Ireland South MEP, Billy Kelleher, has come out in opposition to an EU Nature Restoration Law*, which among other things would facilitate the widespread rewetting of Irish bogland. He explained that the implementation of this law would make land too expensive to build housing on, a striking illustration of the misconception that high land prices are caused by scarcity.
Ireland remains one of the least densely populated countries in Europe, we have no shortage of land to build housing on. The problem of what economic commentator David McWilliams called “the artificial inflation of land prices, which enriches landowners and rewards land hoarding” is one that directly affects the price of property and is a significant factor in the unaffordability of the housing market.
A 2022 report on planning and housing by the Department of Public Expenditure identified land hoarding and speculation as a problem which has affected the delivery of housing. The report showed that in Dublin alone, at the end of last year, there was planning permission for 42,000 that had yet to commence. In a time of such acute housing shortage, this is outrageous. The value of zoned land is inextricable from the property market. “If sales prices increase, the value of land — comparable land — goes up by a multiple of the increase. This, in turn, incentivises landowners to hold on to their assets to extract the maximum possible value. Put another way, it increases land speculation.”
This issue is not only affecting the property market for potential buyers. Land hoarding and speculation also affects the delivery of social housing. Higher land values consume a significant part of the budget of AHBs – who deliver much of our social and affordable housing – and directly impact the final cost of the houses and apartments. This has an obvious immediate impact on how many units they can deliver. It is also an issue when calculating the financial outlay for affordable and cost-rental housing, which in turn affects the price of sale or rent of a unit and the overall long-term sustainability of a scheme.
Residential Zoned Land Tax
To combat the issue of land speculation, the Government has introduced a Residential Zoned Land Tax which will come into effect in 2024. At 3 per cent of the market value of zoned land within its scope it is a token gesture at best, yet its payment is still being opposed by the biggest developers in the country.
Economic think-tank, ESRI, has recommended a solution to land speculation that is more robust than a 3 per cent tax. A recent report by the think-tank advised that a State body such as the Land Development Agency “should have the capacity to buy both public and private land for the development of residential properties.”
This is a good idea, but it is not a new one. It has been in existence since at least 1973, when the Government’s Kenny Report on housing was published. In 2021, Peter McVerry SJ wrote an article on this website about the report and how it could have prevented the situation we are in today. He pointed out that successive governments have avoided implementing the report’s recommendations about land purchase by claiming that CPOs are unconstitutional, yet they have always been used for infrastructure projects such as roads.
Aside from the difficulties of obtaining land that is currently privately owned and using it for public housing, the State is not even using land that it already owns for this purpose. According to analysis by housing expert Lorcan Sirr, social housing being built by AHBs will be further impacted by new legislation to remove development and Irish Water levies from housing. This will “inflate the value of residential zoned land by at least 20 per cent. This is welcome if you are a landowner, but not so great if you are a body such as an AHB – on whom the State is increasingly reliant – seeking sites on the open market.” What Sirr suggests is something we in the JCFJ have long advocated for: The building of social housing by local authorities. The advantage they have over AHBs is “access to land”.
Conclusion: A State-Driven Solution
At a time when social housing construction is delayed and under threat from higher construction costs in general all cost saving measures must be addressed and the high cost of land seems like an obvious target. The State buying land for a fair price rather than an artificially inflated one, and equipping local authorities to build housing on land it already owns would make a significant difference to the affordability.
It is not in the interests of property developers to undermine their own profits. They act in the interests of their shareholders. We should not expect otherwise from these corporate entities, and this is one reason why we need to displace their dominance over housing delivery. Unlike corporations answerable to shareholders, the State exists to act in the interests of its citizens who need homes. It’s high time we actually addressed this crisis, ceased lining the pockets of developers and investors, and started building houses for the people on land owned by the people.