What is the real impact of the Republic of Ireland’s residential crisis and could change of use or exempt developments be the answer?
Image: Aisling Monahan, Senior Underwriter
The real impact of the housing crisis can be found at the grassroots level. Recent research documented by the Irish Independent earlier this year, states that lack of accommodation could be a major factor in the lack of teaching supply. In addition to this, students are again facing difficult decisions to choose expensive rents in Purpose Built Student Accommodation or go with the Rent a Room Scheme.
Aside from all of this is the general housing for Ireland’s growing population. It has long been documented that city house prices, such as in Dublin, are unaffordable for young people and families. With the general election just two years around the corner, the current Government and Governments before don’t really seem to have the answer. That said, Simon Coveney’s recent announcement of repurposing underused office blocks could be one solution but has been received with mixed feelings.
Is the repurposing of existing office buildings or exempt change of use developments the answer?
The scarcity of residential accommodation and specifically student accommodation is not unique to the Republic of Ireland, the UK has a chronic shortage of affordable student accommodation with increased tax burdens leading to a potential reduction in supply. But we should not be surprised by these latest stats.
Every academic year we face the same problem and, surely, the shortage of student accommodation creates an additional layer of demand in the real estate market for the Government and property developers to grasp and invest in existing sites that could be repurposed or purposed built.
The challenge, of course, is in the ‘how?’
With rising land prices and drawn-out planning application processes, change of use and exempt developments on repurposing existing stock could provide the boost needed however it is not without its risks.
Aside from the potential restructuring to ensure the building is fit for purpose and its alternative use, there are other unknown risks that will need to be considered. For example, in the case of a developer looking at converting a vacant office space for residential use, the developer will typically receive a report from their solicitor considering the title to the property which potentially identifies issues or defects that the developer has to consider. The advice given may be to withdraw from a transaction, undertake lengthy attempts to trace missing documents or carry on with the scheme and carry the risk of action being taken on the balance sheet. None of these serve the purpose of freeing up more property for residential accommodation. Title insurance can help to plug that gap by removing the delays from undertaking investigations for missing deeds, by freeing up the potential liability for costs from the developer’s balance sheet and by allowing deals to proceed in the face of legal and technical defects.
Whilst repurposing underused office blocks into homes or student accommodation has the potential to alleviate the Republic of Ireland’s housing crisis and create new opportunities for urban revitalisation, to make it happen will require a collaborative effort involving various stakeholders, careful consideration of potential risks, and a clear understanding of the legal implications. As highlighted by Westcor International’s title insurance products, mitigating these risks is crucial to ensure a successful transition and a positive impact on Ireland’s residential real estate landscape.