Radical Land Bill would reduce the cost of new homes by tens of thousands if implemented
- Labour’s new Land Bill due for debate in the Dáil on Wednesday would give local authorities the power to do CPO development land at its existing use value plus 25%.
- The Land Bill would enact key recommendation of the 1973 ‘Kenny Report’ that FG and FF have blocked for decades.
- Bill would tackle land hoarding and speculation and Labour estimates it would reduce the cost of a new build greenfield house by circa €30,000 in the Greater Dublin Area.
- This bill is constitutional, and accompanied by a Senior Counsel legal opinion.
The Labour Party has published a radical new land bill that will reduce the cost of newly built houses by tens of thousands of euro by implementing the central recommendation of the Kenny Report from 1973.
The Bill will give the power to local authorities for a compulsory purchase order 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 will reduce the cost of a new build three bed semi-detached house built on a greenfield site in the greater Dublin area by circa €30,000.
The Land Bill will effectively eliminate the ability of land speculators to pocket enormous profits and is accompanied by a Senior Counsel’s opinion that the Bill is entirely constitutional. This is the Labour Party’s third attempt at enacting the recommendations of the Kenny Report, having previously brought bills forward in 1990 and 2003.
Labour leader Alan Kelly said:
“We have a housing emergency and we need more affordable housing. This 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, we’re told it’s the government’s number one priority, and we know that land costs makes up a significant proportion of the price of a home so here is a chance for him to finally act and implement the Kenny report nearly 50 years on.
“We estimate that this law if implemented would over time 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 will 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 and must be part of a package of measures to ensure land is used to build homes. For legal reasons, there needs to be a grandfather effect included which means it will effectively only apply to land bought after the Bill is introduced. This Bill should have been implemented long ago but was not because of opposition from Fine Gael and Fianna Fáil.
“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 the government is serious about affordable housing, they must support our bill. It will finally push land hoarders and speculators to build housing on the sites which they have acquired, on both greenfield and brownfield sites. That in itself will release more development land and reduce prices. By giving the power to local authorities to do a compulsory purchase at existing use value, plus a gratuity of 25%, it will make a massive difference in reducing the land cost of newly built units.
“The housing crisis is as bad as it is because of political decisions by Fine Gael and Fianna Fáil. We also need action to protect renters by freezing rents, build tens of thousands of social and affordable housing units, and stop investment funds from gazumping first time buyers. These are all political choices that the government could take but is refusing to do. This Bill is no different, and given how serious the housing situation is, surely its time has come.”
ENDS
Notes:
- 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 guidelines of 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.
- For legal reasons, the Bill contains a grandfather effect, which means that people who buy development land after the Bill is introduced will do so in the knowledge that it may be CPO’d at a price capped at existing use value plus 25%. People who bought development land before the Bill’s introduction will be subject either to that cap or will be capped at their original purchase price plus a return on their investment at a rate of 2% p.a. over the return on 10-year government bonds, whichever is higher.
- Please find enclosed a Senior Counsel’s opinion that this Bill is constitutional. https://www.labour.ie/assets/files/pdf/sc_opinion_-_kenny_report.pdf