Time to force land hoarders and speculators to start building housing – implement the Kenny Report
Speech by Labour Party Leader Alan Kelly on the Acquisition of Development Land (Assessment of Compensation) Bill 2021 which would implement provisions from the Kenny Report.
More than 50 years ago, in the late 1960s, amid concerns about the high cost of housing for home buyers, a situation which has repeated itself several times since, the then Fianna Fáil Minister for Local Government, former Deputy Bobby Molloy, commissioned a report on ways to tackle the supply of development land. A High Court judge, Mr. Justice John Kenny, was appointed to lead the committee established to examine the issue. Its report, the Kenny report, was published in 1973, 48 years ago. It contained a set of radical recommendations to help solve Ireland’s housing problems and should be commended. It is a report that has been talked about ever since but despite all of the chaos and disaster which property has created for Irish people in the time since 1973, it has never been implemented.
We stand in Dáil Éireann in 2021, at least two generations after the report was published, in the middle of yet another housing crisis. In the time since 1973, we have had housing crisis after housing crisis, including a calamitous economic collapse in which property development and speculation, facilitated by multiple Fianna Fáil Governments and not regulated by the banks, bankrupted the country. We have had numerous tribunals and scandals, costing hundreds of millions of euro, and all too many criminal cases about corruption and rezoning in the planning process. They have all passed and the Kenny report still has not been implemented.
The housing crisis is worse than ever before. We have thousands of homeless people, extortionate rents, increasing house prices, a lack of housing supply and a generation of young people locked out of home ownership. All the while, there is rampant hoarding of development land again and again. Land speculation is rife. The victims of this crisis number in the hundreds of thousands.
Instead of continuously shouting at one another, I ask Deputies when we will act collectively to make this stop. What will it take to end Ireland’s dysfunctional property market? After a century of independence, economic collapse and housing crisis after housing crisis, when will Ireland finally have a functioning housing system? I will tell the House the answer. It will be solved when this House has the guts to take on the vested interests, landowners and property speculators who have rigged the housing system in their favour, facilitated by this House. It will stop when Fianna Fáil and Fine Gael stop kowtowing to massive land hoarders, investment funds and speculators and, for once in their political lives, do more to help renters, first-time buyers and families.
As many economic commentators have said, land is at the centre of the housing crisis. Many of the problems we now face could have been avoided if the Kenny report had been implemented. The recommendation is simple but effective. It is that local authorities be given the power to do a compulsory purchase of land at its existing use value plus a 25% gratuity. This measure, which has been opposed by Fianna Fáil and Fine Gael for generations, would immediately have ended the ability of land hoarders and speculators to make enormous profits at the expense of first-time buyers. It would have effectively ended land hoarding as a practice. If it had been implemented, there may never have been a property bubble and collapse, nor a housing crisis or anything like the scale of the crisis that exists today.
The people who should be at the forefront of the Government’s mind, but who clearly are not, are the victims of this current crisis. They are those paying extortionate rents, experiencing or living with the threat of eviction and homelessness, people forced to move back in with their parents rather than find their own home, and the entire generation of young people who have been condemned to spending enormous shares of their income on housing. Behind each and every number in the housing and homelessness statistics, there is a human story of pain and hurt and, in many cases, trauma, as a result of this man-made disaster.
The ideologues in Fianna Fáil and particularly Fine Gael who worship at the altar of the market and believe the market will sort out all problems have been found to be wrong time and again, with disastrous results for our country and generations of Irish citizens. Fianna Fáil and Fine Gael’s approach has demonstrably and repeatedly failed to build housing for citizens in the right place, at the right price and in the right quantity. Fianna Fáil and Fine Gael like to pretend that the housing crisis is out of their hands and is something akin to a natural disaster or an act of God. This is complete rubbish. The housing crisis is as bad as it is as a direct result of the political and policy decisions made by both parties.
Nobody in this Chamber could argue with the fact that our housing system is simply disastrous. Ireland’s housing crisis is out of control and there is, without question, a need and public demand for radical action. That is what we are doing today. We are taking real radical action, finally grasping this nettle and pushing for radical change.
For the third time in our history, we are bringing this legislation before the Dáil. People may ask about the practical effects of this Bill so I will go through it. The Real Cost of New Housing Delivery 2020, a report by the Society of Chartered Surveyors Ireland, SCSI, published in August last year, estimates that the land component of a newly-built house in the greater Dublin area is €53,000 per house, which represents 16% of the final cost of the house. Based on these figures and agricultural land values from the Institute of Professional Auctioneers and Valuers, IPAV, and the Central Statistics Office, CSO, taking into account current planning density guidelines of between 35 and 50 units per hectare, we estimate that, if implemented, this Bill will reduce the cost of a new-build, three-bedroom semi-detached house built on a greenfield site in the greater Dublin area by approximately €30,000. This would not be a silver bullet to the housing crisis, but it would finally be a major step in the right direction that has a substantial practical impact on prices.
By finally implementing the Kenny report, which has been blocked by Fine Gael and Fianna Fáil for 48 years, a length of time which is hard to believe, this Bill will effectively eliminate the ability of land speculators to pocket enormous profits. We have also seen a senior counsel’s legal opinion, which we commissioned, that this legislation is completely constitutional. I know it is completely constitutional. It also needs to be said that the ninth report of the All-Party Oireachtas Committee on the Constitution in 2003 also found that implementation of the Kenny report was constitutional. Let us not hear any of that rubbish today.
For legal reasons, there needs to be a grandfather effect included in the legislation, which means it will effectively only apply to land bought in the future. Remember that there is never a wrong time to do the right thing. There is no excuse for delay. To paraphrase a Chinese proverb on the best time to plant a tree, the best time to implement the Kenny report was 1973. The second best time is now.
The Labour Party is not alone in having voiced support for implementation of the Kenny report. The Green Party – I note the Minister of State is here today – has for decades called for the implementation of the Kenny report. In 2004, Ciarán Cuffe, now a Green Party MEP, said, “The Kenny report on the price of building land back in the early 1970s made some great proposals, but they weren’t acted on”, and they should have been. He is absolutely right. It will be interesting to see if, on the floor of the Dáil today, the Green Party, which is now in government, will follow what we are pushing and support this commitment of which it has long been supportive.
The Green Party is not alone on the Government benches in having voiced support for the implementation of the Kenny report.
In 2018, no less a figure than the Taoiseach, Deputy Micheál Martin, said the following: “I think implementing Kenny is morally the right thing to do – I don’t think there should be windfall profits once land is rezoned but it would also undoubtedly reduce the cost of housing because the price of land at the moment is a significant factor in increasing the price of houses.”
That was what the Taoiseach said, so surely he and the Government are going to support the Bill. The Taoiseach was right: the Kenny report should be implemented. As Taoiseach, he has the opportunity to do the right thing morally, as he said in 2018, and to implement the Kenny report. If he fails to do so, given what he has said, his own morality and what he said in 2018 will be called into question.
Many other bodies have recommended the implementation of the Kenny report, including the National Economic and Social Council, which only recently concluded that the core principles of the Kenny report remain as relevant today as they were in 1973. This Bill is not a panacea, but it will be a major step in the right direction, and will force land hoarders and speculators to start building housing on the sites which they have acquired, or to sell them to somebody who will. That, in itself, will release more development land and reduce prices.
In addressing the housing crisis, there is much more that needs to be done. We also need action to protect renters, by freezing rents, which we all know can be done. We must 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 must address. This Bill is also something it must address. Given how serious the housing situation is – the skyrocketing rents, the endless homelessness crisis, and all the other dysfunctions in our housing system – surely the time is right for radical action. The time is right to implement the Kenny report, once and for all. I ask all Deputies across the political spectrum to support the Bill. Failure to do so will mean that they lack the will to solve the housing crisis.