Mick Wallace (Wexford, Independent) | Oireachtas source

The purpose of the Bill is to disincentivise land hoarding or land banking. There have been many proposals relating to housing since 2011 and we have become a bit blinded by them all, but land banking has not been addressed. Economists say that since 1950, the 80% increase in the price of housing is linked to the land price and that is a significant issue. Between 1963 and 1971 alone, there was an increase of 530% in the price of housing and it led to the setting up of the Kenny commission. Mr. Justice John Kenny was commissioned to examine how in God's name we could control the price of development land. He reported in 1973. He recommended that local authorities should be allowed to purchase land compulsorily at the agricultural price plus 25%. The Government of the day, led by Liam Cosgrave, did not accept the recommendation. It seemed a bit on the radical side. It was suggested that it might give rise to problems with Article 43 of the Constitution which prevents any Government from interfering with property rights, but at the same time the advice was that it would not interfere with it. In 2004, a Fianna Fáil Government set up a committee to examine the same issue and it came to the conclusion that it would not interfere with Article 43. It was about private property and the constitutional balance. The verdict at the time was that it would not interfere with Article 43 but nothing was done either at that time.

It is interesting that in 2006, the National Roads Authority, NRA, announced that 23% of the roads budget at the time related to land acquisition. That compared at the time with 12% in England, 10% in Denmark and 1% in Iceland. We knew we had a serious problem but nothing was done at that time either. If truth be told, since 1973 a total of 13 consecutive Governments have refused to do anything about the situation and ignored the recommendations of the Kenny report. They refused to examine Article 43 or to test it in the courts. They also refused the notion of introducing a referendum on Article 43.

The Urban Regeneration and Housing Act 2015 was a harmless effort to deal with the problem of land banking. I am not sure if the Minister of State, Deputy English, was in office at the time but, as I argued then, it was designed to fail because it was never going to deal with the issue. I know the Government is making some changes now which are of interest, but I maintain they do not go nearly far enough and they will not be a game changer. For example, the Minister is talking about increasing the vacant site levy to 7% from January 2020. First, 7% is not near enough given the price of housing. If the price of a house goes up 10% at the moment, which we have been looking at now for four years in a row, the price of the land goes up by 30% so a 7% levy will not disincentivise land bankers. Second, even though the Government is doing away with the exemption on the loan, there are still loopholes that will allow many people to avoid paying a vacant site levy. The changes do not amount to much. One of the proposed changes is to give the Minister power to vary the levy rate by way of regulations, having regard to increases and decreases in the CSO property price index. It goes on to say, however, that any increase in the levy rate above 7% will be subject to primary legislation. In other words, the only power the Minister will have is to decrease the levy. The Government is going in the wrong direction. That will not solve the problem. We are still going to be left with the loopholes.

I will not have time to go through all the issues but a Ladybird version is that we want to bring in stricter definitions for what constitutes a vacant or idle site because it is way too open at the moment and we need to close it off. For example, if somebody applies for planning permission and gets it, a commencement notice can be made but building might not start for another 12 months. Such a person is still banking the land. Ninety nine out of 100 builders who are interested in building will have organised their finance. If a builder is still sitting on it a year after getting planning permission, then the Minister will have to deal with that.

Another issue that must be tackled is where a commencement notice is made but a project is not completed within three years. A builder could get a commencement notice, put up hoarding, dig a few holes and walk away, but that is land banking as well if the builder is not going ahead and building. There are many different ways of getting around these things and the Government has to deal with them. I know for a fact that these things happen. It is a very clever way of getting around some of the challenges presented.

The appeals system the Minister built into the 2015 Act borders on the ridiculous. Four different forms of appeal are available. A person could appeal being put on the vacant sites register in the first place. After 1 June 2018, which has just passed, he or she could appeal it again. When a valuation was put on what was deemed a vacant, idle site, the owner had the right to appeal the valuation. If he or she lost that appeal, once the person was asked for the money, he or she could then appeal the payment of it. It is ridiculous. I reckon that person could drag out the appeals for at least six years, and there was no backdating of the money he or she had to pay if he or she went down that route. That is nonsense. We have done away with three of the appeals and we have left one.

In the interest of fairness to the site owner, instead of one valuation which a person was allowed to appeal under the 2015 Act, I suggest that the average of three valuations be used, which should be sufficient. It makes no sense to allow four appeals.

Many issues are dealt with in the Bill. A report by the National Economic and Social Council in 2016 claimed that only 9% of zoned residential land was owned by local authorities in 2006, whereas in 1970 it was 30%. That was a major game changer. Those amassing and holding landbanks filled the gap vacated by the local authorities. The result was a huge power shift from builders to those holding landbanks. The person with landbanks became king. Earlier this week, I referred to a site of one fifth of an acre on Dominick Street which I bought for €4.8 million. If one buys a site and immediately begins working on receiving planning permission, it normally takes two years before a sod is turned and another two years to build it out, giving four years in total. Loan interest is usually 6%, which means that the interest repayments on a site costing €4.8 million are approximately €300,000 per year, adding up to €1.2 million over the four years it takes for the project to be completed. Added to the €4.8 million purchase price, that gives an overall outlay of €6 million. We built 27 apartments on the site and the land price accounted for almost half the cost of supplying them. The build cost was €230 per square foot or a little over €200,000 per unit. The land cost, made up of the initial purchase price and loan interest, was equivalent to the build cost. That is a mad scenario and should not happen anywhere.

Many people find the price of housing in Ireland draconian. In most European cities, one can purchase a three-bedroom house between 20 km and 25 km outside the city for approximately €160,000. In Dublin, one would pay approximately €320,000, double the European average. Who benefits from that? Builders do not. They will benefit from this Bill but those holding landbanks will not. More than 99% of the people of Ireland will benefit from the Bill. Nobody is a winner when housing is ridiculously priced. It leads to rents being ridiculously priced and is an all-round problem. It beggars belief that 13 consecutive Governments failed to deal with this issue.

I appeal to every party in the House which is genuinely interested in dealing with the fact that the manner in which housing is supplied in Ireland is totally dysfunctional, irrational and does not stack up to avail of this opportunity to deal with the problem. There may be a problem in regard to Article 43 but let us start the process and test it through the courts and, if necessary, a referendum.

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