to the Society of Chartered Surveyors in Ireland, an autonomous body with responsibility for tallying costs in the construction industry. Paul Mitchell oversaw a 2021 SCSI report on differing construction costs for build to rent and build to sell typologies. His estimate was that build to sell loses €30,000 per unit.
"If a scheme loses €30,000 per unit, [under the proposed DCC plan] the other 60 per cent in a BTS scheme will need to carry that. In today’s world we’re already seeing BTR schemes stalling because of cost inflation. Rents are topped out and yields are compressed.
"Unless your scheme is in the heart of Dublin Docklands where you can afford to charge a lot of money to a two-bed apartment. If you add 40 per cent loss making units into that, the overall scheme will not be viable."
The 40 per cent build to sell is developers' biggest complaint, but they have others: a requirement that developers show there isn't an over-concentration of BTR within three kilometres; exclusion from certain areas; downgrading of BTR from 'permissible' to 'open for consideration' under most zones; tougher dual aspect requirements; a requirement of five per cent 'cultural' use per large scheme; roof terraces not to be categorised as open space; and a presumption against more than 300 units per hectare.
Where did the 40 per cent requirement come from? DCC's chief planning officer, John O'Hara, said "We introduced a notion that 20 per cent of BTR could be built to sell. Councillors caught on to that and changed it to 40 per cent."
Social Democrats Councillor Patricia Roe is on the planning committee and is in favour of the proposed changes. "Do not tell me it's going to cost a lot of money, or take a lot of time, to sell these apartments," she said. "I don't believe developers when they say building apartments are unviable."
"We shouldn't have lowered the standards in the first place. That's what we did in 2018. We have lowered standards — listen to Orla Hegarty, listen to Lorcan Sirr on apartment standards," she added.
Lord Mayor Allison Gilliland is a Labour councillor and is also on the planning committee. "The key issue is a balance of choice for people who want to rent, want to buy, and affordability," she said. Gilliland is in favour of the proposed changes. "That's the time bomb I'm petrified of: high earning workers might be able to afford these apartments now. What happens when they retire?"
Planning, in general, doesn't engage on economics. I think that's a big failing of the systemFiona Cormican, New Business Director at Clúid Housing
As part of the decision, was work done to ascertain how the proposed changes would impact on viability? Councillor Roe said "I would hope so. I would assume there was. I'm giving you a view as a non-expert. I'm giving the view of people coming up to me from around the area."
Fine Gael councillor Ray McAdam is chairman of the planning committee. He is opposed to the BTR changes. He said, "the proposals in the plan as is will make it harder to build homes and solve the affordability crisis".
Will the BTR changes make it into the final plan? "My sense is that the minimum of 40 per cent will be maintained in the development plan," said McAdam. "At the moment you have a coalition of Fianna Fáil, Greens, Labour and Social Democrats."
"We opposed shared, we opposed student, and now we're going to oppose BTR," he added.
John O'Hara is the chief planning officer at Dublin City Council. It's his job to deliver the city plan.
For O'Hara, the plan is a tool to create a better, more liveable, more sustainable city. He emphasises the concept of the 15-minute city: that people should live, work and spend in the same neighbourhood.
O'Hara's boss is Owen Keegan. In a webinar, Keegan said: "It is envisaged that Dublin will become a more compact city, with a network of sustainable neighbourhoods, which will have range of facilities and offer a choice of tenures and housing mixes."
O'Hara said: "We were concerned [about BTR] because a key priority was neighbourhood-making. People of different age groups, professionals, people in later stages, could all live and contribute within 15 mins, within their community, within their neighbourhoods."
The explosion of BTR development doesn't fit with O'Hara's plans for the city, because it's a single form of development. For O'Hara, the goal is variety.
"We are concerned that a proliferation of one bed and studio units would be totally against the policy described and the sustainability climate agenda."
What about the shortage of apartments and rental homes in the city? O'Hara's response again references the 15-minute city concept: "This is the sort of stuff that's thrown out by stats. Yes, in the 1950s to 80s, all that was built was three-bed homes. But you cannot balance the inner city docklands with Clyde road. That's like having one leg in the microwave and one leg in the freezer, and saying, on average, that you're warm."
Did O'Hara's officials analyse how the BTR changes would change construction costs, and ultimately viability? "There was no modelling," said O'Hara.
As the head planner for DCC, what's O'Hara's view on the importance of building more homes? "I am of the view that increasing supply doesn't lower prices," he said.
"Affordability is not our primary responsibility. Our plan is about land use and building typology," O'Hara added.
The approved housing body
The developers have a credibility problem: they benefit from lower construction costs. But the approved housing bodies are a bit different. They have to navigate the planning system and deliver homes within a budget, like the developers. But they're not for profit.
Fiona Cormican is head of new business at Clúid, an approved housing body. Clúid builds between seven and ten thousand homes per year. Clúid works with for-profit developers like Glenveagh, delivering affordable units on their sites. What does Cormican make of the BTR changes?
"Insisting on a certain percentage of BTR being for homeownership is a very difficult thing to do because you are very dependent on the market. And if they are very expensive apartments and people can't afford to buy them, what is the developer meant to do?", Cormican said.
"Nobody is going to come in and fund a project where you cannot prove the market is there for them. So therefore you create a viability problem. It impacts on what we do because we get charged more. And it means ultimately we won't get the apartments," she added.
"I understand the theory behind [zone 16, the proposed new mixed-use zone]. But, it's counterintuitive — there's no financial assessment behind those decisions. And that's the missing piece. I agree with the theory and I get it, and the intention. But you can't just lob things like this into a development plan without estimating the financial impact. It's that missing connection between the economics and the plan," she said.
"There needs to be more engagement with developers and with financiers. It's financiers that call the shots at the end of the day."
"Planning, in general, doesn't engage on economics. I think that's a big failing of the system," she said.
Government – but which one?
There's a tension between Dublin City Council and the national government over this city plan. DCC wants more restrictions on what you can build, the government wants less.
This is normal. The same tension is playing out between the government and other local authorities in Ireland, and between state and local governments in the rest of the world.
Everywhere in the world, there are rules about what you can and can't build. They are a given.
Where you do see some difference is in the level of government tasked with making the rules. Land use rules are usually set at the level of the city, though sometimes they're set at the level of the state or the nation.
Researchers have looked into it. They've found that when it comes to land use, the layer of government doing the regulating has a big impact on what rules get passed.
What they find is that local governments pass more restrictive building rules than national governments. Likewise, when the electoral area is small, governments pass more restrictive building rules.
The effect of electoral areas on land use regulation looks to be big: a 2020 paper by Evan Mast of the University of Notre Dame found that moving from a city-wide electoral area to a smaller ward-based electoral area reduced the number of apartment building permits by 25 per cent. I asked Mast what he thought was driving the changes. He said:
"There are differences in how different levels of government see the costs and benefits of development.
"The benefit of development – for the tax base, for housing affordability, for the environment – is very diffuse. But the cost of development is very concentrated. If you're worried about costs like congestion or parking, that's going to be felt within a quarter-mile of a new development. So when rules are made by a state or national government, they're more likely to take all those regional benefits into account."
Why might that be? The bigger the electoral area, or the higher the level of government, the more issues are going to be on the table in a given election. A local politician in a small ward might campaign entirely on the issue of restricting. But a national politician will run on 10 issues, of which development will only be one.
Another point is that there's not much downside when a local government restricts development. Particularly in Ireland, where our local governments don't raise much tax. In the US, individual cities tax their residents' incomes, property and sales. So they have an incentive to grow their city, and a responsibility to pay their teacher's salaries.
There's also a tragedy of the commons element to restricting development. One local authority acting alone doesn't have much effect on overall affordability. But if they all do it together, the entire nation becomes unaffordable. Individual councils don't get held accountable for the affordability problem, which is seen as national.
That's probably part of the reason why national governments tend to regulate land use less tightly than local governments. If national governments restrict development, the nation becomes unaffordable, and national politicians get held accountable for it.
One of Japan's tricks for keeping housing affordable is that the zoning plan is set at the national level. Professor Christopher Elmensdorf of the University of California Davis said: "Tokyo by far best example of a major city that has accommodated a huge run-up in population without a big run-up in prices. A lot of that is due to a zoning plan set by the national government that is adopted by local government."
New Zealand is another example of a country that liberalised land-use rules after electoral reforms that moved power away from small single-member local districts. "The place where electoral reform has had the most dramatic effect is New Zealand. It abolished single-member districts – and I don't think it's a coincidence you have very ambitious up-zoning there," said Elmensdorf.
Oregon is a US state that saw more development after it moved land use regulation from city level to state level. Michael Anderson, a housing researcher at Sightline, said: "In Oregon, zoning reforms that were off the table at local level were on the table at state level."
The upshot is that Irish councillors are elected in small electoral areas. Councillors and officials have a lot of influence over development, without the commensurate responsibility.
Now that the drafting is close to finished, the key players are the councillors and the minister. What will the councillors ask for, and what will the minister give them?
As we've seen, the councillors are determined to hold onto the forty per cent build to sell requirement. But councillor Ray McAdam, chair of the planning committee, said there may be horse-trading: "If the 40 per cent restriction on BTR is maintained, then we'll definitely have to remove the [300 units per hectare] cap."
The OPR has already made its feelings known about the plan. Would the minister ask the council to amend it, when the time comes? It looks likely: in February this year, Meath's county development plan was overruled by the Minister of State, Peter Burke.
Though the OPR and the Minister might overrule certain elements of the plan that don't fit with national objectives, 95 per cent of it will be passed. Of the ten BTR related complaints the developers have with the plan, only three were addressed by the OPR's submission. So the council will influence the BTR pipeline to a greater or lesser degree.
Whatever the council passes, there'll be fewer apartment buildings built in the coming years just because of construction costs. Conor Larkin of Buxton Capital said raw materials, which used to make up 40 per cent of costs in mid-size developments, now make up 50 per cent of costs. That'll push more prospective developments into the red.
Debates at the council level over the right amount of sunlight in a kitchen, or the right number of renters in a neighbourhood, or the importance of a balcony, aren't purely aesthetic. The decisions made at council and government level ripple outwards and determine the number of homes, and their type, and, critically, how much they cost.
Last week I was told the story of a Brazilian couple who'd been given a month to leave their rental home on Richmond Road in Drumcondra, because the landlord wanted to raise the rent to the market level. They were getting ready to move to Germany. This will go on until there is no housing shortage.
So we have a system in which officials say councillors have the power, councillors say officials have the power. Between them they produce a phonebook of land-use rules every six years. The minister has the right to change the bits he dislikes the most. Then, an army of planners implement the rules on a case-by-case basis.
Whatever else you might say about our system, it couldn't be better designed to hide where power and responsibility lie. If, like me, you think planning rules are contributing to the affordability crisis, whose door should you knock on? The councillors who make amendments and sign off on it? The officials who write the plan? The regulator who suggests changes? the Minister who signs it off? The officials who have significant latitude to implement it?
This document is so important for the price, quality and quantity of homes in Dublin. But it's hard to say whose it is, and hard to hold them accountable for its performance.