Eoin Ó Broin (Dublin Mid West, Sinn Fein) | Oireachtas source

I support Deputy Smith's amendment. I will not repeat the points other than to say we have to have a definition of affordability, particularly affordable rental, which is linked to people's income and ability to pay. I will support any amendment which attempts to do that. I also support Deputy Higgins' amendment in principle because there has been confusion in the public arena around much of the debate on land values.

There should be no reference to market value anywhere in this legislation, because market value is the open market value of land when it is sold on the open market and is determined by the zoning of that land. The vast majority of land we are talking about has an existing use value. The existing use value should be the guide.

The problem is, when you change the use of the land, the valuation changes. Shanganagh Castle is an illustrative example. That land had an existing use value of approximately €9 million. That is how much Dún Laoghaire-Rathdown County Council paid the Department of Justice for the purchase of that land.

Its existing use was the value of that land, which sat on the balance sheet of the Dún Laoghaire-Rathdown County Council. When one decides to develop that land with a mixture of social, affordable rental and affordable sale the land values change. Social continues to have existing use value and that does not change. The market value if one uses the terminology in the Minister's Bill of the cost rental is now determined by the lifetime yields that can be gained from ownership of those cost-rental units and that is a separate valuation. Likewise, the market value of the land on which the affordable purchase is not determined by the purchase price of the home today but the imputed future value of the sale price of the home, including the market value of the land because, of course, under the Minister's scheme one can sell those properties into the private market at a future point in time. The idea that what is proposed in this Bill will give one a zero or existing use value for any lands, from public bodies transferred to the LDA, is simply not the case.

The Dundrum central sites are also very important. Let us imagine a portion of the Dundrum central sites is unaffordable open market price. We do not know what the designation will be but let us give the Minster the benefit of the doubt and let us say he restricts it right down to 10% or 20%. In the market value of that land would be three separate calculations: the proportion of land that is social, which is the existing use value; the portion that is affordable rental for sale, the imputed yields or future value of the sale of the property; and then there is the open market value, which would be the full market price. That is the way this is going to be calculated. The suggestion that I have heard from some Government backbenchers, not on this committee but in my conversations with them, that they have been told not to worry and that the provision is just a way of getting around EU state aid rules and to avoid a legal challenge from some private developer who wants to buy one of these pieces of land but fears that the LDA is getting illegal state aid is, I think, a risky road to go down. We should only be talking about existing use value or the book value of the land, whichever is the lowest because no one should profit from land that is currently unused and sitting with the HSE, the Office of Public Works or Irish Rail and transferred to any public entity whose job is to deliver social and affordable homes. I say that because any increase in the value of the land, and it is transferable, increases development costs and the prices of those homes to rent or buy.

I would not have drafted the amendment as Deputy Higgins has done but her point is an important one. We need to make sure that if land is to be transferred then it must done at the lowest possible price and that is the existing use value or the book value of the land, whichever is lower.