Rick Larkin: 0:26

One of the questions I get asked a lot by anyone sane enough to not involve themselves in the construction industry is why does it cost so much to build housing? There are many answers to this question and, like everything, the answers are a little bit more complicated than we wish them to be. There is no shortage of people, however, who will tell you that there is a simple answer or a quick fix, but those people are either lying or just don't know what they're talking about. My guest today, on the other hand, does know what he's talking about. Paul Mitchell is the co-founder of Mitchell McDermott, a firm that specializes in construction consultancy and quantity surveying. Paul not only helps run that firm with his co-founder, but he also donates his time to work on various reports setting out the state of the construction industry, including sitting on the working group of the housing commission. He doesn't have any quick fixes, because nobody does. I hope you enjoy our conversation. If I was five years old, how would you explain what a quantity surveyor is?

Paul Mitchell: 1:24

Scary people with abacuses, because I suppose, in simple terms, a quantity is very. There's two types. There's one that works for clients and there's one that works for a contractor. And there are two completely different jobs. The one that works for a client is like their financial guardian for construction. Their job is to give you the answer before you start and to make sure that you keep to that answer through the development period.

Paul Mitchell: 1:53

When you come to me and you say you have a site and you say I'm thinking of putting Resi on it, I will say what type? And I will say well, here is the different types and here's how much they cost from a benchmark point of view. So data is huge. We will go through, we will work with you and the architects to say here's an efficient design, here's how you should be doing it.

Paul Mitchell: 2:15

And then, because as a quantity surveyor acting for a client, that is where you have your biggest impact. You're saving the millions upfront, at concept stage, and then, as you move through sketch design and detailed design, you're saving the hundreds of thousands. And then, by the time you get to the construction stage, then you're dealing with the contractors countries there on the other side, because you literally are opposite ends of the table and you're negotiating with that contractor. As you move through all the time, you're keeping to the client's original plan, which at this stage is three or four years old. So forecasting and starting with the end in mind is the key part of a PQS referred to when they work for a client and then, as part of all of that, you survey quantities, you measure.

Paul Mitchell: 3:04

Correct. Yeah, so I suppose that the technical part of the job it's a mix. When I did quantity when I intend to quantity surveying and I was either going to be a quantity surveyor or an engineer, an engineer is a deep dive right. They know the detail and have to do everything to exacting standards and with quantities surveying. What I found when I did the course there's like 12 different subjects, so there was business subjects, technical subjects and financial subjects.

Paul Mitchell: 3:30

So when you were doing physics you were doing maths, you were doing tech, drawing and measurement, right, but at the same time you were doing accounting and economics and then you were doing the business management subjects, which is fantastic because when you go in you're going to get a wide range of skills that you use, because as a PQS advising a client, it's not just about measuring. I can't remember if I've been interviewed when I was in my. I was the first year at a college working for PQS and I got interviewed for what my job was and the title was not just a matter of accounting bricks A long time ago now. But so the measurement part is the technical bit, but I think the strategic advice that you're given a client and where to go to is the most important bit. So and then, if you're working for a contractor, you're very much dealing with subcontractors, you are dealing with a lot of measurement and you're typically based on site. So two very different roles, to be honest, even though both the countries have errors.

Rick Larkin: 4:29

So in your role, say, for Mitchell McDermott, you're a full service firm right, so you could act for somebody like me as a developer. You could act for a bank you could, but you wouldn't typically work for a contractor, for a main contractor.

Paul Mitchell: 4:47

So actually we have it as a rule that we don't ever work for a contractor just simply because we end up in a conflict of interest. So like you can't be paying me one day and the following day I'm sitting in a room with you negotiating from my client. So that's a rule that we had from day one. But our business is basically we do three things. About 45% of our work is project management, About the same is quantity surveying and we have a bit that waxes and wanes between 5% to 10% in the middle which is acting for banks in a due diligence and project management.

Rick Larkin: 5:20

So it's part of the project management, then and I know I don't want to spend all day talking about this because we have a lot of stuff to get through, but the project management end of that, that's where, like, a developer would come to you who's a little bit light, maybe on expertise, right, so they're more of a promoter or a landowner and they say, well, I want to get planning permission for this and I want to build it, but don't necessarily have any experience doing that. They come to you and you'd say, well, we can do that, we can oversee it, we can oversee the tendering process for the main contractor, we can oversee the quantity surveying services, drawdowns from the bank, all this stuff. And you can do that all under the one roof, correct?

Paul Mitchell: 5:57

yeah, and a lot of our projects will be delivered. Like our clients are overseas, so they have no boots on the ground here at all. So we will take it from a concept right through to the end to hand over and the defects liability period at the end. So you're still dealing with projects that are finished.

Rick Larkin: 6:14

Okay, so you then have a must have very broad range of staff, like down to guys, maybe, who are starting out, who are doing the actual measurement and saying there's a million bricks and there's meant to be 1.2 million, all the way up to the guy who's actually making the big decision and saying, well, you know, don't use that.

Paul Mitchell: 6:30

or yeah, and it is a good mix. We have 70 volunteers as we currently stand, and you know can walk out Martyrs.

Paul Mitchell: 6:40

Yeah, yeah, but it's a good group because when we set up, you know, I spent 20 years in the one business in effect, through murders and acquisitions, and the last acquisition was by an American corporate and I grew up in an owner controlled business, so I wanted to get back to that. So, myself and Anthony McDermott set up from scratch in March 2015,. You know, things were still a little bit bleak, but there were, there were green shoots and we grew quite rapidly up through, you know, 2019, and then COVID, ukraine, et cetera, et cetera, and we've, you know, remained at about 70 people throughout that period. So, but yeah, you do need from directors down to graduates, and a big part of our business is training, so you will not keep people unless you are training them. It is not enough to pay someone.

Rick Larkin: 7:32

What's your focus in the business? Do you look at research or I mean, because I know that you we're going to get on some of the research that the firm has put out, because a lot of it's very interesting.

Paul Mitchell: 7:40

But is that something that you personally concentrate on, or is there another area that you're I think across the business, I think we do as a business, focus on data because I think that is the lifeblood of proper decision making. But like each year we now. We started off with one info card. Now we produce 12, which is, if you say it in our office, around October time. It's like mentioning the leading search, because people have to put all their data into two sides of an A4 page, which is never easy, but it means they're digestible. Research piece is a small piece, a part of what we do, my piece I'm heavily involved in commercial and residential. I have a big interest in residential. I sit on the viability group within the housing commission, worked at PII. I've done a lot of voluntary work for the Society of Charits of Ayers, so that's a real interest of mine. Yeah, dare I say, passion.

Rick Larkin: 8:42

Yeah Well, it's a good thing to be passionate about. You brought up viability there. Viability is a very hot topic in the development industry. We have, on the one hand, people like me, others that are screaming for several years about how difficult it is to construct departments. You then have a group I'm trying to think of a polite term to describe them, but you probably know who I'm talking about. There's really four of them who I'm not going to name, but if they deign to listen to the podcast which I'm sure that they won't they will readily be able to identify themselves A cabal of half academics.

Rick Larkin: 9:23

I would describe them as the anti-vaxxers of the property world, who claim that, in fact, there's no issued viability and that you can build houses for basically nothing and it's just a big profit hungry game by big greedy developers, which I freely admit. I am a big greedy developer, or maybe just a greedy developer, not very big. You are an independent voice on this. You're not a developer. You don't work for contractors. You are going to be employed, regardless of whether there is a lot of profit, a little bit of profit. Your role is at the nexus of all of this. Is there a viability problem with the part of construction in Ireland. Yes, thank you for that very simple answer.

Paul Mitchell: 10:14

I have the same reaction when I hear people who are given a significant amount of airtime, who do not actually work in the industry. It pains me because that is what the public listened to when, in 2015, I wrote a report for Property Industry Ireland on apartment development because I followed it we were involved in a significant amount of apartments through the boom 2007, right Negativity around. Remember the late Liam Carroll and Chewbacke's apartments, then a bachelor's walk that was in the rise in the late 90s, early 2000s. That was 2007,. The department brought out their guidelines and they said which is great, here's the minimum sizes. They have one fatal line out, which was these are minimum standards. City and county councils should improve on these where possible. At that stage in 2008, we tracked all this, we measured it all and it's out there for the public to see. The councils then started to check it's Cork City Council, dublin City Council, don Leroy Reddown and others but out their own guidelines. They said no, we want the sizes to be 10% bigger. You can only build three apartments per core. We want a 100 percent dual aspect.

Paul Mitchell: 11:44

I remember being on apartment schemes in Sandyford at the time, trying to redesign these schemes, and they were absolutely decimated. That was 2008,. And then the world stopped In 2014,. They began in 2015, set up Mitchell McDermott and I was a member of PII at the time. They said our apartments are viable. I said, well, here are the issues. We did some costs and we showed that the changes they made in 2008, which never were changed, got added all the significant money to the apartments. We met with politicians, we met with councillors, we met with county councils and planners and through all the talk that was going on at the time, changes were made. Dual aspect what they did was which was really useful. They repealed the 2008 changes, if you remember, and they basically brought them back to 2007, and then, a year later, they introduced Bill to Rent as an asset class. But during 2016, we gathered sorry. Working for the SCSI voluntary capacity, I led the report on apartment viability. The SCSI had done the previous report a year before on housing and we did this Just for anyone who's listening.

Rick Larkin: 13:11

the SCSI is a society of Charter Surveyors in Ireland, so they're kind of the umbrella group that handled the certification and that of surveyors right across the property spectrum, so they're well respected.

Paul Mitchell: 13:23

They're well respected because they are independent. They're not a lobby group, actually a charity. But then we carried out this report and we said, okay, let's take all this data from people, anonymise data from quantity surveying firms for all these apartment blocks. And at the time we got about 3,000 apartments back. We analysed that and we did the development appraisal.

Paul Mitchell: 13:47

And I remember the day the report was issued and the PR guy within the SCSI came back and said the Irish Times are not going to run with the story because they don't believe it.

Paul Mitchell: 13:58

Okay, no, wait 24 hours later, right. So that day it was launched, we presented it to the politicians, then we and journalists and then we presented it to the members and this report for the first time put out site data, construction costs, sales information, viability across a range of apartment types, every paper around. With that, the Irish Times came back and said oh sorry, put two articles that week on it, and it was fantastic because it was the first time. But we did get from some of the quarters that you talked about. Someone asked us to say can you put an image to show what do you mean when you say a core in an apartment block? It was just no. And one of those commentators came back to say oh, look at the report. It's based on a scheme that wouldn't get a fire cert and in actual fact, deliberately, it was an image from a scheme in the United States, so it wouldn't reflect any scheme here.

Rick Larkin: 14:56

It was just so an excellent Without just to pause you there, without you giving me any other information. I know precisely the individual.

Paul Mitchell: 15:06

I'm not going to mention it.

Rick Larkin: 15:07

I won't mention her on this podcast, but anyway.

Paul Mitchell: 15:14

But here's the thing right. So at that point some great things happened. Two great things happened. We got the apartment regs changed, built rents came in as a new asset class but, more importantly, international funds came into the market. Because I can remember at the time doing scheme after scheme that built a cell, viability checks for an AMA that wouldn't work. I remember at the chap sitting across the table for me was currently inclined to mine saying how come apartments don't work?

Rick Larkin: 15:45

Right, and just on that, because I know where you're going with that, and I really only bring this up because last week I was at a wedding and I'm sitting next to somebody who I was trying to explain this point to and, rebecca, if you're listening, we never came to an understanding. But when you say you looked at the viability check for, say, regular apartments, right, that's building them to sell them. So it's building a bunch of apartments and trying to get people to buy them. Ordinary purchasers we hear this a lot and there's a whole episode later planned about this, about this idea of these funds are coming in. They're buying apartments that otherwise will be bought by individuals.

Rick Larkin: 16:26

So you were doing viability checks and as part of that, you're looking at the cost of producing the apartment and you're looking at the end value of the apartment, what they can be sold for and the timeframe in which they can be sold, and the result of that is that one doesn't meet the other, right, the revenue is not meeting the cost or go. You do not have to be a charter surveyor to figure out that nobody is going to build something in which they lose money. So that's where we were. What year was that when you were doing that stuff. For now that was sort of 15, 16.

Paul Mitchell: 16:57

Yeah, and yeah, it was 15, 16, yeah, so even at that point, which is okay.

Rick Larkin: 17:02

Now it's seven, eight years ago and it feels like a lifetime, but at the time the property industry was on the floor. There wasn't a whole lot of construction going on. Tender prices were low, construction material prices were a lot lower than they are now. A lot of the new regulations around fire and things that have come recently were not present then. Construction costs was a lot lower in 2015, and yet it still did not make sense to build these things and to sell them.

Paul Mitchell: 17:29

Correct. Yeah, and if you think about it, we were building apartments back in the early 2000s or somewhere. Do you see a magic figure? A 1650 square meter. That figure now is between 24, 2400 and 3000.

Rick Larkin: 17:47

Yeah, I was gonna say probably closer to 3000 in most cases.

Paul Mitchell: 17:49

Yeah, but depending on the scheme and the report hopefully that will be issued soon has got all the data. And now for the latest report, which has just been issued to the housing commission. Has 14,000 apartments. But the point was, prs came in or built a rent, and because it was a completely different model, it was rent divided by yield right, there's somehow magic. It was able to happen, right, fantastic schemes were getting built. The things really started happening at that point were built rent and the funds, because we couldn't get finance, the banks weren't lending enough and built sales isn't viable. So PRS or built a rent came in. Built rent was the technical planning guidelines that are now no longer. Prs is the generic term for a private rental sector or we're just renting units. So these were, this was working and we were producing units.

Paul Mitchell: 18:50

And it's the thing that I grieves me a little bit is, as soon as something is working, we change it. We cut built a rent, the political pressure amounts. We cut co-living, right, like how many co-living schemes were we ever going to build anyway? Okay, and we need space for key workers, right, we need space for everyone, and one of the things that we've been talking about recently is in terms of solutions. What we actually need so we've been cutting it all down right so that everyone has to get a receipt is whether they can afford it or not.

Paul Mitchell: 19:28

And what we actually need is we need a graduated ladder of housing typologies. We need to be as a student, be in subsidized on-campus student accommodation, we need to have purpose-built student accommodation that is subsidized or not, but it needs to be affordable. And this is the key part in the early stages of the curve. How do we get affordability, viability and affordability two completely different things. How do we then move to a share, a professional share, co-living, right Type arrangement, and how do we then move to a PRS apartment or cost rental or affordable purchase?

Paul Mitchell: 20:11

And if we had those typologies for those and that kind of housing ladder, we will cut out a lot of planning issues, both in terms of planners making mistakes, designers designing the wrong things and developers dare I say it, putting forward the wrong thing I see it all the time the wrong schemes out there. There's a lot of schemes that are stalled and some of those are reasons for that. But instead of kind of having this graduated typology in place, we're actually cutting down the typologies that we did put in place and we're doing that as a reaction to outrage that's based on nothing other than just dogma.

Rick Larkin: 20:54

right that there shouldn't be. Everyone should be living in a really large apartment, whether they want to or not. They shouldn't be high, they should be near everything, everyone should have a parking space, but no one should have a car. You know we are. It is schizophrenic the pace and the manner in which policy around this stuff has been made of late. The media, I have to say, have a large part to play in that by amplifying voices of people who don't know what they're talking about. We've discussed that already. But the politicians also have a bit more responsibility around this, because I do believe a lot of them understand what you're saying. But it is quite convenient to get on board with the Twitter aty and just say the popular thing which is down with department developments, but we need housing.

Paul Mitchell: 21:51

I have a different view.

Rick Larkin: 21:52

Okay.

Paul Mitchell: 21:55

I feel relatively more positive over the last couple of years.

Rick Larkin: 22:00

The last couple of years, or the last couple of weeks, because the last couple of years have, I think, been I mean, look at all the things that have happened. Built to rent was cut. That was an absolutely ridiculous decision that was based on nothing other than, you know, outrage. Co-living was cut, ridiculous decision that nobody could justify with any kind of data or evidence. Correct Building regulations in an inflationary environment, continually being upgraded to the point where we've seen increases recently over two different apartment blocks just on sprinkling, costing 15,000 euros more per apartment because of needing to sprinkler the basements, needing to have telemetry to all the heads, needing to sprinkle the common areas all this stuff that you can't argue against.

Rick Larkin: 22:48

It right, because then you're anti-fire safety. But there is a world that exists without any of that. That's perfectly safe, but we seem to live in a world when we won't take the lessons of what's gone in other countries and we just can't come up with our own. So I'm curious as to why you feel optimism. Over the last couple of years, the last couple of weeks, I think, there's been a number of things actually a couple of months even that have been positive. But, expanding that a little bit, what are you optimistic about?

Paul Mitchell: 23:22

I think that. So I agree with you in terms of, you know, bill to rent. However, the bill to rent one is like. People got very upset over bill to rent and I give a presentation at the IPI conference last November and I said there's not much difference between bill to rent and bill to sell in the regulations. Your mix is allowed. You're allowed to go over 12 apartments per core. You're allowed to have less balconies. Your average size doesn't have to be 5% bigger. Look at the schemes. Look at the amount of bill to rent schemes that are out there. There aren't actually that. Many People went because they didn't like to be stuck with this 15 year covenant, so they just got bill to sell planning permissions and rented the buildings otherwise known as PRS. So data in itself isn't really going to hurt things. What does hurt things is the likes of Dublin City Council saying 40% of apartment buildings have to be bill to sell. Now that is the death knell for apartments in Dublin. That by itself, kills everything.

Rick Larkin: 24:32

Well, I was going to say that you're right. People didn't want to be tied into the rental thing because they had the option of not doing it with relatively little penalty. But the reaction to that happening was exactly that. Dublin City Council saying 40% of apartments had to be bill to sell, don't leave it right down. And others now instituting conditions into the planning permissions which I would say are wholly illegal, requiring you not to rent the property. Now talk about infringement of property rights.

Rick Larkin: 25:06

If someone had the guts to go down the road of challenging that, like I, just it will be tossed and that has been the reaction to it now this idea that renting is bad and so we're not going to build any rental housing, which says renters are second class citizens who do not need to be taken care of. Not everybody wants to buy a house. Not everybody is living here forever. Some people are coming here for a few years to work, or they're coming here because they met their boyfriend or girlfriend and they are going to leave and go to wherever. Why they felt the need to start targeting renters under the auspices of targeting landlords. Right, because you hear a lot of this language is actually about settled areas and about displaced populations and about like it's not sustainable, which is all code for we don't want renters here, we want homeowners, because homeowners are better people.

Paul Mitchell: 26:02

But, like, if you look at the way it's done, it's like in the liberties. You know they're brought in purposeful student accommodation, right, and the liberties was an area that wasn't regenerated during the boom, the last boom, and you went there and these neighbors were up in arms and complaining about these students, these noisy students that were going to come in and we're not going to have this. The planning got through and it was pre the enlightenment of JR rules and the owner, the guy that was the most kind of a noisy neighbor, came up to the owner and he said look, when are you actually going to move these students in? You know, he said they've been in two months. He said what? So you know. And next thing, this like six or seven schemes now down, a new market right For new market is transformed Fantastic.

Paul Mitchell: 26:51

Lovely shops, the distilleries, all the rest right down there. But to wind back a second because I've gone down to tenure, but in terms of the positive things that I think, so yeah, those are negative. Co-living was a miss, right. I just think it's really poor, you know. And going back to when you say I'm independent, my clients are developers. So from that point of view, anyone listening to go well, he would say that because he asked for developers, so put that out there. But you know, we did our first co-living scheme in Dunleary, you know which is up there and built. We have another four on the way, but that's about all that has planning and there will be no more.

Rick Larkin: 27:27

No, there will be no more.

Paul Mitchell: 27:30

And so I think that that was a miss and I think hopefully some shape of that will come back into play at some point again. But if you look at, I suppose what's been happening, if we didn't have the change in terms of the LDA, if we didn't have the AHB's cost rental right, this industry would have just stalled right now, Like the amount of insolvency I would say around departments games will be very high because there wasn't an alternative. So that's very positive, it's provided an alternative, the government and look, if you look at the, we kind of track all the changes that happen and there are a myriad of things that have come into play All these deposit scheme first, home schemes, the most recent Star one, which is cost rental for private developers. So every few months there's something new has been introduced, to the point that it's confusing, and so it's very confusing now. That's okay. It's okay to be confused about if we've got measures that are helping, like Cree, Conor or whatever.

Rick Larkin: 28:35

You can work it out. If you're confused, you can figure it out. It's better than there being just a stroke.

Paul Mitchell: 28:43

So the only thing here construction costs are going to continue to increase and we did that study that we'll probably talk about comparing the costs with the other cities in Europe for the government race issue to publish it in May and that, looked at it was a very deep dive inside into construction costs here because the mantra is the same Ireland's too expensive, rip off Ireland. Construction costs are way too high and for the first time we've reported that it's done a really, really deep dive, like for comparison.

Rick Larkin: 29:17

Yeah, so what you did there was you did this traveling box. So you designed and for anyone will post a link to the report because it is publicly available in the show notes. It's very long and it's very detailed, but if you have an interest in how this thing actually works and you want actual facts, I encourage you to go and read it. At least read the introduction and the summary, if you're not going to read the odd 90 pages of it, fair enough. So you took the traveling box, which is an apartment you designed, and you said let's build this apartment in Dublin, in somewhere in Birmingham.

Rick Larkin: 29:54

You tricked in the Netherlands and Berlin and Copenhagen right. What did you find?

Paul Mitchell: 30:02

So it was fascinating because people have tried to do this before and there are other reports that are out there and they compare things at a high level and if you look at those and in it we did the list review and you'll show that every report says something different. Yeah, absolutely. So we actually took four different asset classes. We took housing, scheme housing, urban apartments, suburban apartments and purpose-built student accommodation. So it was a heavy lift because we did four asset classes across five cities, so you had four traveling boxes. Really.

Rick Larkin: 30:31

We had four traveling boxes.

Paul Mitchell: 30:33

And so we had 20 development proposals. Our cost comparison cut development proposals and so when we took the traveling box so I was fully so the purpose of this report was the government to say, okay, go off, look at those other four cities, come back and tell us how we can reduce construction costs. That was the purpose of the report and when we so, in our methodology and in fairness they put together a very good steering group that a very detailed, brief construction costs only. What we found was that when we took the Irish apartment block and we got a price by quantities of airs in the four other cities, the cost difference was plus or minus 4%. It was negligible. You would lose that in a tender in the Irish market on the exact same job to five contractors Quite easily.

Paul Mitchell: 31:26

Yeah, and I was kind of going like it took us there, kind of, there was 6,000 lines of pricing in the apartment block, so it's an actual apartment block in Dublin that was tendered, so we'd real cost out. And the fact that everyone was pricing the traveling box cut out inflation, cut out technological differences, cut out building standard differences. It was just priceless.

Rick Larkin: 31:48

So this is down to you're specifying the brick, the wall makeup, the type of mechanical installation. Everything is the same. And how much does it cost in Denmark, how much does it cost in Utrecht, how much does it cost in Dublin, et cetera.

Paul Mitchell: 32:01

So we did that. So then I went whoa, that's, that's. I was expecting all these other cities to be lower. Why are they not lower? So then our second pass, which was always planned, was that we would go in and we say, okay, well, here, here is our Irish product. Now, Rick, you tell us what you're building for in Utrecht, Copenhagen, Berlin and Berlin. The costs came back from the other ricks between 17 and 30% lower, and we were kind of going hang on, you've just priced 6,000 lines of data. It's taken us six months to get through, and now you're telling us that this changes.

Rick Larkin: 32:40

So I wasn't personally surprised when I read that, and that's just because I've talked to people in other countries about it and about the standards that we have here. And this is down to the Mercedes and the Toyota. Right, we're building, we're building a Mercedes, and in Utrecht and in Denmark they're maybe not building quite a Mercedes.

Paul Mitchell: 33:03

Yeah, and it's in some cases. We're not comparing apples with apples, right? So what do you mean by that? So in some cases, so if we go here, we build an apartment and you've got floor finishes, get your full kitchen, you've got your fitted wardrobes, you've got some form of joinery- All right, okay, so they're not including a lot of that.

Paul Mitchell: 33:26

So some cases, so a lot of cases they won't have joinery, they won't have floor finishes. In some cases it's extreme they don't have a kitchen, so it's called gray box living. You walk in, there's a pendant in the middle of the room, there's a few sockets right and off you go. Yeah.

Rick Larkin: 33:43

Right, that's actually very common in the rental market in Germany, and their apartments are rentable at a kitchen and you bring your own kitchen from.

Paul Mitchell: 33:50

My daughter is just moving to Manpulli next week to start her arousal this year and there's no furniture.

Rick Larkin: 33:56

I'm going to come. Well, actually, ireland and the UK are the only two rental markets in the world that supply furniture. Yeah, in North America it is considered countless, in Canada it's just absolutely not. Like renting an apartment with furniture would be considered like. Who are you?

Paul Mitchell: 34:13

But it's not that like. So furniture is one thing right, which is in and out of schemes here, but like they have district heating right, their sizes are different. But to be honest with you, while we have prescriptive sizes here, prescriptive minimum sizes, they don't.

Rick Larkin: 34:29

Yeah, they have typically smaller apartments. They're up and down.

Paul Mitchell: 34:34

And you'll see it in the report. It's not actually because there's reports that are in the Irish market published to say our sizes are X square meters percentage above. We have found that some of them are higher than ours, but every scheme was different and unless you're going off measuring every single scheme in Copenhagen and Berlin. But so basically one of the big differences was scope. Right, we did find that mechanical electrical pricing here was higher. However, in a lot of the schemes in mainland Europe you've got district heating right Big steam pipe going down center of street heating up your apartment block where we have to build boilers and PV units and heat pumps and so on.

Paul Mitchell: 35:17

So there was a difference there and what we said was there was specification and the one thing we found was that the other power, the other countries and cities, viewed Ireland so they said you have got really high health and safety standards. You've got higher energy standards, like the UK I think it's just from the beginning of this year they weren't allowed to put gas boiler in, so our ends up and all the other energy requirements have been here higher. They're all creeping up to get to us.

Rick Larkin: 35:51

So we're still creeping up.

Paul Mitchell: 35:53

Everyone is creeping up. They were plateauing. We'll come back to that. But our health and safety, our beaker, how we sign off our buildings right, is much higher here than in the other cities and I've seen this personally myself in other places in terms of health and safety. So does that? They don't put in non-sweets, things like that that are just and when you in the report and well, it's the long report there are some tables that you can just go to the graph and just go. Okay, they say it's this, and when we take the spec and scope and apples and oranges thing into account, we kind of get back to where we are.

Paul Mitchell: 36:32

So from that point of view, we said to government, you can reduce construction costs and our income by up to 14% if you did the same thing. But do you want to move into an apartment without a kitchen? Right Now there was uproar and we were getting all sorts of emails to the office to say how day is just? Rent is bad enough, can't even afford the rent. Now you're not even going to give me a kitchen, are you?

Rick Larkin: 36:53

ridiculous. But there's an argument to say we're not really reducing the construction costs, right, we're just passing it on to something else, exactly.

Paul Mitchell: 36:58

And that's what we've called it. We've called it deferred yeah, differred scope. The tenant, right, carrie is going to come in here and still going to have to go off and buy furniture or go to IKEA. But we actually looked at this back in 2015 with PII gray box living and I thought it was an outrageous concept, right, and I don't think it'll fit here. But what this report did was to say, for once and for all here is the comparison, here is the detail You're not being gouged by Irish contractors or developers, right, but you know, construction cost is only 50% of the overall cost. The report recommends that the other half, which is soft costs, are examined also, and in a recent report, when we looked at the apartment, we found that a minimum of 35% was going to the state.

Rick Larkin: 37:53

Yeah, the state doesn't really react very well to that argument when it's being repeatedly made, as we have done over the years as an industry, to say I always come back to VAT people don't quite realize this. They're buying a house that 13.5% of what they're paying is actually going directly to the state. So when people the help to buy scheme, for example, say it's costing the government 30,000 euros per unit, it absolutely is basically free for the government because they're collecting revenue on the other side. That's essentially paying. They're just giving the VAT back to the customer who's buying the house.

Paul Mitchell: 38:33

But the other thing that they come into play which is something that we do, we can learn from is standardization. So when we got, we're terrible at that yeah we are terrible.

Paul Mitchell: 38:44

We are. All developers are competing with each other and we have no standards. Asim, we're always trying to do what the local authorities did back in 2008. And so when we got them to price this scheme, they said why do you have 16 different window types in your apartments? We said, look, 16 different window types. And so we've got four, because that's what you get off the end of the convertible from the factories and you can place them any which way you want. But we've got four of them. And they said why do you have 10 kilometers worth of this really expensive steel channel? And we said well, that holds up the outer line of the wall. We've got this brick facade and we've got a cavity, so this big angle has to carry the. And then, okay, what do you do? Well, we just have an insulated clay block and we clad the inside of a plasterboard. We insulated and we plastered on the outside, and that's our wall.

Rick Larkin: 39:39

Yeah, that's a huge difference. Can we do that here, though, under building regular, because I understand how the principle of that works and it works absolutely fine, and actually most of those countries are all much colder than Ireland, or isn't winter, and they have no problems with it. But I imagine that if you went down the road trying to do that here, you'd face a lot of opposition from local authority building control, fire officer et cetera.

Paul Mitchell: 40:04

Any time you try and do anything new. One of the things that we did try and get into was building regulations, which is very difficult, because building regulations doesn't say your block has to be 100 mil thick. It says your U value on your facade needs to be X, which can be achieved in many different ways. Building regulations, energy and fire are all creeping up. We have new fire rags about to come into play in Ireland which are going to change the way that we design our buildings.

Rick Larkin: 40:32

They are very, very serious changes that are being made.

Paul Mitchell: 40:36

They're serious changes and they will come into play, and whilst I think the biggest thing here is that the biggest change that we have to make is the changes that are being made to design and standards have to be independently viability checked and people will say they are. But if we look at the new compact housing design guidelines that are going to be coming out for consultation in four or five weeks time, what extent of viability check has been done on them? Or is it up to charity groups and like the SCSI to pull members like me in to say can you give your free time here to do these checks, please, and issue this?

Rick Larkin: 41:24

And one problem I see with that, the way things have changed in the development market in recent years, is that these changes are coming in, they invariably raise cost and so, yeah, the SCSI and people like you will go and you'll do the work.

Rick Larkin: 41:42

You'll say this is raising cost. This is terrible. But now that the market has shifted to being majority controlled by people like the LDA, people like the AHBs, who are providing solely for public service housing public housing, shall we call it, whether it's cost-rental, cost-sale, whatever it's being 100% funded by the state. So there's no commercial pressure in the other direction against these things from that arm of the development market. Because if the cost is 300,000 euros to build a house or it's 400,000 euros to build a house, the house is needed and the check gets written by the government and then the money gets paid, and so the regulations have no pushback on them, apart from people where the economics do matter. Me, you or we say well, actually we can't make that work anymore, we can't build it if it's going to be that price. So maybe think about the regulations.

Rick Larkin: 42:44

We're getting to be a smaller and smaller part of that conversation as this sort of public housing behemoth rises around us, and I wonder a lot about the regulation you talk about viability testing. I just see it as there's just a whole load of fiefdoms among people who are writing these regulations and they want this and the fire guys want this, and it's just well, we get whatever we want, down to the light switches or the socket switches. I don't know if you know this, that the switches for the socket used to be in the center and now we've decided they have to be on the outside. I think we're the only country in Europe that requires this, so click, or whoever it is. Make these socket covers, have to make a separate, different one for Ireland. That's increased the cost of the socket. It's just a small thing, right, but how many sockets are in an apartment? How many are in an apartment building? All of these things that we do? I mean it would be a dream to say you can't change anything unless you viability test it.

Paul Mitchell: 43:44

Yeah, but I think you're always going to get the incremental change.

Rick Larkin: 43:50

But it should be purposeful, right? It should be Like sprinklers. We were putting sprinklers into apartments before they were required. Sprinklers are a good idea. There's a fire, sprays water on it, puts fire out who can be against that? But to go from a situation when they weren't required to now, we have to put telemetry to all of them and they have to be physically inspected every year. And there has to be a commercial system, because there's a car park involved. That requires I am not joking a swimming pool to be built underneath the basement car park to supply the thing with water, like an enormous quantity of water, enormous pump sets expense. That is just for and it's like I look at it and think why we have all these car parks with cars in them with no sprinkler systems, but now, all of a sudden, there's an imperative that there is fire suppression in car parks, just because why?

Paul Mitchell: 44:41

And I think the other thing is that that's not consistent across the board. So we have regulations, but then we have some fire officers who say no, who?

Rick Larkin: 44:50

can vary them at will, right yeah.

Paul Mitchell: 44:52

And they'll say I'm not going to give you your fire cert.

Rick Larkin: 44:54

Yeah, unless you do. The only defense to that is go to Mbore Planola. Take a year, by which point the building will be ready. Hopefully they will rule for you, because the fire rags are meant to be the law but maybe they won't.

Paul Mitchell: 45:05

Well, in a recent case they turned around and said the fire officer is the expert, not us. And going with the fire officer, and there's a particular county where you go, and I only had a meeting last week and they said this is what you're going to have to do, but it's not in the rags. Yeah, yeah, I know that, but you will not get a fire cert. Yeah, and that's just an individual. Yeah, an individual that's saying I am taking an overly conservative approach and you will pay Because there isn't. You know, like developers here are an easy scapegoat in one way, they are blamed all the time.

Paul Mitchell: 45:43

I think the thing has changed a little bit over the last few years. I think people realize hang on, if we don't have developers and if we don't have international funds, we are not going to get units. Yeah, that doesn't get down to it. I do honestly believe, and this is why I'm more optimistic, I do think, that the department and I do think the likes of the LDA and councils are shifting big time in terms of saying no, no, we know what the facts are and we know where you have to go. Cree, come on Right. That's an acknowledgement that apartments for sale don't are not viable yeah, and the government are going to put in up to 144 grand per unit yeah, and the subvention of up to 150 grand per unit for cost rental legislation is positive.

Rick Larkin: 46:30

That's very positive and they should and I'm all for it, they should be complimented for those schemes. They make a lot of sense.

Paul Mitchell: 46:36

Yeah, and the changes like only three weeks ago. They increased the salary limits for cost rental from 59 grand up to 66 grand for double and that's net household income.

Rick Larkin: 46:47

Right, that's net household income. Yeah, so I mean that's, that's a four.

Paul Mitchell: 46:50

Most people, I would say that's a 400 euro increase in the allowable rent. Yeah, and that makes because we're involved in a lot of cost rental schemes and that makes a world of difference. But take it that in a cost rental scheme, things that don't work are a high percentage of three beds. Take it that you have a recent planning permission near where you live that in, in condition for the planning that was granted, said love your scheme, just change, you know, the three by one up the level of three beds to over 25%. That kills cost rental. Like moves like that. Just set back a scheme and think about judicial review, think about planning, think about all that that has to go through right, yeah, so that scheme is set back by two years and we're running on inflation of five or 6% per annum, like things like that are criminal.

Paul Mitchell: 47:44

And at the beginning of this year, when we issued our infocards, we said we needed a three year emergency. We needed a three year emergency to bridge this gap and we needed to do things that you wouldn't ordinarily do. And there were things around a rebate on that. There were things around nailing planning contributions for three years, great for the commune, for 12 months, fantastic, and other things that. But we have to do those things now, but some of those things are happening. They're happening on the public side. That's a venture that's happening on the public side. It's an interesting point you raised then about who's thinking about the private developer now.

Rick Larkin: 48:25

Well, this is the thing the private developer and I say this a lot and people think I'm just like whinging which I am whinging we as an industry are going extinct. A lot of people got wiped out in the crash. You can have your own opinion as to whether Naaman, how all that was done, was right or wrong. It was a very good disaster that wiped a lot of people out. People got old, people retired, people died. Whenever I go to any of the lobby meetings or breakfast or any of that stuff, I'm invariably one of the youngest people in the room. I'm not that young anymore. I was. When I first started going, I was a little kid and I'm sure people were looking at me funny. There is nobody getting into the space of development now.

Paul Mitchell: 49:16

Yeah, part of our work with the Housing Commission was I went and spoke to the German Housing Commission. I'll be interested to hear what that was like yeah, I had a two hour conversation with a very friendly economist and he said they spent two years working in a particular commission, which is on the reduction of construction costs, the commissions for different things. He said they spent two years working with a very expert group to come up with 78 recommendations. 16 were implemented and construction costs went up.

Rick Larkin: 49:55

I thought there was going to be a happy point of that story.

Paul Mitchell: 49:58

Don't do happy Private priorities. The interesting thing was then that two hours you could have interchanged the word Germany with Ireland all through. Where they're at is zero profit companies, ahbs but zero profit coming in. What they do is they take land, the state get land, and then they go out to developers, to you, and they say, okay, give me your best bid for this site, including your proposal. It's a bit like the Odevany Gardens model. You'll say, okay, I'm going to give you a third cost rental, a quarter affordable purchase, a bid for sale, and I'm going to put the rest on the private market. The level of subvention that they have is huge. It was a real eye-opener for me because it meant hang on, this is they're struggling, they can't meet their numbers. The UK can't meet their numbers, the US can't meet their numbers, they're throwing money at us.

Paul Mitchell: 51:05

The thing about it is when you look at it, because all our conversation today has been around viability. When you then bring the affordability piece into play, that is when the real conversation starts, because you might say an apartment, like when we were building apartments in Sandyford back in the 2000s two-bed apartments were been sold for $550,000, $600,000, $630,000 back then. Today's price is $430,000, $480,000, $510,000.

Rick Larkin: 51:35

Which, adjusted, is half.

Paul Mitchell: 51:40

So why did it work before? Like metrics have completely changed. Construction costs are not going to go down. Site values will reduce depending on supply and demand.

Rick Larkin: 51:53

But they're already low anyway.

Paul Mitchell: 51:56

They've reduced actually 39% on average since we did our SCSI report.

Rick Larkin: 52:02

Which makes a lot of sense, but we're seeing the point now where site values are so low, particularly for apartments sites, that it's almost immaterial. Land used to be a third of our cost.

Paul Mitchell: 52:13

20 years ago. Third of third of third.

Rick Larkin: 52:15

Third of third right that's what we used to have. Now it's sort of 7% 8%. So even if land price were to fall 50% from where they are now, that's shaved 3%.

Paul Mitchell: 52:25

And you know, the big issue here is that everybody that talks about their own particular part of that 50%. You're 50% which is construction. You have the other 50% of soft costs, which includes site. When you look at that pie chart, each bit is only 5% to 10%. So when you talk to the council, to the government, about reducing planning contributions, how does that move the needle? If we were to use planning contributions by 50%, it changes the needle by 2%. Just the example you've given on the site, that not sure if I take it off that the development is just going to bid more on the sites, which is a hazard, so that that rebate would look to kind of change that.

Paul Mitchell: 53:10

If you sell below a particular level, then you get your VAT. If you don't, you don't. There's ways around that, I believe. So that's the problem, the bit. So therefore, people only want to go after the chunky bit which is construction costs which, for all the reasons we've talked about, are going to incrementally climb. They're going to wax and wane with the market and tender price levels and then we'll probably see some adjustment at the beginning of next year, but for the most part we are just incrementally going up.

Rick Larkin: 53:35

And each of those construction costs in a way is also a little bit of the pie chart. Like we can say 50% of it is construction, but actually 1% of it is bricks and 2% of it is steel or whatever. So you need all those things to fall and the only common component of them is energy and logistics. But everything else is different. Right, this clay goes into bricks and there's ore goes into steel and timber comes from. So we like to just lump it into one basket and say construction costs, but there's a vast number of commodities involved particularly nowadays and part of the hyperinflation that we experienced.

Paul Mitchell: 54:09

For the first time we were analyzing buildings, not on composite rates, as how much is to put a cube of concrete in place. It was where does the rebar come from? And why are we now tracking scrap steel prices in Turkey for cars? Because that's the raw material that's used to make rebar and we get the rebar from there and the rebar comes and that makes our concrete. So it's mind-boggling when you get into it right and you can see there's an explosion in some factory in America that makes some little insulation chemical through all our prices. We were during COVID. We actually were getting so many questions every day from clients but when everything was changing that we just started issuing this weekly COVID update, which then became a kind of death rate upgrade. Our graphs had changed from cost per square meter on concrete and steel to debts and it was kind of crazy but it showed the kind of global supply chain impact on construction costs and that has settled down somewhat.

Rick Larkin: 55:17

Going into some weeks has been kicking off a little bit again.

Paul Mitchell: 55:23

There's opportunism, but the one thing that we haven't touched on and we'll do that over the next half hour is availability and resources. Now, the whole world is short of resources, right, but we are short of contractors, we're short of suppliers, and what happens when, hopefully in the short term, ukraine situation ceases and we get into a rebuild situation? Right, we've already lost a lot of Eastern European workers back to Europe post COVID. There are all these other things coming down the track, and we've got developers who went through the crash before, like the developers you talked about, and they're more conservative now, right, and they're not going to take that chance.

Rick Larkin: 56:08

Absolutely not going to take that. They're not going to take and they're not going to be less because the funding won't be there for them to take those chances either. You touched on costs and shortages of resources and one of the things I had down here was to talk to you about MMC modern methods of construction which most people take to mean modular building. I'm going to give you our take on modular right. So we've looked at this. Every which way we in the past up to now have made the bathrooms in all of our apartment buildings have been modular right. They've been bathroom pods that were made in near Limerick and then in Nina, steel frame. Perfectly nice bathroom all the same. I don't know how many of. We bought thousands of them and they worked fine. We then went and started doing the plant rooms in the apartments modularly. So very similar Again, they're not tiled but they have sort of a plastic cladding inside. We do all the mechanical heat recovery and the heat pump. We do it all the same in all the apartments. It's hot water tank would encourage heat pump all in little box. Modular, got delivered, worked fine. We then thought, okay, well, let's take it a step further and see, can we do the kitchens? No, can't do it, too many different types of kitchen. So the kitchens are already technically manufactured off site. But we were kind of hoping we could get the whole thing in one piece and drop it in save time, no too difficult.

Rick Larkin: 57:39

So then I started just getting curious and looking into modular construction around the world, and the only place I found that seems to be doing it fairly reliably is in Asia. So in Japan, in Malaysia, in places like this, particularly in Japan, they have a huge issue with labor there can't get any. So they have come up with modular buildings and they work well, they're all the same. Every floor is exactly the same, with the whole way up. The UK they're doing it. John Fleming, I think, is probably, if not the biggest, one of the biggest people they're doing modular construction. But in Ireland it just doesn't seem to fly Like it's hard to even make precast work. From what we've seen, it's like you can do it, but it actually doesn't cost any less. In some cases it costs more and say, ok, well, your time on site is less, so there's a safety benefit to that, but other than that not really much of a saving. Tell me I'm wrong. Tell me you have the solution.

Paul Mitchell: 58:39

You're wrong, I have the solution.

Rick Larkin: 58:41

OK.

Paul Mitchell: 58:42

No, you have to edit the bit out. I think there's been a lot of movement and MMC is a broad church and it's become a bit of a buzzword over the last couple years it has, and I should say that it has become a thing that people throw out to be like that's politically.

Rick Larkin: 58:58

You hear a lot, well, we'll reduce construction costs, we'll just use MMC because it'll be cheaper. And you say, well, will it be? Don't worry about that. Look at these magic beans and vote for me.

Rick Larkin: 59:10

But yeah, so it's a buzzword, but it has been an area of focus for a lot of people who are attracted to the idea of making things in a factory. The same way, cars are made in a factory, if we're going to build a Mercedes, we might as well build a factory. What we do right now is build it in a factory outside Kevin, who works here with us on the cost control side. He of us says what we do is we build houses in a factory with no roof and every single house is different, and we have like 35 people coming along going do it this way, do it that way. I don't like it and that's how we operate our business, which is, you would say, on Facebook, crazy, but we haven't seen another, better option.

Paul Mitchell: 59:49

And, like the, there's a fantastic report that was produced by the World Economic Forum for four or five years old, looking at the construction industry. It's the best report I've seen Because it addresses all of the issues that people because people talk about it. It's such a fragmented industry. Right Got the average number of workers in a construction company in Ireland. It's like single digits. Yeah, it's crazy. Right Now, pit every one of them against each other and get them to bid for a prototype every time.

Rick Larkin: 1:00:20

Yeah, it's a prototype.

Paul Mitchell: 1:00:22

You're not building a Mercedes, you're building a mix between a Mercedes, a portion of Fiesta, right Maybe, and maybe that will change during the course. So we're trying to tie up a prototype with a factory process, right, and that gives rise to challenges. So in the UK the report was modernize or die, right Probably four or five years ago. It was like all about MMC and mainly modular. And that moniker came out last year to say modernize and die because of the amount of insolvency in modularity.

Rick Larkin: 1:01:00

But that has been crazy to see the amount of insolvency.

Paul Mitchell: 1:01:04

But it's not like if I have a factory producing tautas and I'm spitting them out the door right and then suddenly the whole world says I don't want tautas, what do you do? You have to shut your factory down. You can't keep it going and pile up tautas in the car park right. And that's effectively what we're trying to do. And in order to do it, we looked at this previously and we actually we looked at a scheme here of 900 student beds, one scheme, modular, and we went to Sweden with the developer. We saw the modules being constructed onsite and it literally was two bedrooms, corridor in the middle did 40 foot containers, lego, lego right, and then Prander Fassad.

Paul Mitchell: 1:01:50

We then left with that developer from Sweden and we traveled to China. We spent a week on a very hot factory floor trying to see how we would put Irish B-car on these boxes that were being built in China. And you talk about fire. So then, for every box that was different, we'd send France Burnett, spend a hundred grand right and the regulatory risk. And I said it to this particular client. I said I don't want to be sitting here with 400 units, sitting out there in a ship in Dublin port with someone saying no no, I put them, put them in and then I'll see whether I'll approve them or not.

Paul Mitchell: 1:02:32

So you need buy-in from all sorts to be able to do that. So that is modular. Nmc is is very tricky. It was done here. Apartment buildings were built here in the boom by Mr Fleming. Yeah, that are still standing today. But the MMC, more so, is all about just different technologies. It's more about they call it about 2D and 3D. So it's about getting a flat panel. So I might get my wall built in heavy gauge, light gauge steel right. So I just throw up the wall. It's vertical. It might come with its windows. Yeah, we're currently doing the sidings, office building, which is really interesting to look at because we are now just lifting. So we've put the building in concrete and now we're putting up the brick, the precast, the glazing, all in panels. They're just going up. So that's MMC designed three years ago. So the future for MMC? I think it shouldn't be, we shouldn't be negative about it. It's not a panacea and but it will be more 2D than 3D. Well, chains have done modular, part of the shelter and hotel is modular.

Rick Larkin: 1:03:48

Yeah. Well, it makes a lot of sense for hotels, right, because they want it to be exactly the same.

Paul Mitchell: 1:03:52

But and I can't remember which hotel group it was, but their findings on it was it was slightly more expensive, it was in the single digits more expensive construction wise, but it saved on time.

Paul Mitchell: 1:04:04

If you're in a time sensitive zone and you've just bought a site in Manhattan and you have to get that revenue flown on your IRRs under pressure, it makes sense. If you're doing an apartment scheme that may have three to six months flex in it, right, and we've looked at it, we've looked at it here for other student schemes. But I think, and when you look at any of the time lapse videos and you see a house been built, you see all these workers go around the site, right, they're all digging and putting down cables and trenches and foundations right, this takes forever on this 60 second video. And then that's the house gone up Because it's just delivered to site. And then the other 24 seconds, right, is them putting the roof on, putting the gluing the three bits together, right. So it's part of a solution, but it's not an overall solution Because a lot of the work that you see.

Rick Larkin: 1:05:00

The house just comes to site. But somebody made that house as well, and that was human beings. There weren't robots that did that.

Paul Mitchell: 1:05:06

Exactly.

Rick Larkin: 1:05:07

I've kept you here more than an hour so far, so apologies for that.

Paul Mitchell: 1:05:10

I've probably kept you here more than an hour, I mean I find it very interesting.

Rick Larkin: 1:05:13

I actually think it's going to be very interesting. I think people are going to like it. Carrie is here letting us test.

Paul Mitchell: 1:05:18

You still awake, still awake.

Rick Larkin: 1:05:20

You're still awake.

Paul Mitchell: 1:05:20

No, I saw the head hit the table. Extra coffee you have to edit that out later on.

Rick Larkin: 1:05:27

Other things that you're working on. I know that you have this report coming out and maybe you can't talk about it the sprawl, the cost of sprawl. You probably can't give me the details as to what you found, but you are looking into how all that works and I find that very interesting because we last episode we talked to Colin McCarthy and he was making the point about sprawl and how the horse bolted a bit. We've already done the sprawl, so now let's not make the mistake of layering bullshit transport solutions like rail on top of it just to make ourselves feel better. You're doing a report that's looking at more nuanced costs around sprawl whether it's happened or whether we're going to do it, but there are real costs to it.

Paul Mitchell: 1:06:15

Absolutely. One of the things we found our report is a high level report because to try and understand the cost of sprawl is a one to two year exercise. First off, you say, well, look first pass, is there an issue? Right? So in 2006, european Economic Report about Ireland to say that it was probably the worst cases of sprawl in Europe. One of the things that I didn't know up until a few months ago was that they fly an airplane over the entire Europe at low altitude every two years and photograph the landmass. Really, if you look up Korean C-O-R-I-N-E maps, you can actually go in to any part of Ireland and see the change in the different time periods. But you can go in and see the difference between 2006 and 2012. Some of them are wider than others and that's just publicly available. Publicly it's online and you go in and you can see where land they check forestation, deforestation, commercial, residential.

Paul Mitchell: 1:07:28

So one of the things that we're doing is we've had a lot of interaction with the public utility companies. What is to come up with a theoretical scenario and say, if we built at a denser level and we didn't have to connect to this town over here, how much would we save? And figures yet to be finalised, but there is a cost. Now there's some fascinating reports. Actually in Canada, one of the places they looked at, they've actually worked out the capital cost of urban sprawl per head and the operational cost per head and the cost of commuting to your health.

Paul Mitchell: 1:08:10

The thesis has been done over in Ireland the cost of accidents, the environmental cost. We know without doing the one to two year research that it costs money. Ireland has an infrastructure deficit all over the place Electricity, sewage, water and we're a country that started off in a very large bog with trails and over the last few thousand years we've termed the trails and we've all these roads and therefore we're a dispersed country and then we've tried to connect all these people with electricity and water. So we have this extra cost. But so I think cost is bold, so horse is bolded, but we can bring the horse back into the city.

Rick Larkin: 1:08:59

We can stop bringing the horse out into the field with the open gate. That will be a start. I don't think we're making much progress on this.

Paul Mitchell: 1:09:07

Yeah, again, I'm going to be positive here for a second. If you look at, the changes that are out to the government come out of consultation, but this new compact living which had been put out there by the RAI, it's been put out there by some of the private developers and got some negative feedback in some quarters.

Rick Larkin: 1:09:29

What was the negative feedback? The negative feedback was when Stephen Garvey said that we should make the back gardens a little bit smaller, and people went absolutely nuts though by that which totally nuanced reaction to what was very reasonable. Yeah, and people in my mind got the wrong.

Rick Larkin: 1:09:46

That was taken up wrong as these things often, do I mean, if you listened to just 10 seconds of what he said, you would realise that that was totally out of context, like this. Not, he wasn't saying people shouldn't have gardens. He was saying maybe if we just shrink it a little bit.

Paul Mitchell: 1:10:02

Yeah, and it was just. We're living with standards that are very old right and we need we have a moral obligation and an environmental obligation to make better use of our land. We are putting in three and four bed semi-detached houses that are not occupied by four or five people respectively. Our average household size is 2.7. We have a huge issue around our housing need, demand analysis and the mismatch with the census like that's a whole other conversation that I think you discussed a little bit with John Downey, but you know so.

Paul Mitchell: 1:10:43

When the regulations changed that we don't want to build 30 units per hectare anymore, dwellings per hectare, they've changed it to now we want to build 50. So then that meant the developers had to try and build department blocks out in Lueckin or Manus or Kilcock, where they're not needed, where they're, people don't want, they don't commute out that long far. They want a three bed semi-D with the garden. So those viability issues. And next thing, you found that the houses were actually subventing the apartments and now there's a new typologies, which are really welcome to be put out there, about a mix of duplexes, houses and so on. That's what we need and it goes back to the point about having a graduated ladder of housing typologies, which doesn't stop at your house. It's your trade down, it's your senior living, it's your supported housing, it's your nursing home, it's your final home.

Paul Mitchell: 1:11:38

But I think some of that stuff is going to be fascinating. But again, this is the point where we could make an absolute mistake. This is like 2008 and on our website you'll see apartments, how we were repeating the mistakes of the past, where we catalog from 2007 up to last year. And this is right at the point where you go oh no, don't put a new typology in place that's not tested. Is it going to produce more people? Is it actually going to be more dense or is it just going to be more dense because of the amount of units? And there's a nuance in there and we need to be very careful with that nuance and that's why you need quantity severe to know that you're schemes.

Rick Larkin: 1:12:21

Well, that feels like a natural place to release you from the prison of this room. But before you go, I ask everybody about the magic wand If you could change one thing. Now some people have tried to hijack this by saying, well, I changed this and because of that I changed this One thing. Yeah, you can literally just go in to tomorrow, to the doll or to wherever building control, and you can say we're not doing this anymore.

Paul Mitchell: 1:12:46

I'd add 200 people to unbored Hanola 200 people to unbored.

Rick Larkin: 1:12:53

So planners and inspectors and people like that, clear out the planning backlog. Yeah, yeah, it doesn't seem like a bad idea.

Paul Mitchell: 1:13:00

It's a simple idea.

Rick Larkin: 1:13:01

Yeah, I think they are trying to do that. I mean, I was on a panel a while ago with somebody from the Department of Housing and she had said that there was a huge recruitment drive for Bored Hanola, but they're really struggling to get people.

Paul Mitchell: 1:13:19

We have other parts of the world that aren't experiencing what we're experiencing. Our thing that we said in part of our three year emergency that we said in January was go to the UK, get planning consultants and second them in. Pay them. Think about the money we're losing. We actually worked out the cost of judicial reviews. Money we're losing is so pay the planners 20 grand more, right, what is 20 grand in our crisis Zip? Yeah, three year emergency. If the government think about it as an emergency, we will do things like we did in COVID lots of cycle tracks that we never would have had if we didn't have COVID or people working at home. Do things like that Temporary. Now I know there's always an issue with temporary measures. Put those in place. Put three year emergency, deal with it. Knock it on the head because the deficit when you and I are talking in three or four years time, we will talk about the deficit of this time period and the mistakes made now.

Rick Larkin: 1:14:23

Yeah, and the reaction to that. Paul, thanks very much for coming down, for giving us your time. I know that it wasn't just today. We had our warm up call and you did a lot of research too, and it's been very helpful for me because I feel like I've learned a lot, particularly from the reports that you guys write. And you do all that, like you say, on a voluntary basis. You're not paid for it, so it is a real benefit to the industry and it's a benefit to anyone else who wants to learn about costs and learn about how the development industry works. So I want to thank you, not only for today but for that work that you and your colleagues are doing. And, yeah, let's see come back in three years and see how the three year emergency is going. Very good, the build is hosted by me, rick Larkin. Carrie Fernandez produced this episode. Original music was written by Cass. If you have a suggestion for the show or know someone we should interview, please let me know by email, rick at thebillpodcastcom. Thanks for listening.