Ireland’s housing market is in crisis, and the delivery of significant volumes of new housing supply of all tenures has been acknowledged now as a national priority.
To address the challenge, the government’s action plan ‘Rebuilding Ireland’ set ambitious targets to double the annual level of residential construction to 25,000 homes and deliver 47,000 units of social housing in the period to 2021. The government also introduced the Home Building Finance Ireland Agency in Budget 2018 tasked with providing loans totalling €750 million for commercially viable residential development projects.
With the volume of residential property development set to increase across Ireland as a result, we have created a 12 Step legal checklist to assist property developers and investors which outlines the key areas to consider when embarking on a new residential development scheme.
The key steps are as follows:
1. Project Strategic Plannning
At the offset, property developers need to determine what type of corporate structure is appropriate for their needs. Key considerations include whether a Special Purpose Vehicle should be incorporated and the type of funding required.
2. Tax and Regulatory Planning
A review of the relevant tax legislation is also key in determining which corporate structure is the most economically efficient to ensure clients don’t fall foul of regulatory requirements.
3. Site Assembly
The title of the development land need to be investigated to determine the types of easements and wayleaves required on the site in order to prepare the appropriate paperwork.
A review of the infrastructure available in the area should also be carried out to determine costs involved in providing further infrastructure and contributions that will need to be made to the local authorities.
4. Appointment of Professional Consultants
Professional consultants required to provide specialist advice in relation to the project will each require letters of appointment, terms and conditions of their employment and a clearly defined scope of the services they are contracted to provide.
Building contracts and arrangements with nominated sub-contractors will also be required. The developer will need to review the contracts for the different types of works to carry out on the project.
5. Planning and Environmental
Planning permission for a proposed development should be reviewed including the financial considerations and agreements to comply with the delivery of social and affordable housing under Part V of the Planning and Development Act 2000.
6. Project Financing
Throughout the lifetime of the development the funders’ requirements will need to be managed, and pre-conditions to funding may need to be reviewed depending on the progression of the development. Flow of funds and draw down dates may also need to be renegotiated.
7. Construction and Development
It is important to manage dispute resolution arising during the early stages of the development, including disputes related to the acquisition of the development lands, pre-construction agreements, construction contracts, etc.
8. Scheme Set Up
A number of practical legal issues will need to be undertaken when setting up a residential scheme of development, including:
(a) Collating a booklet of title thoroughly evidencing the vendor's title to the development lands; (b) Drafting a standard sales contract for use throughout the scheme; (c) Liaising with property managers; (d) Liaising with Homebond or a similar insurance provider to underwrite repair and reinstatement insurance; (e) Liaising with estate architects to procure scheme maps; and (f) Incorporating a management company to supervise the common areas in the estate, and to agree the division of service charges, and determine further management structures required within the estate.
9. Transfer of Common Areas ("TOCA")
A transfer of the common areas, within the estate, to the designated Management Company will need to be completed, to comply with the Multi-unit Developments Acts 2011. In order to do so a management company will need to be incorporated in advance of the first unit sale, where appropriate.
10. Individual Unit Sales
As well as individual unit sales, clients should consider block sales to housing associations and sales of social and affordable housing to local authorities.
11. Asset Management
An asset management company may be appointed to manage any units retained within the development and to deal with any legal issues arising with tenants and further property sales.
12. Post- Development Alternative Dispute Resolution
Litigation and dispute resolution services may be required in relation to disputes regarding defects, rates disputes, claims against the management companies etc.