Oireachtas Joint and Select Committees
Tuesday, 16 May 2023
Joint Oireachtas Committee on Housing, Planning and Local Government
General Scheme of the Land Value Sharing and Urban Development Zones Bill 2022: Discussion (Resumed)
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I welcome everybody to this meeting, the purpose of which is to recommence our pre-legislative scrutiny of the general scheme of the land value sharing and urban development zones Bill 2022. I welcome the representatives from the Irish Planning Institute, IPI, and thank them for giving of their time. With us are: Dr. Seán O'Leary, senior planner; Mr. Philip Jones, chair of the policy and research committee; and Mr. Robert Keran, chair of the private practice branch. The opening statement and briefing document have been circulated to members.
I will read a short note on privilege before we begin. I remind members of the constitutional requirement that they must be physically present within the confines of the place where the Parliament has chosen to sit, namely Leinster House, in order to participate in meetings. Those witnesses attending in the committee room are protected by absolute privilege in respect of their contributions to today's meeting. Members and witnesses are expected not to abuse the privilege they enjoy. It is my duty as Chair to ensure this privilege is not abused. Therefore, if witnesses' statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that witnesses comply with any such direction. Members and witnesses are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
This is the second meeting we have had on this Bill. Last week, officials from the Department were with us. I invite Dr. O'Leary to make the opening statement.
Dr. Se?n O'Leary:
I thank the Cathaoirleach and committee members for offering us the opportunity to meet the committee to contribute to its pre-legislative scrutiny of general scheme. I am senior planner with the IPI . I am joined by: Mr. Jones and Mr. Keran I will not reiterate what the IPI is other than that we are an all-island professional body with 1,000 or so members across the public and private sectors, central government, semi-State organisations, academia, etc.
We welcome the general scheme. We have consistently been in favour of capturing, for the benefit of the general community, the uplift in land values that accrues to the landowner, or persons taking title from a landowner, from the decision of a local authority to zone or otherwise designate land for development or betterment. It is a fundamental principle that the planning system is there to advance the interests of the common good and ensure that development takes place in the public interest, and this has been recognised since the Kenny report of the mid-1970s.
I have some remarks on the land value sharing aspects of the general scheme. As discussed in our previous evidence to the committee, and as highlighted in the committee's pre-legislative scrutiny report of the draft planning and development Bill, sections 48 and 49 of the 2000 Act, which deal with development contribution schemes, should be inserted, unchanged, into the next draft of the planning and development Bill. As noted in the explanatory memorandum to the current general scheme, the proposed land value sharing contribution would be in addition to, and not instead of, development contributions under these sections. The IPI supports this as the land value sharing contribution performs an entirely different function from development contributions. The former is to capture a percentage of the shared value accruing to a landowner from a zoning decision made by a planning authority, and the latter is a payment towards the costs of public infrastructure and facilities provided by, or on behalf of, a local authority that benefits development in the area of that authority. For example, this would include playgrounds, flood defence works, footpaths and cycle lanes etc. While welcoming the principles outlined in the general scheme, the IPI thinks there should be further detail on the level at which the proposed land value sharing contribution is set, at 30% of the zoning value of land, and whether, even allowing for other Part V and development contribution obligations, it remains below the level envisaged by the Kenny report. However, overall it represents a start in achieving a better balance as between the interests of the public good and the interests of individual landowners and developers, and for this reason it is to be welcomed.
The IPI supports the proposal in the general scheme that the land value sharing contribution would apply to all land currently zoned, and not only to land to be zoned in the future. To exclude such existing zoned land would frustrate the overall purpose of the proposed legislation and would mean that the shared value contributions would not accrue to local authorities for a long time, given the existing overhang of undeveloped zoned land in some development plans. Furthermore, it would mean that achieving reductions in the price of development land, and of arresting the increase in house prices, would be delayed. The IPI also accepts the proposal to bring in the measure on a graduated basis, which should have the effect of encouraging a quicker take up of existing zoned land. The proposal in the general scheme that the land value contribution be collected primarily by way of a condition of a planning permission is welcomed, as it provides clarity as to when the charge accrues, if not already paid. However, the wording of this condition is crucial to ensure that it is watertight and cannot be avoided.
We have some remarks on definitions as follow. The definition of “public infrastructure, facilities and related measures” in the proposed section 31BA, for example, would appear to be broad, while elsewhere there is a certain lack of clarity in some of the definitions, including the definition of “market value” and “critical land”. This Bill must be incorporated into the wider planning and development Bill in due course. In this context, a number of changes will need to be made to the current text, to reflect the proposed changing environment for development plans and, for example, the ten-year time horizon proposed. This is particularly relevant to the date at which the shared value contribution is determined. Some of the provisions regarding the self-assessment of the existing use value and market use value of land are vague, such as the use of “may” in the proposed section 31BG(2), and this subsection should be revised to ensure that all applications are accompanied by such a self-assessment. The section on the purposes of the Act should include a mention of achieving the best environmental, as well as social and economic return, from the use of the land and the provisions in the general scheme must also align with our climate goals. While the institute supports the exemption for social and affordable housing, it would question the rationale for the inclusion of thresholds, in relation to housing of less than five units and in relation to commercial development of less than 500 sq. m.
We have some comments on the urban development zone, UDZ, aspects of the Bill. Further evidence and analysis of why some strategic development zones, SDZs, have not come forward for development is required if a new form of development zone is to have the impact desired and if UDZs are to be flexible enough to address changing circumstances, such as approaches to density or other targets. This should also explain why a new form of development zone is being proposed, rather than improving the existing legislation for SDZs. However, the IPI welcomes the concept that the initial focus for a UDZ should come from the planning authority’s development plan, or from regional assemblies, rather than central Government. Adopted schemes should include an estimated budget, including costings from Uisce Éireann, which, along with local authorities, provides the vast bulk of services necessary to enable the development of land.
We welcome the encouragement of the use of compulsory purchase order, CPO, powers by local authorities, and the fact that compensation payments will reflect the land value sharing contribution, thereby making land cheaper. However, the institute is of the view that this reduced compensation should apply to all zoned land, and not only land within a UDZ, since the land value sharing system applies to all such land. Planning authorities should be allowed to carry out active land management in order to encourage development throughout their functional areas. A core issue with the concept of SDZs, and now with UDZs, is that there be maximum public participation and involvement at the earliest stage.
It is of concern that the present Bill would seek to delimit the discretion of An Bord Pleanála as to whether to provide for an oral hearing in the case of UDZ schemes. Persons should also be able to comment on proposed modifications submitted to An Bord Pleanála by the planning authority. We also have concerns about the content of proposed UDZ schemes and consider that they do not give the necessary certainty to the public or potential developers about what will and what will not comply with the requirements.
The institute is of the view that a number of the timelines set out in this Bill for the various stages of making a UDZ are optimistic and will need to be reassessed as to their workability, particularly in the context of the limited staff resources available in local planning authorities. That is something I am sure the committee is sick of us saying at this stage. While acknowledging the principle of a defined time limit for decision making, the IPI considers that the timeline for the appeal against an approval of a UDZ development scheme at 16 weeks is unrealistic for such a complex document which often involves many individuals and interests. That is why we are proposing a timeline of 26 weeks as more realistic. This can be justified by the fact that there is no right of appeal for individual development projects thereafter. In the interests of brevity, we have not outlined proposed alternative wordings for individual sections of the Bill, but we hope our key issues can be outlined in the discussion that follows. We will also be making a further written submission to the Department. We are happy to address any questions committee members may have. Should the committee wish to further engage with the institute on any aspect of today’s discussion or on the legislation, we would be happy to assist in any way possible.
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
I thank the witnesses for coming in. I will follow on immediately from where Dr. O'Leary left off with his offer to further elaborate the discussion. I have a few specific questions and then perhaps Dr. O'Leary could outline the various points and issues the IPI would like the committee to consider. In point 6 he touched on the idea that the price could be reduced and the inflationary effect on the price of housing. Does the IPI have a projection of what it thinks could be achieved? In the past five to ten years, to what does the IPI attribute land value increases and the cost and price of housing? Dr. O'Leary suggested that further evidence is required and that analysis should be done on why the strategic development zones, SDZs, have not resulted in the type of development and development success that had been hoped for. Will he elaborate on that and his proposal for what the scope of that analysis would be? What would he envisage the analysis would capture and who would be best positioned to undertake it? Will Dr. O'Leary share the other key issues the IPI wants to raise, something he mentioned in his closing remarks?
Dr. Se?n O'Leary:
We have not be able to conduct an analysis like that but I will ask Mr. Keran to speak about some of the land value increase aspects. He might also reflect on what works in SDZs and Mr. Jones also can come in on that. We will figure out the best way of going through the rest of it. We have a document which deals with each section of Bill. That can be made available to the committee when it is finalised if that would be useful. There are also some other specific things we can raise.
Mr. Robert Keran:
The IPI cannot answer the question the Senator asked about land values and projections on land values today. However, the point we are making in point 6 of our submission is that it is important the land value sharing, LVS, contribution relate to all zoned land as opposed to being limited to newly zoned land. That point has been well articulated in the statement. It is in the interest of the concept of betterment that it is applied in a blanket manner to zoned land.
Will the Senator repeat the question about the UDZ?
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
Where I was going with the land value sharing, is that the IPI statement says, "It would, furthermore, mean that achieving reductions in the price of development land, and of arresting the increase in house prices, would be delayed." Does the IPI expect an arrest? Does it expect it to have a material impact in arresting the inflationary price of housing?
Mr. Robert Keran:
The impact it would have is in terms of releasing land for housing. The concept is that there would be a tax, if we can call it that, on zoned land that benefits the local authority. The local authority then has the ability to use that money to release infrastructure that releases zoned land. That is the concept.
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
Does the IPI expect that to materialise?
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
My question about the SDZs relates to the fact there is no quantifiable expectation there.
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
The question about the SDZs and UDZs was around the idea that further analysis should be carried out. Who should take it on? What should the scope be? What does the IPI have in mind?
Mr. Robert Keran:
The point is that the SDZ process has been in place for quite a while. It serves a good function at the moment. There are good and bad examples. The point we are trying to make is that the UDZ process, as articulated in the Bill, has not been differentiated much from the SDZ process. We cannot quite see the research that established that the SDZ process does not work or cannot be tweaked to make it work better. We are suggesting further research into the issues with the SDZ process could be carried out to inform the UDZ process.
Mary Fitzpatrick (Fianna Fail)
Link to this: Individually | In context | Oireachtas source
The IPI is not convinced that the difference and improvement that would be achieved by replacing SDZs with UDZs have been made sufficiently transparent. Is that it?
Mr. Philip Jones:
We looked at the regulatory impact assessment document the Department provided which stated that many existing SDZs have not developed in a timely manner as originally envisaged. There is no mention of the successful ones, such as Grangegorman and Adamstown, where building has been going on for quite some time quite successfully. It is not clear whether the problem is because of the SDZ legislation, which the Department is trying to change, or whether there are other factors such as the fact we had a crash. Some of the SDZs were never developed, possibly because there was not the opportunity to do so or there might not have been any demand. In my old job I was the inspector dealing with Clonburris, which is one of the SDZs. The SDZ scheme went through and most people thought it was great idea, but nothing happened. Was that because of market and economic circumstances changing rather than because of some flaw in the SDZ legislation? There is nothing in the regulatory impact assessment the Department provided to indicate which of those it was. Almost like we might say not to throw out the baby with the bath water, what is wrong with SDZs that a slight change to the legislation could not solve rather than coming up with an entirely new UDZ while leaving, as I think the Department intends, the existing SDZs in place? One of the questions might be, why change it?
On the other hand, the one change for which the reason is evident is the idea that it would come from the local authority development plans. That is certainly welcome because the elected members decide on the areas. In the current legislation it is decided at Cabinet level and effectively imposed on local authorities. We are all in favour of that change. Subsidiarity is an important principle of planning. The question is whether a lot of changes to the legislation are needed. Could it not have be done more simply? I listened to the recording of the meeting with the Department last week. It may be that it is talking about brownfield lands being zoned as UDZs, in which case perhaps SDZs should be continued basically for greenfield sites and UDZs should apply to brownfield sites. However, for some reason, it seems more as though the Department does not like SDZs and wants something new. The reason is not clear.
Dr. Se?n O'Leary:
If I can come in at this point, an example of an improvement which we would suggest is possible is when a local authority is proposing a candidate UDZ. What it is required to submit to the Minister does not include, in as far as it is available, some information on land ownership details because fragmented landownership can be an issue in activating a SDZ currently. That may not all be publicly available but whatever information in that regard is available to the local authority should probably be included in making the candidate application to the Minister.
Another issue that perhaps could be teased out is the role or otherwise of the Office of the Planning Regulator, OPR, in assessing the suitability or otherwise of candidate UDZs. If it is coming from the development plan, the OPR would probably have been involved. Again, the role or otherwise of the OPR throughout the Bill could, we suggest, be articulated more clearly.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I thank Dr. O’Leary for his presentation which is very helpful. I have a question on each of the sections of the Bill. Who ends up paying for the cost of betterment? It seemed from our question to the Department in the past week that there were two schools of thought. Obviously, this charge will not impact on any land that currently has an active planning permission as it is only applies to land for which planning permission is obtained after December 2024. There seems to be a kind of suggestion from the Department that while it might have some impact in the short term on all-in development costs, a little bit like Part V over a period of time, it might actually push down land values more generally and, therefore, as it comes out in the wash, it will not really have an impact. I am interested if the IPI has a view on that part of the debate. I appreciate Mr. Keran has said that there is the other value, namely, the generating of revenue for infrastructure which can then release land. There is this issue of whether it will, even in the short to medium term, have an impact on development costs and ultimately on house prices. If so, could that be modest and what would be the more medium to long-term impacts?
I ask the witnesses to expand a little on the setting of the land value sharing contribution at 30%. When we asked the Department about this last week the answer was a little confusing and referred to where it was 20%, with sharing usually set at 50:50, one adds the 30%. In some senses, the 20% of Part V is not a discount value but is the existing-use value of the land underpinning it. What are the witnesses' thoughts on that?
Deputy Higgins and I have an intimate knowledge of the Clonburrris SDZ because we were on the council when that SDZ was initiated. When I originally saw the concept of UDZs, I was concerned by something which I believe the IPI first brought to my attention, albeit as a different set of propositions in a previous submission. I thought the UDZ would be different from an SDZ in the sense that a strategic development zone is a very large strategic site. I thought the urban development zones would be medium to small sites, with perhaps more nimble 3-D planning schemes, particularly for inner urban compact growth areas.
Separate from the IPI’s commentary on this, it previously had a UDZ proposal. Will the witnesses share that proposal with the committee? I like some of the differences between the urban development zones and the way the strategic development zones currently operate but, like the IPI, I wondered why the SDZs were not just changed and if there could be a different proposition for the UDZs. When I put this to the Department officials, they stated that could be done but they had not really thought of it. I am thinking here of all those brownfield sites in our inner urban cores where a nice, nimble approach - almost SDZ-light - might be taken for those sites in respect of the speed with which we can get the 3-D master plan. This is an attractive idea but the Department seemed to be thinking of this for the UDZs, which are really just SDZs by another name with some tweaks. I would welcome the witnesses' thoughts on that. Will they also elaborate on the IPI's concerns with the content of the UDZs?
Dr. Se?n O'Leary:
I thank the Deputy for his questions. I will ask Mr. Keran to reflect on the medium and long-term impact in the first instance and perhaps on the setting of the rate. Mr. Jones can then discuss the potential of a UDZ, perhaps in the context of active land management and the role of local authorities, and respond to the Deputy’s other question.
Mr. Robert Keran:
I share the concern about what the UDZs might do on land values in the short term. It is very hard to estimate what that impact will be. We have to look at more of a medium-term adjustment. The market will adjust, houses need to be built, developers need to buy land, which I believe they will continue to do, and that will have to be reflected in an adjustment to market values. I do not believe the concern about inflation in market value should stop the principle of betterments finding its way into planning policy or legislation. The Deputy is correct that the short-term impact may be negative but it has to be allowed to adjust through market conditions.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
On that point, when developers are submitting Part V figures to the local authority, they include Part V as a cost which needs to be distributed around. I have heard other active land management experts argue that in fact 20 years on from the passing of the Act, Part V brings down land values because it is being purchased in the knowledge that 20% as it was originally, and 10% as it is now, is at existing-use value. Could something similar work here? Would there be a period of time in which the cost of the levy is borne by the home purchaser but then, as the market adjusts, that would exert downward pressure on the all-in value of the land? Is that a reasonable assumption?
Mr. Robert Keran:
I believe it is. I do not claim to be an expert on this aspect but I believe developers will naturally react initially by passing on the cost. The market has to respond to that insofar as there is demand for housing and limited available land and market conditions have to allow land to be exchanged, conveyed and developed. I am not sure that the passing on of that initial cost by the developer can be controlled but there has to be that market reaction thereafter.
Mr. Philip Jones:
Part of the issue is at what level it is set. The legislation seems to indicate a figure of 30%. The question is whether that is enough to have an impact on landowners and future developers. The Department lacks information. As the Deputy will know, the Department had Indecon examine this matter and Indecon, in its report, indicated that it had very little data and that its analysis was therefore a bit tentative. The Minister is given the power to bring the rate down to 20% but it seems the Minister has only been given the power in subsections 2 and 3 to bring the rate up to 30%. As the Deputy knows, the way these things are done suggests those square brackets imply that those provisions are not finalised.
We are of the view that the Minister should have the power to set the rate at between 20% and 50%. One of the issues with this proposal is that it provides for a publicly accessible land value register. As that gets rolled out, people will begin to see something they do not often see unless they look at the property pages - who believes those in any event - namely, that this land is worth X amount of money. Sometimes the developer may have 200 houses and the land cost is €20,000 per house. If that value goes down, it will be very difficult for a developer to argue the price should go up when there is a publicly available land value register. Over time, I believe it will have the effect that landowners' expectations of the value of their land will go down. From that point of view, developers will be able to get the land more cheaply. That is the logic of what the Department is proposing. Certainly, it is going to take, as Mr Keran stated, a couple of years to work its way through the system. However, I believe it makes sense because normally in analysis of developers’ costs, the land cost is a residual. In other words, the way it works is developers ask what they will get for what they sell, how much it will cost them, what their margin will be and what will be left over to pay for the land. In fact, because that cost will be collected at the development application stage, if it has not already been paid, they will be prepared to pay a great deal less to the landowner for it.
Unless we bring in price controls, which I am not suggesting, it will be very difficult to prevent them charging more. As with getting rid of the development levies, who knows if the saving will be passed on? The value is in having the register which will be publicly accessible, although I know the Department talked about the general data protection regulation, GDPR, and all of that. That, however, is talking about who the person was, and not where the land is and what its value is. I believe it will have a dampening effect on development land prices. Ideally, development land prices should not be anywhere near where they are now but that is because of heightened expectations.
The other thing in the Bill is that the council can use compulsory purchase orders, CPOs, to acquire land, taking into account the land value contribution.
We have said that we think it should apply, not just within a UDZ, but to all. That goes back to the idea from the Kenny report that a local authority should be enabled to engage in active land management. Certainly, when there is a whole pile of different landowners and one is trying to get development in a co-ordinated manner, that can hold up development for quite some time. I well recall different developers in Clonburris arguing that they wanted the bit that was most valuable. That happens even in normal planning applications where there are a couple of landowners. If a local authority has the power to CPO the land, effectively at a reduced value, it will either concentrate the minds considerably or it will be implemented because the local authority can buy it, assemble the land, which is already zoned, and if it is serviced it can then sell it on like most modern European countries do. It is not up to the private market to decide when development happens. The state or the municipalities come in and make the land available. This is an important first step in achieving that. I hope that covers the question.
In terms of the content of the schemes, one of the key issues, in 171AK, is what should be in the scheme. Members will recall a couple of high-profile court cases involving whether maximum densities, heights and so on should be included. We have a couple of suggestions in that regard. First, 171AK(2) states: "A development scheme under this Part shall be generally consistent with the planning framework". We need clarity because, by definition, once a scheme is adopted, a developer would need to know what is within the scheme and therefore it would automatically be a "Yes" and what is not within the scheme and therefore would be automatically a "No". Equally, the public need to know what is allowable and what is not, so the scheme needs to be clear. We suggest that instead of phraseology such as the "types of development which may be permitted" and "building height envelopes", the Bill should refer to "minimum and maximum building heights", "minimum and maximum residential densities" and "maximum non-residential floor areas", so that everybody going in, whether it is a developer or the public, will know this will be allowed and this will not. The wording in 171AK is rather vague at the moment, so we will certainly suggest that it be changed. The word "maximum" is definitely needed, as we know from the court cases involving the north docks. I hope that covers everything.
Emer Higgins (Dublin Mid West, Fine Gael)
Link to this: Individually | In context | Oireachtas source
I thank the witnesses from the IPI for being here. As a county councillor, I benefited greatly from attending the IPI annual conference and getting a feel for what is happening in the planning world. I encourage other councillors to do that.
What I hear today is that this measure in the medium term is likely to dampen development land prices but in the short term it could create inflation. That is a concern. If that is a real concern, my main question is what we can do to insulate ourselves and the market from that.
I agree with councils having the ability to CPO land, effectively at a reduced rate, in an effort to actively manage land better. In my constituency we have had two SDZs and I saw exactly what Mr. Jones talks about in terms of the toing and froing between various landowners and various interests. I am interested in hearing at what point the enablement of CPOs by the council would be allowed. At what point is that the desired outcome or is it always that way?
I agree that the land value register is going to be key because having that on public record and available for everybody to see is, first, transparent and, second, will have wider repercussions on the pricing.
I have a specific query in response to the call-out on exemptions by Mr. Jones. He specifically called out five or fewer units and commercial settings of fewer than 500 sq. m. What is his concern with the exemption? What are his recommendations on how we can ensure that in the immediate term this does not have any negative implications?
Dr. Se?n O'Leary:
I will ask Mr. Keran to come in on the exemption point. It is ultimately about how we can stop encouraging development at unsustainably low densities or the potential for that to be encouraged. Mr. Jones can discuss further the active land management point and the issue of five or fewer units.
Mr. Robert Keran:
The point on the exemptions is twofold. One is that we cannot see a basis for those exemptions. I know there is a similar, almost identical, exemption in terms of Part V, but in the betterment approach, there does not seem to be any logic for excluding those particular sites.
The other point is that we want to avoid the potential for a loophole in terms of people trying to utilise those exemptions to avoid the LVS.
Mr. Philip Jones:
The key point is that the Department is proposing that this come in on a graduated, phased basis to 2024 and 2025. That in itself will be an opportunity for preventing increases because, in reality, there are lots. We had various people coming before this committee on the planning and development Bill and many of them spoke about the number of units that are sitting there with planning permission that have not progressed. If the developers of those sites suddenly realise that in two years' time they will have to pay a fair amount of extra money, they are going to try to move quicker. Rather than increasing prices, we might get a release of some of those because the permissions in themselves only have a limited life of five years and they can no longer be extended, purely on a financial basis, as substantial work must have started. This will have the effect that some people will say, "Gosh, this is going to affect our profits; we had better move quickly." Because the Department is not bringing it in in one fell swoop, which I think would have that effect, but doing it gradually it seems to me that it would have the effect of getting more supply coming, first, which is a good thing but, second, it will dampen down the idea that it can just be added on to the price.
Most of this stuff depends on what the Central Bank will allow in terms of mortgages. Unless there is only going to be building for the luxury market – there is only a small proportion of that – the dampener is really the fiscal rules. If they try to bring the prices way above what people can afford, they will not be able to sell them. On the basis that the Department is doing this on a phased basis with 2024 for existing planning permissions followed by 2025, it may have the effect that the Department intends preventing that and in the longer term it should dampen it down.
Emer Higgins (Dublin Mid West, Fine Gael)
Link to this: Individually | In context | Oireachtas source
That is really encouraging to hear. It is slightly different from what Mr. Jones's colleague said earlier. He is right that the fiscal rules should come into play. The most important factor behind this move is that we want to release development zoned land to produce housing in the middle of a housing crisis. It is great to hear Mr. Jones play down the concern and explain why it should not in any way be a reason not to move forward on something that is going to benefit the housing situation. Does Mr. Keran have anything to add to that or is he happy?
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I will take the next slot. It has been confirmed to us that sections 48 and 49 will be going back into the new planning Bill and that this measure is likely to form part of the planning Bill as well. We are doing separate pre-legislative scrutiny on that.
Dr. O'Leary mentioned resources and said we would be sick of talking about resources. The committee has come to the conclusion in a lot of hearings that we have had on planning recently that resources are one of the key issues, if not the key issue, in regard to planning. We know the figure. Some 540 planning staff were required across local authorities. I know there are staff increases in An Bord Pleanála and also increases in the number of board members, as well as in the Office of the Planning Regulator and in the regional assemblies.
It is not just at the planning stage because in the planning Bill we discussed certainty and timeframes in planning decisions and also regarding judicial review. We need to ensure that the resources are in place across the court system. Time limits cannot be imposed on something so complex unless sufficient resources are in place to meet those timeframes. Dr. O'Leary and Ms Jones both appeared before the committee previously regarding the planning Bill.
On the public consultation for an urban development zone, I think there would have to be quite extensive public consultation. What discussions have they had? What concerns do they have about the capacity at local authority level to do that properly so that we get the outcome we expect? We want the discussion, the changes and the ideas at that grander scale rather than when we are getting into the site notices going up. One of the objectives set out in the planning Bill was to take the discussion out of the application stage and bring it back to the overall forward planning stage. I am aware that we load a lot on our local authorities and there is difficulty in recruiting and retaining planning staff.
Dr. Se?n O'Leary:
This may be an example of where it needs to be joined up with the planning Bill more widely, if the ambition of the planning Bill is to have as much detail and engagement as early as possible. When it comes to urban development zones, UDZ, the board would be very limited in the circumstances where it could hold an oral hearing, and that is of concern to us. It is about getting that right at the start. We spoke about technology and so on as well.
Regarding the resource issue, it goes with the local authority that is assessing or identifying a candidate UDZ and then drawing it up. It goes to the planning resources available to developers, to environmental expertise and to a whole host of skills that are required. While the board is being beefed up, that is in effect taking resources away from other parts of the planning system. It is a very serious issue and the timelines in place for a host of aspects of the UDZs are unrealistic. It applies to the wider Bill and it certainly applies to this. That is something that needs to be reflected upon because otherwise it will lead to disappointment, frustration and a feeling that something is not working when perhaps we are baking in failure without those additional resources. Having gone through the SDZ experience, Mr. Jones might have a view on how public participation and the oral hearing aspect in that process can work better.
Mr. Philip Jones:
The key thing we need to be aware of is that with SDZs and now UDZs there is no possibility of planning application objection, once the SDZ scheme is adopted. That is it. There is no right of appeal by a developer but equally there is no right of appeal by a resident. It is so important that they are involved at that first stage, and not just, as I mentioned, that the scheme needs to be clear about what is allowed and what is not. The public needs to be given a fair opportunity to express its views because that is the only opportunity available. None of us wants a member of the public to be taking a judicial review after that because they were not given a fair opportunity. Section 171AL is talking about 16 weeks to do an appeal on an SDZ. From my experience and that of all of our members, that is so unrealistic as to be laughable. We have suggested that 26 weeks would be about the tightest timeframe possible and that is without an oral hearing. The section then goes on to propose 14 weeks, that the board can, at its discretion hold an oral hearing, which is right. However, it then goes on to say that before deciding on an oral hearing for an application
...the Board shall have regard to the necessity of an oral hearing given the limits of its powers and shall only hold an oral hearing if it decides with regard to particular circumstances that there is a compelling case for such a hearing.
We suggest that the entire subsection be removed. Leave it up to the board without limitation to decide on an oral hearing. It would be very unfair if all a person can do is write in, not hear in detail, as they would at an oral hearing, the logic behind a scheme, and then have no right to appeal that when individual projects come in. Unfortunately, as we saw with the Bill, many of these figures seem to be taken from the air without any logic in terms of the reality on the ground.
As an inspector, I presided over three SDZs. None of them was done in less than 26 weeks and all of them had oral hearings. It does not make sense to ask people to accept that and then have no right of appeal afterwards.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Earlier we discussed that the SDZs were on a larger scale. We are not sure about the UDZs, whether they are smaller. There is talk about urban and suburban underutilised sites. That is the description that is used. We discussed previously the idea of a reduced timeframe for less complex cases. Without knowing how complex a UDZ is compared to an SDZ, I accept Mr. Jones's point about 26 weeks for an SDZ, but if the UDZs are to be a smaller plan or zone, then perhaps the 16 week timeframe may be appropriate.
Mr. Philip Jones:
The answer is that it depends on the size of the UDZ. If it is a brownfield site, it is surrounded by people. There may well be as many people if not more than with a greenfield site at the edge of a built up area like Clonburris was. It is not so much about the size but rather the principle that the public and the developers who own the land should be involved at the earliest possible stage. There should be fairness to both sides at the early stage since neither a developer nor a third party can take an appeal against an individual development project. The North Lotts, as it was originally, in the docklands is a very small area but it contains an awful lot of development. It is not the scale of the site but rather the ambition of the development.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
One of the things was to engage the public earlier in these processes and have a more meaningful public consultation process rather than just coming in to look at a map on the wall and trying to figure out what might be there. In the planning Bill, nor in this one, I cannot really see what measures would be put in place to try to improve that public consultation process. That would take a lot more work from local authority planners, to really engage with people. To really go through it, they would not just be talking about coloured zones on a map which are very hard for people to visualise.
The Royal Institute of Architects discussed the use of 3D modelling with us. That would necessitate a third party contractor at local authority level. We cannot expect local authorities to be doing 3D printing of models. However, there needs to be a refocusing of resources if we want good public consultation, good land activation and good outcomes. We do not want people to be dissatisfied and seeking judicial reviews.
Mr. Philip Jones:
Section 171AK lists what should be in the scheme. There is quite a lot in there. For example, I refer to the site beside Sandymount, which was an SDZ. It had quite a lot of 3D images within the Poolbeg scheme. It is up to the local authority to do that. It may well be that there should be non-mandatory guidance and good practice guidelines from the Department on how they should be done to assist people. I agree with the architects. If it can be done with 3D modelling - I am not talking about a big model the size of the room here - simple sketches of what the scheme would envisage, that would make sense. Some people can read drawings but many more would benefit from a 3D image. The great advantage of doing that would be that the public would get to see it. If it comes initially as a framework in the development plan, the public will be aware that this will be coming onstream because that will be the initial thing, that is, the site is going to be the subject of one or more UDZs. The public would be alerted that they will have another opportunity at that point. In one sense, it rectifies the fact there is no appeal for the individual projects.
What is in 171AK with the changes I have mentioned provides some degree of assurance in that regard.
Certainly the idea that the Department can model guidance on what should be in it in visual terms as well as just in written terms would make sense. However, that is not for primary legislation. It may be for regulations and maybe guidance.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I thank Mr. Jones. I had a question on the land value sharing but I will move on to Deputy O'Callaghan.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
Link to this: Individually | In context | Oireachtas source
I thank the Cathaoirleach and our guests for coming in. In regard to the IPI’s view on whether this is the best way to do land value capture to capture the uplift in land values, there is a key challenge in terms of housing affordability. The planning system, for many good reasons, restricts people’s abilities to build and puts many constraints on that. Arguably there is not a sufficient amount of measures to ensure that restriction is counterbalanced with measures to ensure affordability. Land values and land value capture measures are part of that. In the IPI’s view are there any better ways of doing land value capture? Is this the best way? Do the witnesses have a view on that?
Active land management has been referenced quite a bit here. We are sitting in a city that more than 200 years ago had very active land management with the Wide Streets Commission. That effectively had compulsory purchase order, CPO, powers. The issues of different landowners were circumvented by the Wide Streets Commission buying up different plots of land and doing radical alterations in terms of our streetscapes that we can now see. The George’s Street Arcade, which I believe is one of the finest buildings in Dublin, came about from an Act of Parliament that gave the Wide Streets Commission the ability to buy up different plots of land to put in what was then the south city market. The idea of active land management is not new. It was done on a far more radical level than is being proposed now.
I recently read an OECD report on land use and planning systems throughout the OECD that listed off countries like Austria, Finland, Germany, Japan, South Korea, Norway, Spain and the United States where land banking powers exist for pre-emptive purchase rights at an improved valuation. They are much more radical measures. Given our housing affordability crisis and indeed our infrastructure crisis, is this going far enough? Are there other models? What are the views of the IPI on that?
Dr. Se?n O'Leary:
Before I let Mr. Keran and Mr. Jones in on that, I believe it goes back to something the Cathaoirleach mentioned. Implied in all this is a whole new set of skill sets for local authorities and for planners on top of everything else. We have spoken about that. That is again a sense of realism about the skills that are available and the skills that need to be acquired by planners and local authorities.
In terms of the history and the alternative approaches, Mr. Keran might introduce it and Mr. Jones can talk members through one section of the draft Bill and what it means. Certainly, from a personal perspective as a planner who went through planning school quite a while ago, finally to see the Kenny report possibly being made real in some sort of way, having gone through constitutional issues and all sorts of stuff, indicates that the intentions behind this Bill are welcome. It is good finally to see that the planners coming out today, even if there are not enough of them, will actually see some progress on the Kenny report being made real. Again, harking back to the history of the Wide Streets Commission and the fact we have done this in the past, we can do this and the principle of this and something finally happening in this space is very welcome in the first instance. However, Mr. Keran and Mr. Jones will discuss it further.
Mr. Robert Keran:
I agree with that. It is not the answer to everything because it is one of a suite of different schemes, incentives and initiatives that need to work in tandem with residential zone land tax to get the more local active land management measures such as appropriate infill sites and tax incentives. It is a collective rather than a single answer. However, as Mr. O'Leary said, it is what planning intends to do in regard to the public good. It is deliberately aimed at releasing suitable land for development through financial gain for local authorities. It is a positive way of doing this.
Mr. Philip Jones:
The core of this is not only the Wide Streets Commission but, as we know, Baron Haussmann changed the face of Paris by doing something similar. The key here is not just that we will have a publicly accessible land register with values but we will have the power, as a local authority, to CPO land. Section 171AQ allows a local authority to CPO land and take into account, when paying for that, the land value sharing contribution. In effect, within a UDZ it is being suggested that the local authority should be able to CPO land, and when the vesting order is done, the compensation in effect is much less than full market value because it takes out that land value contribution. Our view is that should apply to all zoned land. Most progressive countries in Europe assemble land by the State and hand it over, not to speculators and in many cases not to developers but to builders. If this legislation is passed, with section 171AQ being extended to all zoned land rather than solely within UDZs, that in itself will have a salutary impact on landowners because they themselves will want to develop rather than lose control over their land which the local authority would have to do.
The irony is, as Mr. O’Leary said, I went to planning school back in the 1970s when the Kenny report was there, but at that time everybody felt it was not going to happen because it was unconstitutional. The change was in 2000 when the Supreme Court Article 26 decided that Part V, which everybody, including, unfortunately, some lawyers we ourselves as an institute had at the time, said was unconstitutional and could not be done, was perfectly okay in the interest of the common good. Subsequently, there was a court case where one High Court judge, who is now a member of the Supreme Court, said there is no right to develop land, only to own it, under the Constitution. Therefore, I believe the whole view back in the 1970s that it was unconstitutional is now gone. There may be some lawyers, perhaps those who were trained at around the time I was trained as a planner, might still be wedded to the old idea. However, it is the opportunity of the CPO and the threat of a CPO by a local authority to do that. I see nothing wrong with a local authority buying land at this reduced value, getting it serviced and then selling it on to a group of builders to build at a time of its choosing rather than at the time of the market’s choosing.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
Link to this: Individually | In context | Oireachtas source
I thank the witnesses for their answers. My fundamental question about this is that some other European countries do active land management where the entire value uplift from the land being zoned or the change of use is captured publicly. We have a housing affordability crisis which is extreme and causing all sorts of problems for people. We also have the crisis around delivering infrastructure that is needed with housing. I absolutely accept it is progress, but by going for a model where we will be able to capture a substantial part of that value, and given that the value is entirely created from a public process of rezoning or change of use and indeed public investment in infrastructure, are we selling ourselves short by not trying to get a larger amount of that value, as was envisaged in the Kenny report?
I take the point that progress is progress, not disputing-----
Mr. Philip Jones:
My view would be that it would be ideal. However, there are two issues here. We have the tools which the local authority may have if section 171AQ is extended to all zoned land but we also need the initiative of the local authorities. Some local authorities are very good at getting things moving. We know one or two local authorities around the country are buying up derelict land and reselling it for housing. Louth is one of the top local authorities in that. Some others have done absolutely nothing. There is some initiative needed at local authority level. In my experience at local authority level, at the time of doing that they will say they have to pay full market value for these things and will not be able to afford it. If it can be done at a much cheaper price, and then sold on, and there is nothing wrong with a local authority making a bit of profit either; it cannot only be the private developer who makes a profit, that can be used as a revolving fund to do more. To answer the Deputy’s question directly, this is the best way we can do it at the moment, not because it is the best but because we need to move at least some steps.
The bit that is hidden here is the local authority having the power to make a compulsory purchase order which will have a salutary impact, particularly on landowners who are sitting on land and are not prepared to develop it. You can get your land zoned and sit on it for 20 years. Okay, you will have to pay it eventually when you develop and therefore you will not develop. Having this power hanging over them and the threat that we will take their land from them if they do not develop it, and we will only have to pay perhaps half the market value, would have more of an effect than having to pay when a landowner eventually gets a planning permission. A combination of the two is as good as we are going to get and it is well worth going ahead with at this point.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
I think Mr. Jones is correct in saying that some local authorities have been better than others in using the CPO powers that are there. I agree with everything there. There is nothing wrong with the local authority making some profit or selling on the land after it is assembled in order to activate it for use now. Others view things very differently. Some would present that as the State selling on an asset that it has assembled. Take the example of the North Quays in Waterford. That is also a strategic development zone. Waterford City and County Council actively assembled that land bank through the use of CPOs and negotiation. Negotiation is always better than having to use a CPO but, where required, it is a useful tool. Some people said that it was wrong to sell it on to Harcourt Developments which will now put €300 million on top of a State investment of €170 million to develop out a strategic development zone which will transform the face of Waterford city. Many of these tools do exist and the question is how they are used. The Government, sometimes correctly, gets flak for things not moving but other times it is misdirected because there are many tools which some local authorities use and others do not use at all such as repair and lease, vacant properties and CPOs. Some local authorities are top of the game and others are not even at the races.
I am using Waterford as an example because I know it best. It is not to be parochial. Do our guests not think that the SDZs give certainty for both the public and the developer? I have been involved in that process. We are very clear on what is allowable on the Waterford North Quays in terms of height and quantums of retail, apartment units, hotel beds and office space. What is it that is not working? I am looking at No. 16 in the opening statement. What is it that does not give the necessary certainty?
Mr. Robert Keran:
The concept of an SDZ, the way it is set out, works very well. All processes can be tweaked a little and lessons learned. The point in the opening statement is that the way the UDZ process is set out in the Bill is slightly different from the SDZ. Mr. Jones addressed this. The words used in the Bill such as building height envelopes are not as definitive as some of the words that might be used in the SDZ context. We are saying that the UDZ has to deliver the same certainty as an SDZ would deliver. It comes back to the point I made earlier about the resources that might go in to the public participation stage of an SDZ and now a UDZ. That works both ways in the sense that you front-load the resource during the plan-making stage and that eases the resource loading at the back end when the planning decision has been made. You are encouraging early participation and early resource loading from the local authority to ease the resource loading at the back end. The point is that the SDZ does work and it can be tweaked. The UDZ model can be based on the SDZ model but it has to deliver the same certainty that the SDZ delivers.
Mr. Philip Jones:
I remember him well. Being direct, 171AK.2(c) refers to "proposals in relation to the overall layout and design of the proposed development, including maximum building height envelopes and floor areas". What the council did with the North Quays in Waterford is much more than that but not every SDZ has done that and the more clarity we have, the better. There have been two court cases involving the north docks SDZ where the developer wanted to go beyond what was in it for his own reasons and tried to argue in the courts which knocked him down twice. The point is, if you have certainty then everyone involved, whether it is a developer or the public, will know what is on and what is not so it is fair to both parties. That is why we need to put in things such as minimum and maximum building heights, minimum and maximum residential densities and maximum non-residential floor areas so that no one is unaware of what is in the scheme once it is adopted and they can make their arguments to the board.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
I agree but when we talk about minimum and maximum, how prescriptive should that be? We can have big ranges in minimum and maximum. That equates to something very different on paper. How narrow would Mr. Jones have them, in his professional opinion?
Mr. Philip Jones:
I would have them sufficiently narrow that everyone knows what they cannot do. In a greenfield situation you do not want someone to say they want a two-storey, semi-detached, own-door house when you are trying to get higher densities for good reasons but equally if you have a reasonable area you do not want ten- to 15-storey apartment blocks when low-rise medium density of six- and seven-storey buildings work better for the people who are going to live there. You cannot be so prescriptive as to design but you have to be clear so that when the designers go in, they know what they are not allowed to do and then the public knows when they see the scheme if something is clearly not in accordance with it, and there are no out clauses. One of the problems with any legislation involving money is that you do not build in loopholes. You try to close the loopholes before you do the legislation. As the members here know, every year the Oireachtas has a Finance Act and Revenue comes up with a few more words to plug the loopholes that the clever tax accountants have found. I would say that in drafting this legislation, the Houses should try to word it in such a way that there are no loopholes, as far as you can see, and therefore there are no unintended consequences. There may be intended consequences but you try to plug the loopholes as much as possible. Vague wording like "building envelopes" can mean anything to anybody. You need to be clear.
I take the Senator's point that there is a range. That can be a numerical range or it could be floor area. Someone might say they want 2,000 m2 on this block. They might be told "Sorry, the SDZ says they are getting 1,500 m2, so no". Once it is clear then everybody knows. That is the best way of dealing with it. In the North Quays there was much more than zonings. There were drawings and everything.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
I have a good experience. I appreciate it is not like that everywhere but, as has been said, good practice guidelines in terms of documentation can be useful. Perhaps what was done in Waterford is a good template for other areas.
Dr. Se?n O'Leary:
I understand that. At the same time, it is acknowledging that there is a need for some flexibility built into reviews to avoid SDZs being built out at lower densities than would be ideal, which may be the case over a longer period. There must be some element of public participation if the local authority is looking to modify a UDZ and things like that. It is about learning from the experience of SDZs as well.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I have said before that I am a very strong supporter of SDZs. I went through Clonburris and have a good knowledge of Poolbeg. Exactly as Senator Cummins and Mr. Jones stated, where they work to provide clear frameworks for people to operate in, everybody benefits. That is not to say they are without problems.
I want to go back to a question I asked earlier that was missed. I am not clear why UDZs in this format have been brought forward. From listening to the Department, it seems to be thinking of them on an SDZ scale. From memory, the committee had a previous discussion with the IPI about the idea of UDZs. My impression at that stage was of a much more flexible instrument. If our guests were doing UDZs, would they be SDZs-plus, which is what this seems to be, or would they be some other tool? I am not clear why they have come to us in this form. I am not opposed to what is in front of us and I share the recommendations of the presentations so far.
Perhaps we were at crossed wires when I asked a question earlier. I do not think the Department is proposing this for small-scale development in urban sites that could be very high density. I think it is thinking about large strategic sites. Having said that, one of the advantages is that an area can be designated as a UDZ but within that, bits of it can be progressed. I like the idea of UDZ designation at the request of a local authority. That could be done for a site with a relatively small footprint but which could have significant density or strategic involvement. I am interested in that.
I want to further tease out Mr. Jones's observations about section 171AQ. It seems to me that if we went further than his proposition of applying the local authority CPO to all land and allowed the discount on the purchase price to be greater than the 30% uplift between the existing use and the market value, it could have the double benefit of further incentivising the owners of the land, the developers, to activate land, or, if they are clearly not going to do that, to allow the State to acquire that land at an even more significant discount. I know they are not the same, but the Kenny report suggested existing use value plus 25%. The general scheme refers to market value minus 30% of the uplift. I am trying to think which is the better deal for the taxpayer. There is real merit in what Mr. Jones has said about private sector land activation because there is the bigger threat of a greater loss of value for a developer who does not develop. What would be the right formula to provide better value for the taxpayer? Is there a better, more flexible version of UDZs? When I us the word "flexible", I in no way mean a lack of certainty. I am with Mr. Jones on the need for certainty.
Some years ago, Dublin City Council identified a number of pieces of brownfield land in the urban core for which there was a proposal to rezone. I often thought it would have been better to have a designation, such as a UDZ, that would then allow for 3-D master planning of those sites, with public participation, to allow for better usage of them. In that 3-D master planning, we might be able to better represent the public interest in terms of the content on the site rather than anything else. That makes sense.
Mr. Robert Keran:
I agree with the Deputy's point about UDZs in general terms. The problem at the moment is that the way in which it is drafted is remarkably similar to what SDZs intended to do. Section 171AB states that a UDZ shall be "of significant economic, social or environmental benefit to the State and the common good". That is an SDZ. It is the same thing.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
If that section were to be subjected to a slight change where instead of refers to "the State", there was reference to "the local authority" or "the functional area", all of a sudden the scale becomes relative to the planning authority rather than to the country.
Mr. Robert Keran:
That is absolutely so. The challenge then is that the process needs to be nimble enough to get that through quickly because you do not want to be stuck preparing a planning scheme for two years on a small site that needs to be developed quickly. The process has to be reactive enough to different scales of sites. There are some mechanisms, such as the strategic development regeneration area, SDRA, mechanism in the Dublin city development plan, that have approached something similar to a UDZ. Those mechanisms have these designations and master plans or framework plans that try to encourage or control the direction of developments. This seems to be what the UDZ is trying to do but grounded in legislation. I am not sure it is articulated correctly at the moment.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Some three or four years ago, before this general scheme was published and before UDZs were in the Government's housing plan, the IPI was talking about UDZs. What did it have in mind back then?
Dr. Se?n O'Leary:
From memory, I think it was a combination of that master planning approach that Mr. Keran mentioned and what Mr. Jones has discussed about empowering local authorities to create a vision for strategically important sites. Perhaps it was an SDZ-minus, or something like that. We envisaged that the scale would be different but also that the local authority would have done the site assembly work that was discussed. There are also considerations around services, access and things like that. From memory, it related to the local authority being able to take a more strategic approach to things such as access and encouraging the role of Uisce Éireann and things like that. There are various models, but perhaps there is an element of trying to limit the number of acronyms we have and not creating further confusion but instead focusing on the principle, which I think is sound. We need to avoid making implementation so complicated that people are left wondering what is happening next door to them, whether as part of an SDZ or UDZ framework or whatever. That is broadly the point. The principle is sound. The scale of it, the time that goes into it and the skills that are needed is where the issue arises. We must consider whether the two things can live independently. That goes back to why this needs to be knitted into the final Bill.
The Deputy asked another question.
Mr. Philip Jones:
To follow on, part of the reason we suggested that was because a couple of years ago, there was an idea that it would be up to a developer to do a master plan, without it being adopted by the elected members. The institute strongly believes in local government and subsidiarity and, therefore, felt that was not appropriate. It was happening in a couple of local authorities where there was an objective to do a master plan but that plan was effectively the developer's master plan, which then went to the local authority as part of the planning application. The public had five weeks to make submissions and that was all they had. The idea of a UDZ is that a plan would be prepared by a local authority. That was our view because some bad examples of developer-led master plans got through, and that is not the way to do proper planning.
Section 171AQ is worded very carefully. I assume the Attorney General was involved in its wording. It might be best to stick with that wording but extend it to all zoned land. A bit of land might be zoned for ten years but nothing is happening with it. At the same time, it may be close to the existing built envelope so you do not want to down-zone it and have a leapfrog situation. It is about local authorities having the opportunity to do it. If we went much higher, there may be a reluctance on the part of the Attorney General's office to get it through. There might be difficulties in that respect, notwithstanding what I said about Part V.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I was going to ask a supplementary question on that point. If I understand it right, the discount to the State when purchasing Part V units is that the land is acquired at existing use value.
That establishes the principle that existing use value, in that context, is adequate compensation. For me this is a really significant point. Why would the State deviate from that as a principle? If somebody has a piece of land, he or she has two choices, one of which is to develop the land in accordance with the zoning and the planning permission, if he or she has planning permission, and make the return, which is fine. If that person is clearly unwilling to do that or is not able to for different reasons of finance or whatever, the State has this option of acquiring at existing use value. That would be a pretty heavy incentive for the owner of that land to develop because he or she would lose not just the future uplift in the value but might even lose a portion of what he or she had paid for the land, assuming that person had paid more than the existing land use value.
I am aware the witness is not a constitutional lawyer and I am not asking him to speculate on the legality of it, but from a planning point of view and with the public interest in mind, is a discount of 30% of the difference from the existing use value to the market value a fair deal for the taxpayer?
Mr. Philip Jones:
Probably not. This is why in our submission we have said that it might be better to have it up to 50%. It is the threat rather than the action that might happen. The object of the exercise here is to get development happening, not for people to use the planning system just to enrich themselves with no real development happening. The real nasty piece is that people are getting planning permission on land having got it zoned or having bought it from a farmer who has had it zoned and just selling it on at a higher price. To me that is speculation. The less of that we can have in Ireland, the more we can actually get development going. This whole thing here, it is hoped, is going to try to stem that as much as it can. Certainly, I can see no logic in any of the documentation the Department has put forward as to why it is limiting that option in 171AQ and the new Part 2 insertion on UDZs since it is all about the land sharing contribution, which applies to all zoned land. That would be the big one in that regard from us to the committee.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Given that all almost all SDZs have multiple land ownership, one of the challenges, such as that in Clonburris after it went through the board's appeal, was getting agreement between the landowners around the amenity space. I wonder if this provision is really about strengthening the hand of the local authority in that land management group, or the landowner group, post the passing, to make sure they all play ball on the agreement around the amenity space. Would that sound like an educated guess?
Mr. Philip Jones:
I believe that is probably a very fair guess but it is not in the sprit of the Kenny report at all.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Absolutely. I am trying to work out why they have done it. They might have given us an opening to do something better. I thank the Chair.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
Mr. Keran mentioned utilising exemptions to avoid the land value share. When the Department was in before the committee a couple of weeks ago, I asked the officials, notwithstanding that we want to see more social and affordable housing, whether they saw that an exemption in place for social and affordable housing may have the adverse effect of just driving a particular type of development. We all know that the best mix we can have is private, affordable, and social in the one development. If we are exempting social and affordable housing, where will the private housing be developed alongside it if that will have the levy? Would the witnesses share that concern or possibility there? Do the witnesses see where I am coming from.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
If it was more financially beneficial to just go with one tenure type and avoid the land value share, would Mr. Keran see that as a risk?
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
A person would get planning permission for a unit. It is not designated as a social, affordable, or private house at planning stage.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
Is that for a single tenure type?
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
I am not saying that it has to happen, but consider the owner of the site who is being hit with the land value share of 30% to develop market housing. He or she can develop social housing without being hit for 30% or develop market housing and be hit for 30%.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
If we believe that to be a risk, how could we calibrate that in a better way? I think it is a risk and I said this to the Department a couple of weeks ago. I appreciate that the witnesses might not have an answer to this now.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
Like it or loathe it, LVS is a blunt instrument here. I just have a fear that we are going to create communities that are not balanced. The same applies in the reverse. If we have an area that has solely private housing, for example, and we need to see the development of social housing or affordable housing in an area, it could be a very useful tool. If, however, we have an area that has a high concentration of social housing and we need to see more of a mix in that area, we would disincentivise the very homes that are really needed to create that diversity within the communities. I am just identifying a problem there. I am not expecting the witnesses to have a response for us here but perhaps they could think about it. I have been thinking about it over the past couple of weeks and I have not managed to square the circle in my own head.
Mr. Philip Jones:
I do not have the actual Bill in front of me but my recollection from reading it over recent weeks is that it says applications for permission for social and affordable housing would be exempt. They would have to make it clear in the planning application whether it was for social housing or affordable housing. They could not do it afterwards. A local authority might see that a person is looking for planning for 100 social and affordable houses and ask where is the market housing. The authority might decide it is not going to grant the planning permission for that type of development and it wants a mix. It might be that the land value sharing legislation would not be being used, but knowing the planning application the planning authority could say it wanted mixed development. That already happens with Part V applications where sometimes local authorities say they do not need social housing and they just want affordable housing because there is already a surfeit of social housing in the area. That has always been the case with Part V.
It is probably solvable on foot of the word being used, which is applications for social and affordable. The applicant would need to say at the time of making the application that the planning application is for social and affordable housing. It would not be for an applicant to say he or she was looking for planning for 20 houses and then, after getting the permission, not pay that levy because they were going to be social and affordable houses. As the legislation seems to be written or as proposed in the Bill, this does not seem to be covered. In that sense, it would be done through the normal planning process if the local authorities, as I am sure they will, have a general policy that they want mixed tenure type developments.
Of course, "tenure" is probably the wrong term because social housing could be council provided or it could be social rent or it could be affordable housing. I always have loved that word "affordable" from the 2000 Act. The implication was that the rest of it was unaffordable. We know what affordable means but nonetheless there was an implication, even back in the time of the former Minister, Mr. Noel Dempsey. Because it says applications for permission for social and affordable housing are exempt, it would mean that normal applications for housing that are not stated to be such would not be exempt.
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
They are not stated to be, yes, but as we know, there are a lot turnkey social units which are delivered by the market. I think it is a quick delivery mechanism, so it would not capture those. Is that what Mr. Jones is saying?
I mentioned it a couple of weeks ago. Perhaps the Chair is onto something in that. Maybe when we are making our report on this, we need to flag that. Perhaps the response there is-----
John Cummins (Fine Gael)
Link to this: Individually | In context | Oireachtas source
Perhaps we can tease it out. I thank the Chair.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
We are into the third round now. I am going to go first and then bring in Deputies Gould and Ó Broin.
Mr. Jones said he was in planning school.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
The Waterford planning school. I refer to the Kenny report. Much later on, in around 2009, the windfall tax was brought in for zoning. Now we have this. Can Mr. Jones recall the reasons the windfall tax was not retained or was not successful? That was an attempt to curtail overzoning at the time, as I remember it.
Mr. Philip Jones:
My recollection is that it was brought in around 2008, and then we had a crash, and the troika. I seem to recall the then Minister for Finance, when the Government changed, got rid of it very quickly. Why did he get rid of it? Maybe the troika asked him to get rid of it, or maybe he felt, at the time, that this was holding up development and was a disincentive to development, when the attitude was, "let us try to get any development". We all know how that led to vulture funds and all the rest of it. I am not sure there was any rational analysis as to why it was taken out.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
At the time, we had a lot of overzoning.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Yes. At that time, it was an attempt to curtail overzealous zoning during local area plans or county plans. It was removed, however. Would it be Mr. Jones's understanding that this was because we went into an unprecedented time of no development? Again, I do not see how it would have stymied development. It may have curtailed overzoning.
Mr. Philip Jones:
I am not sure, but certainly the 2010 Act brought in the core strategies. More recently, we had the powers of the Office of the Planning Regulator, OPR, to effectively regulate overzoning. There is a certain argument for saying that we, as a country, grossly overzoned. The Flood tribunal looked at that, and we ended up with core strategies which prevented everybody's land being zoned, and then we got the OPR when that was not sufficiently strong. I think this is another attempt to do it, but it is more subtle this way. It is not just a tax. It is the register as well, which is very important.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
My understanding was that the windfall tax, as it was back in 2009, would have been a tax on newly-zoned land, whereas this would capture everything. I was not present for the first session on this, and I keep meaning to listen back to it as I think many of the questions I have were answered. However, this is retrospective as well, so it would apply to a piece of land which has been zoned residential for 15 years with nothing being built on it. We all know there were parcels of land which got trapped from county plan to county plan unchanged. That would still apply in this situation. When one goes for planning permission, it will be the capture of the market value now versus the current value of the land. That is my understanding of it.
Mr. Philip Jones:
That is my understanding as well, but in fairness, they have given the gradual, phased implementation, so that the first lot will not be caught for a while. Then everything will be caught. It is a huge change from the previous general scheme, which only applied to new. As we know, that would not have worked for years. This one is much better in that context.
In fairness to the Department, it is bringing in the phasing, and that phasing will act as some sort of a prod to get development moving, which in some case may have been zoned for 20 years. That is good. If we get some of that activated quickly, because of a fear of getting done and having to pay more, then everybody wins.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Would Mr. Keran like to come in on that?
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Okay. That is grand. Deputy Gould is next.
Thomas Gould (Cork North Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I was listening there intently and I thank the witnesses for their contributions. Something which they discussed earlier was resources and staffing. We know from meetings which we have had that local authorities are short at least 500 in their planning sections, if not more. A point was made about the whole area of An Bord Pleanála and local authorities. Surely we are looking at a major blockage here if they cannot get staff. An Bord Pleanála has been doing recruitment. However, in regard to local authorities, we have had the city and county managers in here saying that they are finding it very hard to recruit the staff with the skills. We have a housing crisis right now. How are we going to manage all of this? Are there any suggestions? Is this something on which the colleges need to work with the Department, or that the Minister needs to do something about it? Until we fix that problem, many of the problems cannot be fixed.
Mr. Robert Keran:
I thank Deputy Gould. This morning, I was at the Joint Committee on Autism and the conversation went in a similar direction. Again, with regard to neurodiversity and planning for neurodiversity, it is a new skill set, and it is very difficult to impose on a system which already has difficulties. We will be publishing some research in July on planners, qualifications and numbers. There are a couple of things which I would say about that. Practically, it is incumbent on all of us to make planning an attractive career. I guess some of the narrative around planning is sometimes unhelpful, and we probably need to talk more around the opportunities in it. The OPR, in fairness, has done some work with CareersPortal, which is where many second-level students get their ideas on what courses to do. It is trying to make planning an attractive career at that level.
We need to look at grades, salary scales and so on. Local authorities are finding it difficult to get people at the lower grades, and that is because they are maybe coming from England where they are at a certain level. They are going in at the bottom of a grade, so it is just not attractive to them to go into local authorities or the public sector.
We need to look at bursaries for students studying planning. The courses we accredit are typically a two-year masters or three-plus-ones, and one needs to do that to get the skills and knowledge which ones needs, but it is expensive. It is particularly expensive if one is in Dublin.
There are issues with the capacity of the planning schools to deliver more students than they can. I think there are 70 to 75 students coming out this year. It will be less next year, so the capacity of the schools to produce the graduates is an issue as well.
The other thing is there is probably a lack of joined-up thinking. The Higher Education Authority had some funding under the human capital initiative for conversion courses and so on, and planning was specifically excluded. A planning school could not apply to run some sort of conversion course. The only mention of planning in that last round of funding was about planning offshore renewables, so engineering is kind of what it was talking about. Again, it is probably a lack of joined-up thinking.
The Department and the OPR are very alive to this, and we are as well. We are looking at what we can do to make planning an attractive career, encourage people in to it and encourage take-up in the schools. However, with the skills in this and the forthcoming legislation, none of it is going to work unless we have the people and we are setting it up to fail. That is something which came across very strongly in this committee's pre-legislative scrutiny report as well. Without putting these things in place, things are not going to improve in the way which people think they are going to. They are some things we think need to be considered.
Thomas Gould (Cork North Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I thank Mr. Jones for that. As he has said, the matter has come up at previous meetings. I am just very concerned that if we have the best legislation in the world without the resources and staff to implement it, we are at nothing.
I am involved with a GAA club and community groups but do not know one person from them who has ever gone to college to study planning. Believe me, I have known hundreds of people over the years from coaching teams. It was said that more work needs to be done in schools to get people interested in the subject of planning and to pursue it at college. Having capacity of 70 to 75 this year, with a lower capacity next year, suggests we need to be acting with the colleges now to have courses in place in August, September and October. Even at that, there would be a two- or three-year lag before the planners graduate. If we wait another year, we may not fail but there will definitely be a delay in the system.
I want to refer to an issue that Senator Cummins talked about. I come from an area of very high social housing density. More social houses are being built in areas that already have a high density of social housing. The argument some make is that developers and builders will not build private houses in certain areas because they are not as attractive and the houses do not make as much profit. The developers might say they make no profit. It is about getting the tenure mixture right. I live on Cathedral Road and my house was the closest one to Knocknaheeny that I could buy, Knocknaheeny being where I am from. Gurranabraher has houses built over the years by Cork City Council, the local authority. What I am saying is that in developments in the likes of The Meadows and Fairhill, I just see more social housing. Is there anything in this Bill that will help us to get the mixture right? It is all about having private, affordable, cost-rental and social housing. What is happening concerns me. From people in my club, St. Vincent's, and people such as those in Na Piarsaigh, I hear that no private houses are being built in Knocknaheeny, Farranlea, Fairhill, Hollyhill and such places. All the young people who come out of college or get a good job leave their community because no private houses are being built. It is about getting the mixture of cost-rental, affordable, social and private housing right. Is there anything in this Bill that will help get the balance right?
Dr. Se?n O'Leary:
By way of context, my PhD was on sustainable development in Knocknaheeny. Ultimately, it found the whole concept of sustainable communities in places like Knocknaheeny was based solely on tenure and that there was no discussion about services or anything else, as the Deputy knows that better than anyone. That was the finding. To put 80,000 words in a sentence, there was a concept of sustainable communities without engaging with what made a sustainable community. Mr. Jones and Mr. Keran might refer to the other aspects of the Bill.
To give the local context, because I am from Cork, there are 38 planning students in the school in Cork and they will be graduating this year and next year. Again, however, there are fewer students in first year than second year, which is a problem. Once one has a qualification, one still needs two years of post-qualification experience before we feel one can become a full member of our institute. The Deputy is right that there is a very big lag. It is probably incumbent on all of us to try to make planning a little more attractive. That is my pitch for Cork. Does Mr. Jones want to add anything?
Mr. Philip Jones:
I have just one point, which I made when we were before this committee on another occasion. After the crash in 2010, the Department of Public Expenditure and Reform basically told every State body, including each local authority, that it had to get approval before it could employ anybody. We are not now in the middle of the era of the troika, so why can a local authority not take on four planners without going cap in hand to the Department of Housing, Local Government and Heritage, which must then go cap in hand to the Department of Public Expenditure, National Development Plan Delivery and Reform, if it has the money? One of the suggestions we made, which I believe is reflected in the committee's report, is that the real cost of dealing with a planning application should be covered by the planning application fee. In fairness, Mr. Cussen of the Office of the Planning Regulator stated in front of this committee that the fee for dealing with a single housing unit is €65 and that it has not changed since 2001. The actual cost is about ten times that. If we had full cost recovery for all planning application fees so the local authority would get a bit more money, it would help. If a local authority has the money and needs the staff, it should be allowed, without going cap in hand to central government, to take on those staff. I am aware there is a bigger issue concerning how many graduate from the schools but always having to ask central government when one wants staff to do one's job seems to be a hangover from the days of the troika. We need to get rid of it. If the local authority has the money, why should it not be allowed to get the staff it needs to do its job? That is one approach, but I acknowledge Dr. O'Leary's point that we need to get more people to get the jobs. Both approaches are needed.
There is one thing in the general scheme that might help with the social element, that is, the idea that a local authority could purchase land compulsorily and hand it to a builder to build housing on it. It should not be a profit-making builder but a small builder. Many of the firms now operating at public level are larger firms. There is no reason a local authority could not buy a small site at less than the market value and then give it, by way of licence, to a builder who would build the houses and sell them on the open market, undercutting the private sector elsewhere. Thus, you would get private houses in the area. If the profit motive is removed, it might result in housing at the infill sites in the locations being talked about. That is one suggestion.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Maybe I have spent too much time at meetings of this committee but I actually think planning is a really exciting profession. If you consider what is being taught in Technological University Dublin, between planning, urban regeneration and transport-oriented development, you will realise the profession is really exciting. Part of the problem is that many go through school not even knowing that planning exists, let alone that it is a career or profession. I completely take the point about entry-level grades of pay, etc., but planning is so fundamental to our society and urban and rural areas that if people had a better sense of what was involved, it could be regarded as much more attractive. It is as attractive as architecture or engineering, but for some reason both planning and building control seem to be the poor cousins by way of reputation. I do not believe that is fair given what the people concerned do.
It is a shame Senator Cummins is not here because this discussion on tenure is very important. There is no empirical evidence from any of the research done on Irish housing to confirm or prove tenure is a determinant of the sustainability and quality of communities. It is one of those things that frustrates me greatly. Probably one of the most important pieces of research on social housing in Ireland, published in 1999 and called the seven estates study, was done by Professors Tony Fahey and Michelle Norris. They studied local authority estates right across the country and confirmed that there are great benefits to mono-tenure. What makes a public housing estate unsustainable is the lack of investment in amenities and infrastructure and the heavy concentration of the tenants' income at the very bottom of the income deciles. Increasingly, what housing policy experts are arguing for is not about tenure – this is not an argument for or against mixed tenure – but about mixed income. Some of our best-quality public housing estates, which are really great places to live, are still predominantly single tenure but have a much broader mix of incomes and professions than some of the newer estates. The solution to Deputy Gould's problem is not private housing but local authorities building affordable purchase homes and letting young working-class people buy their own homes in their communities. This is being done in Moyross and is working very well.
I call the thinking the dogma of mixed tenure because it has become dogma without a proper evidence base. The real problem is that we residualised public housing to be housing for the very poor in the 1990s and noughties. Actually, the problem is the over-concentration of poverty, not the tenure mix. It is important to point that out.
Senator Cummins raised an important point but I would come at it from a different point of view. Mr. Jones's response is useful, so we should clarify this with the Department.
If a private landowner and developer was able to get private planning permission and then evade the tax by way of offering it as a turnkey property to an approved housing body, AHB, for social and-or affordable housing, that would create an interesting conundrum because, arguably, the local authority or AHB acquiring the turnkey property could expect a discount in the purchase price because the developer is not paying the levy. It would be important for us to clarify with the Department whether a developer would no longer have liability for land value sharing tax in the case of a turnkey property. On the basis of Mr. Jones's point about the wording, the developer would not be liable. It would only be where a local authority, AHB or the LDA had got planning permission specifically for the social and affordable development.
Also to remind people, as it gets lost, if a local authority does a mixed-tenure development on its own land of affordable purchase through the affordable housing fund or affordable cost rental housing through the cost rental equity loan, CREL, scheme and social housing, that housing is available to 80% of the working population. Affordable purchase homes can now be bought through the affordable housing fund on an income of up to €100,000, which would put the figure above that. It was €85,000. Private for-profit housing is not actually needed in a public housing estate to have a mixed-income population as households with incomes of up to €85,000 and in some cases €100,000 can access the fund. It is important not to concede to the dogma of mixed tenure. It is mixed income and adequate amenities and infrastructure that create good quality communities. That can be mono-tenure or mixed-tenure. It depends on how it is done.
We should get clarification from the Department on that point because if it is possible to deliver a turnkey property and evade the tax, I want to ensure the local authority or approved housing body is getting the discount. Currently, when an AHB buys a turnkey property, it pays full market value for the land. That is baked into the price. It might get a small discount, but not a Part V discount. It would not be fair if a developer could avoid the land value sharing tax but the AHB or local authority is hit for the full market value of the land. Mr. Jones is correct that it applies where the grant of planning permission is for social and affordable housing. That includes sites on which the LDA is only doing social and affordable rental or purchase, which is currently all of its sites.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Can I clarify the Deputy's question? It relates to cases where someone applies for planning permission, builds and then offers the property in turnkey condition.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Mr. Jones's reading of the Bill is that, in that instance, only the Part V portion of the planning permission would not be relevant for the purposes of the land value sharing tax liability. The remainder of the housing would be. I presume, but I think the committee should clarify with the Department, whether a developer would be able to evade the land value sharing tax in the case of a turnkey property, where regardless of the planning permission, 100% of the properties are sold.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
The developer would have paid the land value sharing tax at the point of planning permission. Therefore, if now-----
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
No, the developer pays at the point of commencement. Not for all, but for the vast majority of turnkey properties, the turnkey agreement is in place before commencement. I know that is not always the case, but it is for a large number.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
Does anyone want to comment? It is something that should be clarified.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Apologies for my rant on the dogma of mixed tenure. I have a particular view on the issue.
Mr. Philip Jones:
There is one small point I would not like to miss. In 31BA, the definition of market value is rather important so I will bring it to the committee's attention. The definition talks about the normal things one might expect market value to be, but at the end it states "and the assessment of market value shall not take into account any value associated with any extant planning permission in relation to the land in question". The definition specifically excludes-----
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Part V
Mr. Philip Jones:
No, it actually states "any extant planning permission in relation to the land". If it is zoned, it has X market value. If it is zoned and has planning permission it has X+Y value. The Y is excluded so the net effect in the definition would be to reduce the amount that could be put in for market value. The calculation is existing use, market value minus-----
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
Will Mr. Jones explain that for us slow learners in the room? It is 31-----
Mr. Philip Jones:
It is 31BA, which includes the definition of market value. It is not clear why this is being done. In reality the market will take that into account. If the State is going for a standard CPO and the valuations come in, land that has planning permission is normally worth more than land that has only been zoned. Yet, for some reason, the definition excludes any element of value when it has planning permission. The effect would be to artificially reduce the market value and therefore, the land value sharing contribution as that is the difference between existing use value and market value. If the committee is bringing in Mr. Hogan and his colleagues at the end of this process, it might be relevant to ask why they are doing that.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I will ask both Mr. Jones and Mr. Keran this. In the previous session, we had a long exchange with the Department about market value versus what is called transaction value or the actual price paid. I raised a question around the transaction value impact on the market value. Imagine that up to a certain point in time, land has a value of X euro per hectare. Then somebody comes in or there is some change in Government policy. Co-living was the example I used. A development site in Dublin 8 had planning permission for a three-storey mixed-use residential, commercial and restaurant development. Co-living came in and that changed the planning rules. An international development collective acquired the land and overnight doubled the price of the land. It went from a reported market purchase value of €4 million to something like €10 million. That has an impact on the potential market value realisable for everyone else who has land in that area. The Department was clear that it was market value at the point in time and not about transaction values. Do the witnesses understand why that would be the case or is that something about which we are better talking to land valuers and land management experts who will appear before the committee? Why would extant planning permission be excluded? Surely, it would be materially relevant to the market value. A speculator acquires land and gets planning permission. What was the famous one that was in the news? It was the chipper site in Drumcondra where someone acquired land and got planning permission on a promise of development to the elected members. The land was rezoned and the speculator flipped it for twice the purchase value. It was a high-profile case in the newspapers.
The witnesses thought they would get away early and Mr. Jones dropped us all in it again.
Mr. Robert Keran:
Mr. Jones made the point about the extant planning permission. It is not clear why it is not included in the market value calculation. It probably should be but that is a question for the Department. When the Deputy says "transaction value", does he mean the difference between the existing land use value and the market value - in other words what someone is paying for it - or does he mean the actual price paid for a piece of land? It is the latter.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
A good example is Poolbeg SDZ. We can only go on media reports because we do not have a land register. It has been widely reported that the Ronan Group paid 25% above the guide price for the Poolbeg site. That is a significant matter. We have quite a few responses from the Department of Housing, Local Government and Heritage to freedom of information requests about what market values in the surrounding area were. If someone pays 25% more than the guide price, that has to have an impact on market values of land, depending on how much other people are willing to buy and sell at. Market value is determined by valuers at a point in time, but if something changes, such as a decision being made by an investor or a change being made to planning regulations, people can start paying more and the market value starts to change. We had an interesting conversation with the Department. It is good that this legislation is capturing all residentially zoned land from the most recent zoning decisions and development plans. However, the point at which the tax liability may fall due may have a much higher or lower market value because there could be a significant delay, and any changes in market value, some of which are determined by the actual price paid, will not be taken into account.
Mr. Robert Keran:
I understand. One of the points is that the planning Bill, which is a separate Bill, is allowing for a ten-year development plan. In theory, there would be gaps of ten years between zoning, subject, as we know, to variations.
One could have quite a substantial gap between the market value and the real transaction value in the context of what is happening in the market. One of the points we will be making in the further elaboration on the Bill is that there should be more regularity in reviewing the register and looking at the values of the register. That is something we will be submitting.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It makes absolute sense, but we also have a property price register. In some senses, the market value is the price that people pay for properties at a point in time. When people are then going to sell properties, or indeed assess whether the purchase price of a property is reasonable, one of the great things about the property price register is that we can now go and check what prices are actually transacting at. Again, the Department seems very resistant to the idea of allowing the land value register to track the fluctuation in the way the a property price register would. I am aware that it is a slightly different thing.
Mr. Robert Keran:
There are fixes for that in the sense that the mechanism at the moment is a register of land values. There is a separate process for self-assessments, as the Deputy is aware. Perhaps a better process would be if the land was valued at the date of the planning application, for example. The self-assessment would be submitted with the planning application that values the land at that date so it is current and up-to-date, and it would factor in other transactions on other sites in the area. That might be one area for us to make a written submission.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I was just thinking out loud.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
With regard to the further submission the Irish Planning Institute will submit, will Mr. Keran forward a copy of that to the committee as well?
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
It would be helpful for us.
Thomas Gould (Cork North Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
I have just one question on a comment made earlier. Mr. Jones spoke about the over-zoning of land and that we have too much over zoned land. Cork City Council has recently brought forward its new city development plan. The Office of the Planning Regulator, OPR, suggested that the council had over-zoned the land and it had to go back and take some sites out. Then there were sites that were zoned for years. We are in the middle of a housing crisis. There is zoned land everywhere yet we have a shortage of housing. I am aware that the Bill will take time, but in the witnesses' opinion will those zoned lands that have been zoned for years be developed more quickly or go through planning more quickly rather than people just sitting on them? Will it make a difference?
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I thank Dr. O'Leary, Mr. Keran and Mr. Jones for giving considerable time to us here. It is very helpful for us. It is important legislation. We are seeing aspects of the Mr. Justice Kenny report recommendations at last, 50 years on.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
It is not that he was against betterment taxes. We were chatting about this at the start. I am not against this Bill. I believe there is real merit in betterment taxes, but one of the points that Mr. Justice Kenny made was that betterment taxes are always passed on to the purchaser of the homes. If I understood his argument correctly, and our colleagues here would know this much better than I do, the primary reason he was not proposing a betterment tax but was proposing a designated site scheme for the acquisition of land at a lower value, was because he felt it was a better way to ensure not only more was built but to also undermine speculation. Most land management experts that I know would argue that this is contrary to Kenny and not in that spirit but it does not mean it is a bad idea. I defer to my learned friends across the way here.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I thank the Deputy and Mr. Jones. I am sorry for opening up the conversation now.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source
We had all of this discussion in the last session Chair.
Steven Matthews (Wicklow, Green Party)
Link to this: Individually | In context | Oireachtas source
I missed that one. I thank the witnesses for their time today. If they could forward that further submission it would be very helpful for us.