Dr. Kieran McQuinn:

The basic idea is that it penalises people who are hoarding land that could be used for development. In research across various jurisdictions, we considered what policy measures had been used to stimulate housing supply. A site tax was used in the Danish case and seemed to yield quite significant results.

There are a number of ways in which this can operate. If there is a site tax and people hoard land, they might face the prospect of paying a 2%, 3% or 4% levy, which would encourage them to bring the land on-stream. Related to this, if developers are asked about a breakdown of cost, they will all mention that land costs are quite expensive and constitute a certain proportion of the total. Part of the reason land costs are so expensive relates to the speculative element. If a person is holding land and believes it will be worth 10% or 15% more next year, it drives up the price and people tend to hold on to or hoard the land as a result. That drives up the cost for somebody trying to develop the land. If there is a site tax, which is properly parameterised and implemented, it should cut out much of the speculation on land, which would in turn drive down the cost of the land and building a house. The site tax has much potential and it could be very influential.