Reasonable cost reduction: The preferred option to address First Mover Disadvantage

by | Apr 3, 2023

The Irish Home Builders Association (IHBA) has made a submission to the Commission for the Regulation of Utilities (CRU) consultation on how to address First Mover Disadvantage (FMD), writes CIF Executive of Housing, Planning and Development Rosie James.

FMD occurs where an initial homebuilder invests in infrastructure connections for a development, and subsequent developers later connect into this asset without contributing to the initial infrastructure costs.

Addressing FMD was identified as a key action to be completed by Uisce Éireann (formerly Irish Water) as part of Housing for All, and the IHBA welcomed the opportunity to provide feedback on the consultation.

Our key consideration when reviewing the different options proposed by the CRU to address this problem was to focus on the impact this would have on members and the delivery and cost of housing.

Ultimately, these projected costs would be passed on to the consumer.

The consultation comes at a time where the housing industry faces various issues including delays in planning approvals, inflationary pressures and high construction costs.

Three options were proposed by the CRU to address FMD. These were as follows: Shared Quotable Rebate (SQR), Reasonable Cost Reduction (RCR) and Group Appraisal Rebate (GAR).

All three options offer different means to address FMD and we received very useful feedback from IHBA members.

The preferred option as set out within the IHBA’s submission to the consultation was the RCR option.

This provides the first mover with an initial discount on the cost of connecting, with the compensation paid based on the risk level of subsequent developers connecting.

This option was considered most suitable given that it directly addresses the financial disadvantage that the first mover faces when they install the infrastructure.

Whilst this option is not perfect, for example the proposed calculation used to quantify the rebate needs improvement, this was considered the most suitable (subject to certain amendments).

The consultation closed on January 12 and we have since had further engagement with the CRU following our submission.

We look forward to sharing the outcome of the consultation once this is published by the CRU.

Should you require further information or if you would like a copy of the submission contact Rosie James on [email protected]

Meet the CIF team: Rosie James

In 2016, Rosie qualified with a Master’s Degree in Rural Land and Business Management from the University of Reading. She then trained as a surveyor working at Bidwells in Cambridge where she qualified as a member of the Royal Institution of Chartered Surveyors (RICS).

She later moved to London, working at the Duchy of Lancaster with various estate management responsibilities in Crewe, Staffordshire and later Yorkshire.

Before moving to Dublin in October 2022, Rosie worked as a researcher at CoStar, a commercial real estate data company. She joins  he CIF as an Executive of Housing, Planning and Development and provides support and advice to members of the Irish Home Builders Association (IHBA).

Contact Rosie at [email protected]

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