House price inflation out of control – action not words required from Govt
- Labour’s new Land Bill due for debate in the Dáil on Wednesday would give local authorities the power to CPO development land at its existing use value plus 25%.
- The Land Bill would enact key recommendation of 1973 ‘Kenny Report’ that FG and FG have blocked for decades.
- Bill would tackle land hoarding and speculation and reduce the cost of new build greenfield houses.
With a report in the Irish Independent outlining that house price inflation has outstripped wage increases, with the worst yet to come, Labour housing spokesperson Rebecca Moynihan has called on the Government to support Labour’s bill to decrease housing costs. The Labour Party will introduce a bill this week which would tackle speculation and land hoarding based on the 1973 Kenny Report.
The Land Bill will give the power to local authorities to do a compulsory purchase of development land at its existing use value plus 25%, rather than at market value. Based on data from the Society of Chartered Surveyors and the CSO, Labour estimates that if implemented, it would over time reduce the cost of a new build three bed semi-detached house built of a greenfield site in the greater Dublin area by circa €30,000.
Senator Moynihan said:
“How many experts are needed to tell the Government what ordinary people already know? House prices are totally out of control, a 68% increase in the cost of housing is phenomenal. The fact that wages have only risen by 9% in this time is frightening for anyone aspiring to get on the property ladder. There’s been enough talk from Government, it’s time to act now.
“We need to tackle the price of building land to make more affordable. The Labour bill will put it up to the Government and the Minister for Housing about how serious they really are about tackling the housing crisis.
“The Minister has talked a lot about affordable housing and we know that land costs makes up so much of the price of a home so here is a chance for him to finally act and implement the Kenny report 50 years on.
“This Land Bill from Labour wants to eliminate the ability of development property speculators to pocket enormous profits. If implemented, this bill would knock tens of thousands off the price of a new build house and will be a big help to people trying to save for a home of their own. It would help reduce the gap between the costs of housing and pay. It would also eliminate speculation on development land and go a long way to getting more supply on stream by hitting land hoarders and speculators where it hurts.
“This land Bill is not a silver bullet though. We also need the Government to adopt other measures including a ‘use it or lose it’ provision on planning permissions and ensure the derelict sites levy is enforced.
“The Government’s own think tank, the National Economic and Social Council recently concluded that the core principles of the Kenny Report remain as relevant today as they were in 1973. Blockages on the supply side include the slow release of land for development. With excess demand, property developers can control prices and secure super-normal profits in a cartel-type situation.
“If, as economist John Fitzgerald descried, we ain’t seen nothing yet, we need to act now. This Bill would be a big step in the right direction, send a clear signal to land hoarders and speculators that they need to move now to build housing on the sites which they have acquired, on both greenfield and brownfield sites. By giving these powers to local councils, it will make a massive difference in reducing the land cost of newly built units.
• The full title of the Bill is the Acquisition of Development Land (Assessment of Compensation) Bill 2021.
• In the most recent Society of Chartered Surveyors Cost of Housing Delivery Report, the SCSI found that the land cost for a three bed semi-detached house in the greater Dublin area was €53,000 per house. Based on current planning guideline housing density requirements of 35-50 units per hectare, and agricultural land values from the Institute of Professional Auctioneers & Valuers (IPAV) and the CSO, the effect of this Bill would be to reduce the land cost of a three bed semi-D in the Greater Dublin Area by circa €30,000 per unit in the case of a greenfield site that is currently zoned agricultural.