Majority of derelict buildings not currently financially viable for restoration, study finds

A NEW STUDY examining dereliction has called for increased grant support to make restoration of empty buildings viable.

The report, by the Society Chartered Surveyors of Ireland (SCSI), found that less than a third of vacant and derelict buildings are financially viable for restoration from a study of a sample of 20 buildings. 

It examined each building in detail, from its structure, to its plumbing, doors and windows, to examine the breakdown of renovation costs and where issues may arise.

The Society is now proposing doubling key grants to make the country’s vacant housing stock viable for people to live in again.

After surveying more than 400 chartered surveyors, the organisation is also calling for the Government to establish a national register of vacant and derelict properties, along with urging for increased funding to local authorities which in turn must take a “more proactive approach” for carrying out purchase orders on vacant units. 

Without grant support, just five of 20 vacant or derelict buildings are viable for renovation according to the first ‘Real Costs of Renovation Report’ by SCSI.

When the relevant grants for owner occupier type residences under various schemes are factored in, just one additional property becomes financially viable.

‘Major impact’ by increasing supports

The properties examined by the report are made up of 13 residential owner-occupier type properties and seven “investor type” properties. They were located across the country.

48,000 dwellings that were recorded as vacant in 2016 remained vacant in 2022, according to the Central Statistics Office (CSO).

• Our colleagues at Noteworthy want to investigate dereliction and vacant sites in a number of areas, including Cork city and Naas. Find out more here.

Chartered Planning and Development Surveyor Lisa Rocca, one of the authors of the report, said the findings highlighted key challenges which people undertaking renovations projects face around costs and accessing finance.

“It’s clear current incentives and supports in place are not at a satisfactory level to make a meaningful difference to the current levels of vacant stock,” Rocca said. 

The report examines the costs involved with renovating such properties, breaking these down between ‘hard costs’ and ‘soft costs’. 

Hard costs – such as structure, plumbing, heating, extensions, doors/windows – account for 87% of renovation costs. Soft costs – such as professional fees, utility connection charges, planning fees – account for the remainder, according to the report.

“This contrasts with previous SCSI reports on the delivery costs of new houses and apartments which found a fairly even split between hard and soft costs,” the body said.

Location, size and condition the critical factors for viability according to the report.

The report also raises issues with the Croí Conaithe scheme. The initiative was launched last year providing grants of up to €50,000 to support the refurbishment of vacant and derelict properties.

But the SCSI said the current grant isn’t enough – adding that more properties became viable when it tested scenarios where the grant was doubled.

“We have 13 residential type properties among our case studies and in a scenario where the Croí Cónaithe grant is increased to €100,000, the number which becomes viable doubles to eight, while two more are on the cusp of becoming viable, so it’s clear increasing the grants would have a major impact with regard to financial viability,” Rocca explained.

The SCSI is recommending a feasibility grant included under Croí Cónaithe – similar to the case in Scotland – to help prospective purchasers assess the viability of a project.

It warned that the ownership status prior to renovation has a “considerable impact” on financial viability particularly for those seeking a mortgage.

“While just five of the 20 properties in our case study are viable without grants, in a scenario where all the properties are already in ownership that figure rises to 13. If grants are included that figure potentially rises to 17,” it said.

Regulations ‘too restrictive’

Chartered quantity surveyor, Nick Taaffe, whose own renovation project is included among the 20 case studies, said planning regulations for older buildings are viewed as too restrictive by 54% of respondents in the survey.

“Whilst there is universal acceptance of the need for appropriate fire safety standards and disability access, there is also a high level of concern expressed that the regulations are too restrictive to renovate property for habitable use,” he said, adding a review of the regulations for renovation projects is urgently required.

He highlighted one case study on Dublin’s Grafton Street. While the 3-storey building is financially viable for residential renovation, the “requirement of a secondary means of fire escape and the unavailability of an option to make this happen, means that the project is unlikely to be renovated”, Taaffe said.

“As a result this superbly located property is unlikely to be renovated for much needed residential use and will instead remain as storage for the foreseeable future,” he said. 

41% of SCSI members suggested increased financial supports and 26% wanted less red tape and a simplification of the regulations, according to the study.

President of the SCSI, Kevin James, said it was vital that the Government and key stakeholders were making decisions based on accurate information.

“Before we address a problem, we have to understand its scale and to that end it is essential that the Government establishes a national register of vacant and derelict units with clear and appropriate definitions of same.

“Local authorities need to be allocated more than the current funding of €150m to purchase and renovate vacant buildings. For their part local authorities need to adopt a much more proactive approach to implementing their CPO powers, especially for urban properties lying vacant for a long time.”