[Article] Case may exist for State to buy land for housing

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Case may exist for State to buy land for housing
From:ireland.com
Monday, 3rd January, 2005

Consultants hired by the Government reported that there might be a case for the State to compulsorily acquire development land in Dún Laoghaire/Rathdown from a builder who had not sought permission for any housing on the south Dublin property.

In a December 2003 report that found in favour of selective intervention by local authorities to prevent land hoarding, Goodbody Economic Consultants also found that speculative land hoarding may have played a role in restricting the output of housing in the Fingal area of north Dublin.

It said policy interventions to improve the availability of land would reduce expectation of price increases "and thus avoid excessive speculation".

Goodbody said a selective "use it or lose it" scheme in which land not used for housing was acquired by local authorities could result in significant additions in the supply of affordable housing. However, it said that a selective scheme was unlikely to result in significant house price reductions.

Local authorities would be empowered in such a scheme to impose a deadline by which land-owners would have to complete the development of housing on specific lands.

If the land-owner failed to comply, the local authority would acquire the property by compulsory purchase order at a price set at a specified percentage above agricultural value.

The Department of the Environment, which commissioned the consultants' report, refused a Freedom of Information Act request for it last year.

However, a copy seen by The Irish Times said that one builder in Dún Laoghaire/Rathdown had control over a "significant proportion" of inactive land.

The report did not identify the builder, but said that the individual had not brought a scheme through the planning process to develop housing.

"There may be a case for intervention in such instances," it said, citing a case study of the land and housing market in Dún Laoghaire/Rathdown.

The study indicated that this case was an isolated one and said that the lack of serviced lands had been the "major factor" influencing the supply of housing in the area. "There is no evidence that builders are delaying construction of housing once planning permission has been obtained."

In a case study of the market in Fingal, Goodbody said that "oligopolistic hoarding" - in which developers influence house prices by controlling a significant proportion of building land - was an unlikely explanation for the failure to rapidly increase housing in the area.

It added that "speculative hoarding" - where owners held on to land in anticipation of a rise in its value - could have played a role in restricting output.

However, Goodbody said it was not possible to definitively allocate responsibility for the restriction in output to speculative hoarding because lack of capacity in the building industry was another possible factor.

The Goodbody report was given to the Department four months before the Joint Oireachtas Committee on the Constitution found that such measures would "almost certainly" pass a constitutional challenge in the courts. The Government pledged last April to examine the committee's findings, but it has taken no specific action since then.

Goodbody found that oligopolistic hoarding by property owners seeking to manipulate the supply of housing and its cost by refusing to develop their land was not a widespread problem.

"However, specific instances can arise which give rise to concerns. This suggests that a 'use it or lose it' approach could have application on a selective basis."

While warning of "considerable dangers" to the housing and land markets if an extensive scheme was introduced, it said "deployment on a selective basis" under conditions may yield benefits.

A necessary but not sufficient condition for intervention was that a significant proportion of zoned and serviced land was not being brought to the market. Where this condition and others were met, the local authority should consider whether supply was being withheld because of market conditions.