Mick Wallace (Wexford, Independent) | Oireachtas source

I disagree strongly with the thinking behind this section. I was really surprised to see it in the Bill.

What percentage of banked land out there is not mortgaged? I would imagine it is low. As anyone who knows the sector well will confirm, if one had a site worth €2 million and one owed nothing on it, one would mortgage it to get some money. If I have an asset worth €2 million and I let it sit there, that would not be clever. One uses money to make money, if one is in this game. If one has such an asset and goes to the bank stating it is valued at €2 million, it would not be unusual for the bank, following independent valuation of it, to provide a mortgage of 75% of the asset. They would not give one 100%. They would allow for shrinkage. In the present market, they would probably only give 50% but I can confirm that ten years ago getting 80% was not a problem. When we built offices and restaurants and kept them, we did not just let them sit there. We would have had units worth, maybe, €1 million or €2 million. We would have been off our head to let them sit there and not get money for them that we could use to do other work. That is what we did. We mortgaged them so that we could do other development and we could build in other places with the money that we would get from it. Anyone who would own a valuable development site and not mortgage it would be a very poor businessman.

The only scenario I could imagine where those involved in the land-banking game would not have land mortgaged is probably those with what we would regard as old money and those who had cash down through the years who worked in a different way in business and never really adopted the modern business methods. However, it would not be encouraged by any financial adviser that one would have an asset worth serious money and not mortgage it so that one could get money to do other work and make further money with it. From a business point of view, it does not make any sense that a site, deemed vacant and eligible for a levy, will be free or partially free of a levy because of a certain mortgage on it. The majority of sites will be mortgage. That is a call an investor will make.

If it so happens that the site is mortgaged at close to the current market value because one might have bought it when sites were dearer and the value has come down, I would say the investor has a decision to make. If I was the bank manager who gave the investor the mortgage in the first place, I would say he or she must make a call as to whether it is in his or her interests to hold this site even though the mortgage on it is approximately equal to its market value, to hold this site and pay a 3% levy on it, or to sell it on. That is a call one makes; it is a business decision. One looks at the site's location, its potential and the markets. One looks at all that one can do with it. One might get someone to do up a scheme to see the site's potential. One garners as much knowledge about it as one can and makes a business decision. However, the idea that such a site would not be eligible for the 3% levy does not make any business sense. That is a mistake.

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