I move: "That the Bill be now read a Second Time."
I wish to share time with Deputies Broughan and Connolly.
I move: "That the Bill be now read a Second Time."
I wish to share time with Deputies Broughan and Connolly.
Is that agreed? Agreed.
The purpose of the Bill is to disincentivise land hoarding or land banking. There have been many proposals relating to housing since 2011 and we have become a bit blinded by them all, but land banking has not been addressed. Economists say that since 1950, the 80% increase in the price of housing is linked to the land price and that is a significant issue. Between 1963 and 1971 alone, there was an increase of 530% in the price of housing and it led to the setting up of the Kenny commission. Mr. Justice John Kenny was commissioned to examine how in God's name we could control the price of development land. He reported in 1973. He recommended that local authorities should be allowed to purchase land compulsorily at the agricultural price plus 25%. The Government of the day, led by Liam Cosgrave, did not accept the recommendation. It seemed a bit on the radical side. It was suggested that it might give rise to problems with Article 43 of the Constitution which prevents any Government from interfering with property rights, but at the same time the advice was that it would not interfere with it. In 2004, a Fianna Fáil Government set up a committee to examine the same issue and it came to the conclusion that it would not interfere with Article 43. It was about private property and the constitutional balance. The verdict at the time was that it would not interfere with Article 43 but nothing was done either at that time.
It is interesting that in 2006, the National Roads Authority, NRA, announced that 23% of the roads budget at the time related to land acquisition. That compared at the time with 12% in England, 10% in Denmark and 1% in Iceland. We knew we had a serious problem but nothing was done at that time either. If truth be told, since 1973 a total of 13 consecutive Governments have refused to do anything about the situation and ignored the recommendations of the Kenny report. They refused to examine Article 43 or to test it in the courts. They also refused the notion of introducing a referendum on Article 43.
The Urban Regeneration and Housing Act 2015 was a harmless effort to deal with the problem of land banking. I am not sure if the Minister of State, Deputy English, was in office at the time but, as I argued then, it was designed to fail because it was never going to deal with the issue. I know the Government is making some changes now which are of interest, but I maintain they do not go nearly far enough and they will not be a game changer. For example, the Minister is talking about increasing the vacant site levy to 7% from January 2020. First, 7% is not near enough given the price of housing. If the price of a house goes up 10% at the moment, which we have been looking at now for four years in a row, the price of the land goes up by 30% so a 7% levy will not disincentivise land bankers. Second, even though the Government is doing away with the exemption on the loan, there are still loopholes that will allow many people to avoid paying a vacant site levy. The changes do not amount to much. One of the proposed changes is to give the Minister power to vary the levy rate by way of regulations, having regard to increases and decreases in the CSO property price index. It goes on to say, however, that any increase in the levy rate above 7% will be subject to primary legislation. In other words, the only power the Minister will have is to decrease the levy. The Government is going in the wrong direction. That will not solve the problem. We are still going to be left with the loopholes.
I will not have time to go through all the issues but a Ladybird version is that we want to bring in stricter definitions for what constitutes a vacant or idle site because it is way too open at the moment and we need to close it off. For example, if somebody applies for planning permission and gets it, a commencement notice can be made but building might not start for another 12 months. Such a person is still banking the land. Ninety nine out of 100 builders who are interested in building will have organised their finance. If a builder is still sitting on it a year after getting planning permission, then the Minister will have to deal with that.
Another issue that must be tackled is where a commencement notice is made but a project is not completed within three years. A builder could get a commencement notice, put up hoarding, dig a few holes and walk away, but that is land banking as well if the builder is not going ahead and building. There are many different ways of getting around these things and the Government has to deal with them. I know for a fact that these things happen. It is a very clever way of getting around some of the challenges presented.
The appeals system the Minister built into the 2015 Act borders on the ridiculous. Four different forms of appeal are available. A person could appeal being put on the vacant sites register in the first place. After 1 June 2018, which has just passed, he or she could appeal it again. When a valuation was put on what was deemed a vacant, idle site, the owner had the right to appeal the valuation. If he or she lost that appeal, once the person was asked for the money, he or she could then appeal the payment of it. It is ridiculous. I reckon that person could drag out the appeals for at least six years, and there was no backdating of the money he or she had to pay if he or she went down that route. That is nonsense. We have done away with three of the appeals and we have left one.
In the interest of fairness to the site owner, instead of one valuation which a person was allowed to appeal under the 2015 Act, I suggest that the average of three valuations be used, which should be sufficient. It makes no sense to allow four appeals.
Many issues are dealt with in the Bill. A report by the National Economic and Social Council in 2016 claimed that only 9% of zoned residential land was owned by local authorities in 2006, whereas in 1970 it was 30%. That was a major game changer. Those amassing and holding landbanks filled the gap vacated by the local authorities. The result was a huge power shift from builders to those holding landbanks. The person with landbanks became king. Earlier this week, I referred to a site of one fifth of an acre on Dominick Street which I bought for €4.8 million. If one buys a site and immediately begins working on receiving planning permission, it normally takes two years before a sod is turned and another two years to build it out, giving four years in total. Loan interest is usually 6%, which means that the interest repayments on a site costing €4.8 million are approximately €300,000 per year, adding up to €1.2 million over the four years it takes for the project to be completed. Added to the €4.8 million purchase price, that gives an overall outlay of €6 million. We built 27 apartments on the site and the land price accounted for almost half the cost of supplying them. The build cost was €230 per square foot or a little over €200,000 per unit. The land cost, made up of the initial purchase price and loan interest, was equivalent to the build cost. That is a mad scenario and should not happen anywhere.
Many people find the price of housing in Ireland draconian. In most European cities, one can purchase a three-bedroom house between 20 km and 25 km outside the city for approximately €160,000. In Dublin, one would pay approximately €320,000, double the European average. Who benefits from that? Builders do not. They will benefit from this Bill but those holding landbanks will not. More than 99% of the people of Ireland will benefit from the Bill. Nobody is a winner when housing is ridiculously priced. It leads to rents being ridiculously priced and is an all-round problem. It beggars belief that 13 consecutive Governments failed to deal with this issue.
I appeal to every party in the House which is genuinely interested in dealing with the fact that the manner in which housing is supplied in Ireland is totally dysfunctional, irrational and does not stack up to avail of this opportunity to deal with the problem. There may be a problem in regard to Article 43 but let us start the process and test it through the courts and, if necessary, a referendum.
We learned during statements on child homelessness last week that almost 10,000 people, including some 4,000 children, were homeless in May 2018. Members are aware that that is the tip of the iceberg because the number of hidden homeless is not recorded. I have repeatedly highlighted the situation in that regard in Dublin Bay North, the worst-affected constituency in Ireland. The suffering of homeless citizens and those on housing lists constantly shows that legislation such as that proposed by Deputy Wallace has been needed for many decades.
The Bill would be a powerful deterrent to land hoarding and I commend my colleague, Deputy Mick Wallace, and his staff on bringing it forward. The Urban Regeneration and Housing (Amendment) Bill 2018 was introduced on 21 June and will amend Part 2 of the Urban Regeneration and Housing Act 2015 which provides for the vacant site levy and related matters. The vacant site levy, which is to be charged from 1 January 2019, was originally set at 3% but had a large number of loopholes which enabled developers to reduce the amount of levies owed or appeal the levy. Deputy Wallace eloquently explained the farcical nature of the appeals system on this morning's "Morning Ireland" radio programme. Section 11 of the Bill will increase the vacant site levy to 25% of the market value of the site and remove the ridiculous exemptions that made a mockery of the levy in the first place. Three of the four grounds of appeal will also be removed.
As Deputy Wallace rightly pointed out, the Kenny report was published in 1973 and followed two years of committee discussion during which ten or 12 possible approaches to the problem were considered because the price of land in Dublin had risen by approximately 500% in the seven or eight years prior to 1971. It recommended that sites be acquired by local authorities for 25% more than the site's agricultural value but that recommendation has been ignored by 13 consecutive Governments. Had the report's recommendations been adopted it is likely that we could have avoided some of the boom time house and land price rises and inevitable bust and crash. In 2004, pre-bust and mid-boom times, the All-Party Oireachtas Committee on the Constitution stated that the Kenny report recommendations could have been adopted and that a constitutional challenge to such recommendations would have been decided in favour of the public interest. It is striking that that has never been put to a constitutional test. It beggars belief that these issues around land hoarding and stockpiling have bedevilled our nation for more than six decades but the Government still refuses to address them.
It was yesterday revealed that only 6% of local authority owned land is on the councils' vacant site registers and that Dublin City Council, DCC, is due to fine itself approximately €2 million as a result. Its 21 vacant sites listed on the register could hold almost 2,000 homes and include locations in Ballymun, Inchicore, East Wall, flat complexes and areas in my constituency. I agree with Mr. Mel Reynolds, a distinguished housing policy analyst and architect, who stated that a significant dent could be made in our homeless figures if these sites were developed. He also expressed concern at the message the small number of registered council vacant sites is sending to private developers.
Of course, land hoarding, landbanking and speculating on prices of homes and land have been a deliberate Fine Gael policy and follow on from the approach of its Fianna Fáil colleague when it was in government. Budget 2012 introduced a seven-year relief on capital gains tax, CGT, purportedly to incentivise the market. Section 604A, inserted into the Taxes Consolidation Act 1997 by the Finance Act 2012, provided CGT relief for properties acquired during the period from 7 December 2011 to 31 December 2014. After we got into a disastrous housing situation, the 2015 legislation was brought in. As Tom Healy, director of the Nevin Economic Research Institute, NERI, rightly stated last year, land continues to be the dominant factor of production and determining economic interest, while high finance and three-bedroom semis have replaced cattle as significant commodities of interest.
I warmly commend the Bill and hope it will be passed by the House.
Ba mhaith liom mo bhuíochas a ghabháil chuig an Teachta Wallace as ucht an Bhille seo a chur os comhair na Dála. I have no hesitation in supporting the Bill and ask my colleagues in the House, in particular those in Fianna Fáil, which holds the balance as to whether it will be passed, to examine it carefully. The explanatory memorandum is clear as to the purpose of the Bill, which seeks to disincentivise landbanking and land hoarding with a view to addressing the overall problem of the price of development land. The main provisions of the Bill, which are clearly set out, are to provide stricter definitions of what constitutes a vacant site, to increase the vacant site levy and remove three of the four appeals allowed under the original Act of 2015 and certain exemptions in regard to the existing levy and, of particular importance and significance, to provide an option for the owner of the site deemed vacant to enter into negotiations with the local authority.
I cannot see how anybody could object to the Bill in the context of the very serious housing crisis and the 2015 legislation which has not been implemented. I understand 11 local authorities were obliged to bring in a register in January 2017 but have failed to so do. I ask the Minister of State to explain why that has not been done. I have records pertaining to two Galway local authorities which have vacant registers, including vacant sites, which is very interesting.
The Minister might read the digest on the original Bill. That Act was brought in when people were saying clearly there was a housing crisis. At the time, SIPTU referred to a housing crisis. The ESRI referred to the need to build 18,000 houses a year, and we were down at 8,000 new houses per year. All of that was highlighted in 2015 and what we brought in then was a very limited Act that was not even implemented.
In addition, the previous Government, in which Fine Gael was the major party, brought in the 2014 Act, which was subsequently implemented. That legislation removed the right to own a social house for life, played around with language and brought in a housing assistance payment, HAP, which the Minister of State is now calling social housing and on which we understand €300 million will be spent this year as opposed to €153 million in 2017. That is what the Minister of State is calling social housing.
With regard to this Bill and the price of land, this is not new. Almost 50 years ago, in 1971, the Kenny report was commissioned. Mr. Justice Kenny sat for more than two years, took detailed submissions and a majority report was presented. It dealt in particular with Article 40.3.2° and Article 43 of the Constitution regarding personal rights, fundamental rights and property rights. Mr. Justice Kenny teased out all of that and stated in clear English in 1973 when he published the report that while there is a right to property, when we look at the common good we are not asking to abolish that right but seeking to regulate it, as was done with rented accommodation legislation at the time. He said there was no obstacle in regard to the Constitution. In any event, this proposition should be tested because we are in the middle of a housing emergency. Language fails me when I seek to describe the situation nationally and in Galway.
I have no hesitation in supporting this Bill. Once again, I thank my colleagues but, more important, I appeal to the other parties in this House. This is a time to show we can make a change and that new politics works.
I thank Deputy Wallace for the opportunity afforded to me to speak tonight about the vacant site levy in response to his Private Members' Bill entitled the Urban Regeneration and Housing (Amendment) Bill 2018, which proposes a number of significant amendments to the 2015 Urban Regeneration and Housing Act which first introduced the levy measure.
While I may not agree with every aspect of the Bill in terms of the key points of concern, which I will touch on later, I believe the Deputy will find broad agreement across the House on the intention behind his Bill, which I gather is to tackle land hoarding and ensure that land is brought forward for housing and other developments. The concept of having a levy and trying to utilise land is something all Members agree with and want to achieve. The job we had in trying to achieve that objective in the 2015 Bill was to find something in the Constitution that would create a balance, could make a difference and would force people to use land. I accept that as the years have passed, we need to increase the levy and that is what we are trying to do.
The Bill contains some proposed amendments to the existing levy provisions, which the Government is already progressing through a range of legislative reforms. I take the opportunity this evening to update the House on these reforms and progress with implementing the levy.
As many Members will know, the primary objective of the vacant site levy is to act as a mechanism to incentivise the development of vacant or underutilised sites in urban areas for both the provision of housing and the development and renewal of land. This is with a view to facilitating the most efficient use of such land and sites and enabling them to be brought into beneficial use rather than allowing them to remain dormant and undeveloped. In this respect, the Government shares the overall objectives of Deputy Wallace and we want the levy to be an effective mechanism for activating key sites for development and to be responsive to changing economic circumstances.
In this context, I will first highlight how the Government is already addressing some of the key provisions of the Bill before us. As Deputies will be aware, the Planning and Development (Amendment) Bill 2016, which, among other things, will provide for the establishment of an office of the planning regulator, is currently progressing through both Houses of the Oireachtas and is due back in this Chamber either on Thursday night or Friday to introduce amendments brought in during its passage through the Seanad. A number of Government amendments relating to the vacant site levy provisions, which were developed in consultation with and on foot of legal advice from the Office of the Attorney General, were tabled on Report Stage in the Seanad. Collectively, these amendments aim to further strengthen the levy provisions by increasing the rate of levy from 3% to 7% for sites on the register for the year 2019, as announced in budget 2018. This will ensure the levy is more aligned with the increase in house price inflation in recent years and, therefore, has a more meaningful impact and is more effective in bringing forward sites for housing development.
It is agreed that 7% will make a fair impact. It was a figure that others in the House had suggested. I am conscious Deputy Wallace wants to increase the levy to 25% but there was a view that 7% would make an impact and force people to utilise land. That is what we are trying to legislate for in the Bill that will come before the House on Friday, which will remove the possibility of applying reduced or zero rates of the levy for sites on the register that are subject to a site loan, taking account of the economic recovery and recent increases in land and property values since the enactment of the 2015 Act. I am conscious that Deputy Wallace has agreed with that and regards it as common sense. We are probably on the same page in that regard. The Government Bill further clarifies the definition of "vacant and idle", with reference to vacant sites on residential land, to include sites that are not being used primarily for the purpose for which they have been zoned, that is, for the provision of housing, and where the land was purchased after it was zoned residential, irrespective of when it was purchased. It provides that the Minister may, by regulations, vary the levy rate within the upper threshold of 7% to ensure the rate can be varied promptly to respond to property price fluctuations, along with enhancing the Minister's general regulating powers to further facilitate the consistent implementation of the levy.
In addition, with a view to further addressing the broader issue of land hoarding, a number of other amendments have been made to the Government Bill during its passage through the Oireachtas. I am conscious that Bill has been dragging on for the past two years in these Houses and that people have invested considerable effort in the legislation during that time. The key amendments in this respect are to provisions relating to the extension of duration of planning permission, which would permit such an extension only where substantial works are carried out during the initial duration of the planning permission and allow for a maximum of two extensions of the duration of a permission, the combined extent of which would not exceed five years. These amendments are intended to ensure that planning permissions are activated earlier and that the development works are completed earlier. We had discussed that concept in debates on earlier planning legislation during the time of the rental sector strategy in December 2016 with a view to trying to bring forward initiatives that would deal with developers who were sitting on land and had not brought it forward.
We look forward to engaging in more detail on these amendments at the end of this week when we finish the Planning and Development (Amendment) Bill 2016 in this House, or bring it close to finishing, along with other important amendments. There are approximately 82 amendments to be discussed on Friday and next week, if necessary.
As I stated, there are some elements of this Private Members' Bill on which I must indicate serious reservations at this stage, primarily relating to legal and constitutional issues. The Urban Regeneration and Housing Act 2015 is framed in such a way as to strike the right balance between ambition, in terms of achieving the common good objective of securing the development of urban lands for housing and regeneration, and the concerns and interests of individual property owners and their constitutional rights to private property, which cannot be underplayed. Therefore, to ensure the legislation is reasonable and proportionate to the aims of the levy measure, and to protect it from risk of successful legal challenge, the levy provisions as enacted, as well as the various amendments being advanced, as I have briefly outlined, contain necessary features which set the levy at a reasonable but not excessive rate. They also provide for appropriate notice to landowners to take action before becoming liable for the levy and appeals mechanisms at various stages of the levy implementation process, in line with the concept of fair administrative procedures. I am conscious that Deputy Wallace said that the number of appeals available are too many. However, some years ago, in order to ensure the legislation was constitutionally sound, great efforts were made in the wording to make sure it would be effective, would be used and would not be subject to legal challenge that would defeat its usefulness.
In light of these principles and the previous legal advice received, there are significant concerns about the constitutionality of specific provisions of the Deputy's Bill, which propose to dramatically increase the levy from 3% to 25% of the market value of a site, remove the important and fair appeals provisions in particular circumstances, and facilitate the purchase of vacant sites deemed suitable for housing purposes from site owners for not more than 60% or 40% of their market value in specified circumstances. Taking account of previous advice, these provisions are likely to be considered to be excessive, unreasonable and in conflict with the constitutional provisions relating to individual private property rights. In effect, these proposals, if introduced, would weaken and undermine rather than strengthen the legislation and would probably be found unconstitutional by the courts. That could then have far-reaching implications for the concept of the levy and any actions arising. I do not believe that is Deputy Wallace's intention. His intentions are genuine, but we need to safeguard robust and proportionate measures against perhaps desirable but unworkable and counterproductive reforms.
I recognise that the Deputy is genuine in what he is trying to do and many who will support him are of the same belief. As a Government, we try to bring in legislation that is balanced and that would be successful if it were legally challenged.
Notwithstanding these significant concerns, in light of the fact that the Government is addressing some key elements of the Bill through the amendments outlined, we are not intending to oppose the Bill at this stage. If the Bill passes Second Stage this evening, it will have to undergo pre-legislative scrutiny and I expect that these constitutional and legal implications will require further detailed examination and likely significant amendments before it can be advanced for Committee Stage consideration. Either the Minister, Deputy Eoghan Murphy, or the Minister of State, Deputy Phelan, will address some of these other elements later in the debate. We are prepared to let the Bill go to Committee Stage and to tease out these issues. None of us has the divine right to all the information on this. We are happy to have it teased out but we do flag our concerns. They are the same concerns on which we took advice back in 2015. I was not in this role at the time but I am conscious that the then Minister, Deputy Kelly, had to go to great lengths to get a Bill that would be useful and would help all of us in our aim to make sure land is activated, especially land that is zoned residential and that is badly needed for housing purposes. The Government's legislative reforms in this area are scheduled for discussion later this week. I look forward to engaging with colleagues on them this week and next week if need be.
I am sharing time with Deputies Casey, O'Loughlin, Brassil and MacSharry. I commend Deputy Wallace on bringing forward the Bill. To answer Deputy Connolly's query, Fianna Fáil will be supporting the Bill. It is an important step forward. There is no doubt in my mind or my colleagues' minds that land is being hoarded. It is a major issue, as the Minister of State will also agree. Land is overvalued in many parts of the cities. It is being purchased by some of the bigger players that have come into the market at 35% over open market value. Deputies will know who I am talking about and I am sure the Department does as well. It is a big issue. We had a debate a couple of weeks ago in which we talked about the State and how it can utilise the land it holds to drive others to move land. We have 3,008 ha of zoned, serviced land owned by the State, State agencies and local authorities that could be developed for housing. It is a major issue in our city.
We have to increase the vacant site levy. I do not think 7% is going to cut it. It is not a disincentive. We need a bigger stick to make some people move on these sites. Although 25% might seem heavy-handed, if a reasonable timeframe and lead-in were given to a penalty like that, it would be justified. There are issues we would have to consider on Committee Stage, such as the 12 month planning permission limit. If someone were to submit a commencement order, would it be 12 months after the commencement order? If they were to submit a commencement order four years after gaining planning permission, planning permission would be staying live for five years. We have to look at these elements to see how we could work it into the system.
We are all aware that there are many aspects of this housing crisis. We have to ensure that affordable homes are built and that people can aspire to owning and living in their own home with a mortgage that is not going to cripple them. The issue is acutely visible in Dublin. They are holding land and controlling large parts of the market and the city. They know how many houses to release in any given year, although not everyone who is in the market is doing this. We also need to ensure that some of the smaller players - some of the indigenous Irish small builders - get back into building homes and smaller developments. We are overly dependent on four or five big players. If one or two of them were to decide not to budge, as they are backed by significant capital resources, we would have a very big problem and would continue to see double digit growth in land and house prices.
I welcome the fact that the Government will not oppose the Bill. We also checked this Bill as Deputy Wallace brought it to our attention last week. We had a look at it from a constitutional perspective and our legal advice is that it is not unconstitutional and does not conflict with the property rights in the Constitution. The Government can bring in a levy or penalty for a corporation that is profiteering in a market. At the end of the day, the people who pay for that are the potential homeowners and those who are stuck in a rental market that is out of control, not just in Dublin but also in many of our urban centres.
This is very welcome legislation. There are certainly aspects around the 36 month completion limit. If there are good reasons for things to happen, for certain utilities, wastewater or whatever, we have to make sure we are not tying people's hands and that there is a reasonable approach. Thirty-six months on completion of certain phases would be fine. Deputy Wallace was in the building game long enough and knows what I mean about issues arising from time to time in dealing with some of the State utilities. In broad terms, I welcome the Bill. It is a good discussion to have and I would like to see it move on to Committee Stage quite quickly. I do not want it to be another Bill that is accepted on Second Stage and dies on the vine. I think the Minister of State would agree that the vacant site levy provisions brought forward in 2015 have not worked. I am not sure increasing it to 7% will work either. We have to look at how we can better use the vacant sites register. The appeals mechanism in place is overly generous. I agree with Deputy Wallace on that.
There are very good aspects to this Bill and certain parts we would like to discuss in greater detail on Committee Stage. Fianna Fáil will be supporting it on Second Stage.
I commend Deputy Wallace on his genuine and practical knowledge and views on the land speculation element of our wholesale housing crisis. Land hoarding and speculation were significant factors in the housing bubble that occurred a number of years ago. I thought we had all learned the lessons that were so brutally exposed when the crash occurred ten years ago. I know that Fianna Fáil has learned them and I know that Deputy Wallace has. I am confident that the people have. This Government, however, seems indifferent to the hoarding that is taking place while the price of building land rises day after day.
The vacant site levy as structured will not work. Sufficient lands are not being developed for affordable homes to be built and the penalties for land hoarding in the midst of a housing crisis are not strong enough to change the behaviour of those who own these lands. There is a wealth of international evidence on the housing problems in other western nations that proves beyond any doubt that Government needs to have oversight on development lands.
The reluctance of various Governments to implement Mr. Justice Kenny’s report has been due to a valid concern over the constitutional implications of Article 43 of our Constitution which outlines the rights of private property owners. The great financial crash of 2007-2008, however, and its ongoing roll-out is catastrophic proof that elected Governments on behalf of their people must prevent profiteering on development lands. In that regard, it is useful to look at what Article 43 states. The first part of Article 43 outlines correctly that private property rights exist in our law and must be protected by the State. We seem conveniently to forget, however, the second part of this article, which is so important and clear that it deserves reading. Article 43.2.1° states: "The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice." Article 43.2.2° states: "The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good." In black and white, in Irish and in English, our Constitution clearly mandates Government to control property rights under the principles of social justice and the common good. Social justice and the common good are everlasting values of every democrat and indeed are the core values of those who regard themselves as republicans. The disease that is destroying our free market system, not just in Ireland but internationally, has been allowed to fester because of a failure of elected and sovereign Governments to legislate and enforce laws under the principles of social justice and the common good.
This article and our Constitution recognise that property rights are not absolute. The need for affordable homes to be built for people is the definition of "the common good" and indeed is one of the defining social justice issues of our age.
This Bill is an effort finally to address the unjustified and immoral speculation and hoarding of lands and I am glad that my party is allowing it to continue to Committee Stage. Of course, this Bill will need to be amended and yes, it may be open to constitutional challenge but the duty of this sovereign Parliament is to give expression to the common good of the Irish people. There can be no more hiding behind vested interests and their legions of lawyers. Governments are accountable to Parliament, Parliament is accountable to the people and the people are protected by our Constitution. I believe passionately that now is the time for our democratic system to defend the right of Irish people to a roof over their heads. I thank Deputy Wallace for providing a foundation for dealing with this part of our housing crisis and I look forward to seeing this Bill in committee.
I also welcome this Bill put forward by Deputy Wallace and welcome the opportunity to speak on it. I am fully supportive of my party's decision to back this Bill. For many years, the political system has grappled unsuccessfully with vacant sites in terms of incentivising people who owned zoned land to develop that land. That is something this Bill very much tries to grapple with. There are many aspects of the Bill that I believe will bring about significant and positive improvements.
Another issue concerns vacant houses. According to the last census, we are looking at 200,000 unaccompanied and unused houses in the State. The Government has tried various measures such as the repair and lease scheme, which is something I greatly supported. A tax-free loan of €40,000 was offered to people to do up their properties and give them back to the local authority over a ten, 15 or 20-year period. For whatever reason, there has been no uptake. I find it difficult to understand because I would have thought that if one incentivises people to do something, they will do it but for whatever reason, it has not worked. I think we need to look into that and try to find a resolution because if we could get even 10% of the 200,000 properties turned over in a very relatively short period of time, we would go a long way towards solving much of the emergency housing difficulties we have. Thinking about what has worked and what has not worked over time, one thing that has always seemed to work is providing some sort of tax incentive to property owners to develop or do up property. It might not be the most popular option, particularly among my left-wing colleagues, but at the end of the day, tax incentives do seem to bring about the required result. I think it is something we might look at. Equally, we could look at a tax penalty for those who have vacant houses and allow them to be left unused and continue to build up to that stock. In his deliberations over this particular Bill, I ask the Minister of State to look at that issue as well and to try to come up with some incentive that will get those who own vacant properties to do them up. A tax incentive is something that should be looked at in great detail.
Perhaps some sort of tax initiative to encourage those who own vacant sites to develop them could be considered. In the 1980s and early 1990s when there was nothing happening in the property market, the section 23 initiative worked very well until it was over-used and abused but if we could control such initiatives and maximise them, there is something in it that can work very well. I believe there is investment money out there and there is certainly the capacity in the system to take the development so I ask the Minister of State to consider those points.
Sad to say, Ireland's housing and homelessness crisis has almost become one of those apparently unsolvable problems that we hear about every day. It is frightening to think how normalised hearing about men, women and children who have no home to call their own has become. Lest we as a society become immune to hearing the stories that I hear every day in my constituency of Kildare South, and I have no doubt every public representative hears the same stories in their own constituencies, I believe our housing crisis should be declared a national emergency. While I believe priority should be given to those who currently do not have housing and who are trying to get on the housing ladder, we must bear in mind the impact of the crisis on the drive to attract foreign direct investment, especially in the light of Brexit.
In May 2014, 350 families were homeless, yet today, a mere four years later, the number is almost 2,000. This is going to increase not just every year, every month or every week but every day. We must boost social housing supply. On average, when Fianna Fáil was in power, 4,700 social houses were built every year. In the first three years of the Fine Gael-led Government, an average of 413 social houses were built. Much of the blame regarding why there has not been more social housing seems to be put on the local authorities. My definitive understanding, certainly in Kildare, is that the Department is just not approving social housing projects for local authorities and voluntary housing bodies. It is just tied up in red tape and bureaucracy. The fact that public procurement takes two years within the Department is a scandal.
However, this cannot just be about social housing. We cannot allow home ownership become the sole preserve of a few. Every hard-working family deserves the chance to buy its own place and to make a home. We cannot allow that dream to fade away because families and communities will suffer as a result of that uncertainty.
I am glad my party is supporting this Bill. There are a number of elements we must put in place in terms of making sure we have a viable supply of housing and this is certainly one of them. Strengthening the vacant site levy system is vital to ensuring we have a vital and functioning housing market. The current system, which has a number of loopholes, is clearly not working. The fact that a significant amount of State-owned land is on the register underlines the need for the State to launch an effective affordable housing scheme on its own land. We must ramp up the vacant site system, which appears to be ineffective, and set out new tools to incentivise development and curb land speculation.
Since coming to power, Fine Gael has launched six separate plans. That does not even count the numerous re-launches of those six plans. More housing plans have been launched by Fine Gael than the number of actual social houses built in 13 local authorities last year. House building numbers are tens of thousands behind what was originally claimed. Government figures overstated completions by nearly 60%. We must support this Bill.
I commend Deputy Wallace for bringing forward this Bill, which can be another cog in the wheel with regard to trying to solve the housing crisis. The housing crisis has many facets and many issues that are blocking potential solutions.
Increasing the supply of housing in the market will ultimately be the long-term and effective solution. Strengthening the vacant site levy system is vital to ensuring we have a functioning housing market. The current system will not work as it does not penalise land hoarding effectively. A significant amount of State-owned land is included on the register, which underlines the need for the State to launch an effective, affordable housing scheme on its own land.
I strongly believe that this crisis will not be solved without a hands-on approach from Government. Up to now, the Government has launched scheme after ineffective scheme and handed them to others to implement. This has not worked. The Taoiseach must get his hands dirty if we are to resolve this crisis. The Minister and his Department must be proactive in creating policy and also working to ensure that policy is implemented.
This problem cannot just be handed to the market to resolve as the market has failed up to now to make any impact whatsoever. This is one of the key areas where my party and Fine Gael differ. We understand what is required to solve this problem whereas it is one of Fine Gael's major failures after eight years in government. The solution is a hands-on approach from the Taoiseach and his Government to build social housing, to make affordable mortgages available to low and middle income workers and to ensure there are affordable houses available for them to purchase. These measures would take the pressure off inflating house prices for those whose income allows them to access mortgages from our high street banks.
The vacant site register has a number of loopholes and has not acted as an effective incentive to motivate development despite having been in effect for six months. This Bill will increase the vacant site levy to 25% from 3% next year. It will redefine and expand the criteria under which a site may be included on the register, including sites with permission unused after 12 months or a commencement order uncompleted after 36 months. It will empower local authorities or State agencies to purchase lands under the vacant site levy at 60% and 40% of their value.
The housing crisis and the way it is being handled portrays Fine Gael's values in government since 2011. It is aloof to the needs of ordinary people and just does not understand what it will take to solve the problem. The Taoiseach, in particular, displays no empathy whatsoever with the homeless. He has no empathy for those who are living in rented accommodation, with the cost of rents rising and no hope of a social house. He has no empathy for our middle income workers who cannot access a mortgage, and if they did, there is no house out there they could afford to buy. The reason he has no empathy is that he just does not understand the needs of the ordinary people of this country.
I call Deputy Ó Broin, who is sharing time with Deputies Caoimhghín Ó Caoláin and Pearse Doherty.
On behalf of the Sinn Féin group, I thank Deputy Wallace for introducing the Bill, which we warmly support. What is important about this debate is that it addresses problems with the private housing market, which are, of course, the price of houses and the rate of supply. Whenever the Government is responding to these issues, it keeps telling us that supply is the answer and if it can just get the private sector to build more units, that will bring down the price. That is why the Government policy response is tax breaks such as the help-to-buy scheme, grants such as LIHAF, loans such as through Home Building Finance Ireland, and planning reform. All of that is about trying to incentivise the supply of private sector units. The problem, of course, is that this kind of policy is based on a false premise. The price of houses is not determined by the demand and supply of the houses themselves, as most housing economists will tell us. House prices are determined by the interaction of the availability of credit to build or to buy and the supply and price of land, as well as labour and materials. It is credit and land that are the key determining factors. Our problem in the private market is that land speculation is at the heart of our affordability crisis.
The House should not simply believe me. Members can listen to the Society of Chartered Surveyors Ireland, which has prepared two reports in recent years. One report in 2016 looked at eight real house building projects in Dublin, in particular the average cost of the land per unit of accommodation, which was €57,000, that is, €57,000 added on to the price of the house. Last year the society carried out a more detailed study looking at apartments, and the land price per unit of accommodation ranged from €30,000 up to an astronomical €125,000 for developments of five storeys or more. This problem is even infecting Part V social housing, so we now have the situation, albeit on a small number of developments in Dublin, where the land cost for Part V apartments is as high as €90,000, for example, in Dalkey.
One can see very clearly that speculation in land is driving up prices, in the first instance in regard to private supply but, increasingly, also in regard to Part V supply. As the Government's policy response is based on a false premise and a misunderstanding about what drives house prices and housing supply, many of the actions it is taking are making the problem worse. They are increasing house price inflation, making it more profitable for people to landbank and slow down the delivery of units.
What is very important is that it is not just affecting first-time buyers; it is also affecting renters, students and local authority balance sheets. In addition, it is not just a domestic issue or some odd quirk of our domestic market. TASC, the Think Tank for Action on Social Change, had a very important speaker, Ann Pettifor, at its conference last week. She is an internationally renowned economist and campaigner for developing world debt cancellation. She has been doing a great deal of significant research looking at the global phenomenon we are currently experiencing and to which Deputy Wallace's Bill speaks. She said that what is driving up land costs and house prices across the developed world is a great wall of money. She quoted figures of somewhere in the region of €390 billion of investment capital that is currently looking for a home. What it is looking for are safe, high yield assets. In the absence of Governments being willing to enter into the bond market themselves, this money is being invested in property. When investors started coming to this jurisdiction, in the first instance they were looking at distressed assets and focused on the portfolios of IBRC or NAMA, both in commercial and residential property. They are now moving into residential on a new scale, whether it is in terms of investment trusts, student accommodation or what we like to call the public-private partnerships on crack, the enhanced leasing initiative, which the Minister of State, Deputy Damien English, was responsible for launching.
What this influx of investment capital will do is further exacerbate the crisis. Unless real action is taken, the kind of action that is outlined in this Bill, the problem will get worse. We need a new approach, and Deputy Wallace and others have adequately detailed the value of the Bill. However, a vacant site tax has to be punitive. It cannot be fair or reasonable; it has to punish people for speculation. Whatever the rates, it has to be based on that principle. It is likewise with the removal of exemptions and the closing of loopholes, but also in regard to creating a situation where there is a real opportunity for the State in areas where it is required to purchase land at a discounted price for social good.
I have no qualms about supporting the Bill. It is dishonest of the Government to tell us it supports its intentions and will not stand in the way but, really, it will prevent it from ever coming to committee, so we will never have that discussion. I would prefer it if the Government was honest about that. Alongside this Bill, however, we also need to see the State stepping up and investing significantly in public land and social and affordable housing funded through the taxpayer. If we did those two things, we would start to see the kind of difference Deputy Wallace and his colleagues intend with this legislation.
I wholeheartedly agree with the Bill brought forward by Deputy Mick Wallace and I thank him for doing so. It pains and concerns me to see the very same mistakes being made now which we saw in the lead-up to the horrific economic crash in the years 2007 and 2008. The housing strategy employed by the current and previous Fine Gael-led Governments has, quite simply, failed. The real failure, however, was the development of an utterly reckless housing policy, introduced by Fianna Fáil throughout the 1990s and 2000s, which brought speculation, greed and commodification above the basic right to a roof over families' and individuals' heads. The results of this are now being lived out in the streets, in hotels and in other types of totally inadequate emergency accommodation.
Sinn Féin has consistently put forward concrete proposals throughout all of these years to protect tenants, public and private, and homeowners. These proposals have been largely ignored by both Fine Gael and Fianna Fáil. Given the emergency crisis we are now experiencing, the time for pussyfooting around this issue is over. Speculation by developers and holding huge land banks all over the country while seeking to make mega-profits need to cease immediately. The vacant site levy has not worked. We are told finance is not the problem in building social and affordable housing and, therefore, we require land. Developers are sitting on this much-needed land. Deputy Wallace states that increasing the vacant site levy from 3% to 25% would be a game changer. I agree with this statement. Let us make speculating on development land an expensive business. Let us finally put people first. As long as we continue to view land and housing as a commodity to be bought and sold to the highest bidder, we will continue to have a housing crisis. It is not good enough. As I have already said, people must come first. Housing is a human right. I support this Bill.
Ba mhaith liom fáilte a chur roimh an mBille seo agus tréaslaím leis an Teachta Wallace as an Bhille a chur os comhair na Tí anocht.
The greatest challenge and, indeed, risk to our economy is the housing issue, in particular the supply of housing and house price and rent inflation. House price inflation has been at its highest rate in the last number of years, running at 13%. This year, rent prices are 22% above the peak levels in 2008. Despite these facts, the Government believes what it is doing is working. If that means adding fuel to the fire regarding these costs and concerns in the economy, I agree.
The vacant site levy is simply not working and we need radical change of the sort proposed in the Bill. Sitting on undeveloped land is completely unacceptable in this day and age. It is the worst and most harmful type of speculation and Government policy must tackle it. This Bill is the foundation to do so. The current levy and the Act, given the range of exemptions therein, do not work. We heard calls from Fianna Fáil again today to address these issues through tax incentives for developers and speculators. We have them already in the form of REITS and other structures which are paying an effective tax rate of 2%. Gaps in legislation allow them to purchase property blocks and sell or rent them at punitive cost. The rents set are at rates far higher than the cost of servicing a mortgage to purchase the same properties. We have a pervasive housing system which allows no capital gains tax to be paid by property funds. They can flip properties after five years without paying any tax whatsoever. It is not only funds which are involved in this, others are getting involved too, including pension funds, with Irish Life being the latest. Whereas the previous Finance Act provided that property had to be held for seven years before a CGT exemption could be claimed, this was reduced to four years in the last Act on foot of a proposal by Fianna Fáil. As a result, a huge amount of property has been flipped tax free in the State. The beneficiaries escaping the imposition of 33% tax are international investors.
These tax incentives simply do not work. They have pushed up house prices and rents and created a major housing supply problem in the State. We need less carrot and more stick. We need a punitive measure to ensure the worst type of speculation is no longer tolerated in the State. This Bill provides the foundation for that and I encourage the Government to state not only that it will not oppose it, but that it will allow it to proceed to Committee Stage. I ask the Government to cease its antics on money messages and the like.
I thank Deputy Wallace for introducing the Bill, which the Labour Party will support. We introduced the Social and Affordable Housing Bill in 2016, which also proposed the implementation of the Kenny report but while we received the support of the left in the House at the time, we did not, unfortunately, get the support of Fine Gael or Fianna Fáil and the Bill did not pass on Second Stage. It contained a number of measures, but a central one was the implementation of the Kenny report. I support fully the implementation of that 1973 report. In fact, I was a member of the all-party committee on the Constitution which recommended in 2004 that the implementation of the report would be in accordance with the Constitution. I note for the information of Deputy Casey that the committee was chaired by Senator Denis O'Donovan, who is now Cathaoirleach of the Seanad. Our legal advisor to the committee was Mr. Justice Gerard Hogan, who was then a very eminent senior counsel. He advised that there was no constitutional impediment. Deputy Casey quoted some of Article 43, but it is no harm to quote it in full. It is quite short and I have six minutes left. Article 43.1 states:
1° The State acknowledges that man [they always said "man" in those days], in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods.
2° The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property.
The provisions of Article 43.1 are balanced in Article 43.2 which states:
1° The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.
2° The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.
That is pretty clear. In any case, the interpretation and recommendation of the all-party committee in 2004 were very clearly that the Kenny report can be implemented. Now is a time to do so as we are beginning to see the hoarding of land in a really big way again. It must be stopped.
Other Members have provided many statistics as to what is happening. Deputy Wallace knows better than most of us in the House the ups and downs of the business and the kinds of things that landowners will do to make more money or to protect their potential earnings. I refer to the vacant site levy in that context. It is important to ensure that measures are constitutional because if they are not, one can be sure that people will take cases, in particular people with money and power. As such, it is important to ensure that what one does is in accordance with the Constitution. Many people have dismissed the 2015 legislation and the vacant site levy as useless but they had to be proofed against the Constitution. That is one of the reasons there has been such a long lead-in time. While the registers have been compiled over the past few years, the levy is not coming in until next year. I was involved at the time and we were told we had to so provide because of the right to private property in the Constitution.
Deputy Alan Kelly was the Minister at the time and he tried to introduce a higher levy. Whether it was the Fine Gael or the legal advice, he was certainly advised at the time that he would not get any further with that. He battled to make it higher at the time and there is a proposal from Government, which I welcome, to make it higher now. Deputy Wallace's Bill seeks to bring it to a higher level also. I support that measure albeit we must ensure that it is constitutional. We have seen people with power and money use the courts in the past to delay things for years. As such, we have to be realistic. In saying that, I agree with Deputy Connolly that many local authorities had not compiled registers comprehensively or even at all. I agree with Deputy Wallace about taking away any loopholes that have been discovered. Local authorities must put their own land on the registers too. Certainly, there is evidence that they own vacant sites which they have not registered. The levy must be effective but I caution that it must also be constitutional.
I have no problem with the two Fianna Fáil Deputies who are present, but I take issue with the other three who have spoken. One said, more or less, that only Fianna Fáil knew how to get down and dirty and build houses. Another talked about how few houses were built in the first three years of the Labour Party-Fine Gael Government. However, that, of course, was because they were not started under Fianna Fáil. The Deputies know very well that the number of houses built is the number completed. They also know very well that it takes approximately three years to get from the start of a project to the end, if not longer in many cases.
It is longer now.
The Minister of State, Deputy English, will, I am sure, confirm that I have attended the openings of housing developments which commenced when I was Minister of State in the Department. They are only opening this year. As such, it was a failure of Fianna Fáil not of the Fine Gael-Labour Party Government that virtually nothing was completed in its first three years of office. I was also very worried by another Fianna Fáiler who spoke about tax incentives again for developers, builders and landowners. That is what brought about the crash the last time. Houses were built in the wrong places.
It was the repair-to-lease scheme that was referred to. Deputy O'Sullivan should not be disingenuous.
Lots of houses were built in the wrong places because of tax incentives. I am not being disingenuous and I acknowledge that Deputies Cowen and Darragh O'Brien made good contributions. However, Fianna Fáil is trying to rewrite relatively recent history and it is unacceptable.
All they need is the tent.
Sinn Féin knows all about fundraising.
This is a very serious issue. There are nearly 10,000 homeless people in our country and too few social and private houses are being built.
We also have the point made by Deputy Ó Broin that the cost of houses is going up. The cost of rent is going sky high. That is not only about supply but about market and people making profits. It is a complex area where we need serious contributions but we do not need the kind of misinformed points-scoring that I have heard from some of the Fianna Fáil speakers.
In conclusion, my party supports this Bill. It needs to go into committee. We certainly need to bring in whatever measures we can, including the vacant sites levy and the Kenny report, in order to stop speculation on land when so many people are in such misery in this country because of homelessness.
The next time slot is Solidarity-People Before Profit, Deputies Barry and Boyd Barrett, with 5.5 minutes.
It is 7.5 minutes.
It is down here as 5.5 minutes. The Deputies will get 7.5 minutes so. They may divide it between them, whatever way they want.
This Bill proposes several positive steps that Solidarity will support. In particular, we welcome the proposal to increase the vacant site levy from 3% to 25%. We also support the removal of the right of the landowner to appeal the valuation of the vacant site as determined by the planning authority. We support giving the planning authority the power to value some vacant sites at a zero valuation. Indeed, this is something that should be considered beyond the limited circumstances envisaged in this Bill.
The biggest hoarder of land in the State is the State itself. According to research conducted recently by Mr. Mel Reynolds, the State controls sufficient land zoned for residential development to provide more than 114,000 dwellings. Some 48,724 of these could be developed on lands owned by the local authorities, 65,399 could be developed on lands owned by NAMA and yet, in the middle of the biggest housing crisis in the history of the State, the Government has built less than 1% of this total per annum in recent years.
Solidarity has proven the potential for public housing on public lands by publishing detailed costed plans for potential developments at Old Whitechurch Road in Cork, Damastown in Dublin West, Kilcarbery in Dublin South-West and Belcamp Lane, Northern Cross in Dublin Bay North.
In Cork city, there are now 310 hectares of land zoned for residential development in the hands of NAMA. This is more than 18% of all such lands owned by NAMA in the entire State. There are a further 41 hectares of land zoned for residential development in the hands of Cork City Council. In Cork city, 11,350 new dwellings could be built on the 351 hectares owned by NAMA and Cork City Council combined. Solidarity has shown how the last major Cork City Council landbank at Old Whitechurch Road could be used to build 800 new homes - 600 houses and 200 apartments - at a cost of, say, €150,000 for a two-bedroom apartment and €170,000 for a three-bedroom house, eliminating profit, etc. Mortgage repayments could cover the cost of 400 affordable homes over 25 years. Four hundred social homes could be covered by €29 million from the Department of Housing, Planning and Local Government and a sum less than one fifth of the Cork City Council capital programme budget.
The provisions of this Bill are modest but they are positive, and Solidarity supports them in so far as they go. However, only the development of public housing on the vast majority of that publicly-owned, zoned land can bring this housing crisis to an end and our message to the Minister is, "Get on with the job or get out of office."
I thank Deputy Wallace for putting forward this Bill. People Before Profit will support it.
I thank the Deputy for highlighting, once again, the obscene issue of land-hoarding and property speculation by investors, developers and property speculators of various sorts. Indeed, I tried to do the same with my own motion a couple of weeks ago dealing with different aspects of this same problem. It is important for the public out there to know, and I hope this debate gets a bit of coverage.
We talk often about the human misery of the housing crisis but what is not talked about enough is the flip-side of the coin of that human misery being suffered by so many of our citizens in which a small group of people are making a lot of money out of it and they do not care about the human misery they are causing. The more human misery they cause, the more money they make. The more desperate the situation gets in terms of the unaffordability of housing and rents, the more money they make. That is the obscenity of the matter. The Government has not only failed to deal with it, but actively facilitated it. When the history of this period is written, it will show that following the disastrous crash of 2008, the Government - first of Fianna Fáil but continued by Fine Gael - through the policy of NAMA flogged off vast amounts of land and property assets to speculators who have then speculated on that land, hoarded it and generated the crisis that we now face.
I laugh with despair when I hear the Government talking about how well it is doing. Boasting about this, they state planning permissions are up by 27%. Of course, planning permission means nothing other than that the value of that land increases for the landowner. Landowners can then sit on it and do absolutely nothing with it, and that is what they are doing. We only need look at Cairn Homes, for example, sitting on enough land to build 12,000 homes, or 20% of the zoned building land in Dublin. The company built 103 houses in 2016, it built 200 in 2017 and it is talking about ramping up at some point to 1,200 in a couple of years' time. The company is clearly drip-feeding and speculating on the value of property. When one looks at what it builds, it is unbelievable. Albany, in my area, is "Luxury coastal living". Half of it is still empty. The start price, at €890,000, will really solve the housing crisis for us. What about Marianella in Rathgar, with the starting price of €650,000 ranging up to €925,000? Is that affordable? Profiteering is what these people are doing and yet these guys ran off with €26 million in shares last year and shared out €4.1 million in wages, bonuses and pension payments in 2015.
I thank the Deputy.
That is what is going on. A small group of people are profiteering on the backs of the misery of huge numbers of people. This Bill is attempting to impose punitive measures on that kind of speculation and I warmly welcome it.
The next slot is for the Rural Independent Group - Deputies Michael Healy-Rae, Danny Healy-Rae and Mattie McGrath.
How much time have we?
The Deputies have 7.5 minutes to share between the three of them.
Between the two of us now so.
Deputy Mattie McGrath is not here.
Yes, approximately four minutes each.
That means more time for the brothers.
First of all, I will not use the time to take potshots at anybody about his or her political policies in the past, whatever the party he or she is from.
I thank Deputy Wallace for bringing this matter to the fore. Whether one agrees or disagrees with some of what it contains, it is only healthy and right that we have a debate. I would sometimes have to take issue with Deputy Boyd Barrett, with whom I am very good friends, when I hear him talking about people being "obscene", "despicable", etc.
Why is that so because there are people in this country who take it upon themselves to buy property, develop it and sell it on? It cannot be said that those people are despicable or outrageous because they want to make a living and they create employment. That seems to be going on a lot in Dáil Éireann where we are down on top of people. We need people to build houses for us and we need houses to be provided. If the State will not do it we need houses to come from somewhere and we need property to be developed. I will certainly not put my name to calling the people that are involved in that despicable. I know that bad things have happened in the past but the one thing about bad things happening in the past is that surely to God we will be smart enough to learn in the future.
We are doing it all over again I am afraid.
There is an awful difference between people making what Deputy Boyd Barrett might call outrageous profits and people making a living. I can see nothing wrong with that and provided that at the end of the day people can have affordable housing and that it will not be exorbitant, that is what we all want. I would be worried too when I see the way prices are going, that again it is going beyond the control of working people who want to go away and get a mortgage and have a life along with it. They should not be stuck with a mortgage whereby they will not be able to afford to do any of the other things that young families might want to do. During a debate like this it is not helpful to hear people being branded like that. I do not agree with that.
On what is being proposed in the Bill, I would urge caution again because there are people who might own property and who are not developing it right now. Punishing people or taxing them to an extreme that forces them into doing something at a time that they might not be able to do it or that it does not suit them would involve legislating for everybody's private business and that cannot be done. Everybody's personal situation cannot be legislated for in that way. We cannot paint everybody with the same brush. Yes, perhaps there are people who were hoarding land to the detriment of the people who we are elected to represent but it is about balance and being prudent. We have to be careful about what we do when we make legislation to deal with an issue like this. I appreciate where Deputy Wallace is coming from. His heart is in the right place and his intentions are good but we have to look at situations such as where I am from where if families want to build a home on their own land to take care of their housing needs, in many cases they are not allowed to do so or there are serial objectors who stop them and sterilise home farms and stop farmers from developing on their own land. Those are things that are of concern to me.
I am glad to get the opportunity to talk on this matter this evening. I believe that most people who get up in the morning want to do right and they mean well but I have concerns about putting compulsory purchase orders, CPOs, on land or taking land off people. I am worried about that because if land was handed down or had to be bought at a high price, it may not be fair to take it off people if the balance is not right as Deputy Michael Healy-Rae said. Developers may not be able to get finance, there may be right of way issues, there could be several things, there could be title issues or there could be many reasons so that is why I would not put my name to a CPO directive to take land off people and hand it on to anyone.
There was mention this evening of 200,000 houses being vacant around the country. That could be right but they are not in the right places. There are houses vacant in different rural, isolated places where families will not or cannot go as there is no public transport, facilities or services. Mention was also made of the repair and lease scheme. The reason that scheme is not successful is that there was not enough money given to it and because the local authorities could only operate the repair and lease scheme where there was a need for social housing or where there was pressure on. As far as Kerry was concerned that was Tralee, Killarney and Dingle. The repair and lease scheme did not apply to all of the rest of the county.
The Government is saying it has so many plans and reports about what it will do and what will be done but I believe that the finance is not there. Why does the Government not come out straight and say it because in Kerry there are 37 people now who have applications in for rural cottages. They have the sites themselves. They will not be considered until 2021, so if people who have the sites and the need cannot get their houses built because the Department will not give the green light to the local authority, that signals that the money is not there.
It is the same with the way demountable homes are being blocked by the Government. The Taoiseach did not even know what they were but I can tell the Minister of State that I know what they are and the people who are inside them and living in them at present in Kerry want them to be upgraded but they will not get them. The only people who will get a demountable home now are those whose house gets flooded or goes on fire. Those are the reasons that have been given by the Department. That rules out demountable homes altogether and that says to me that the Government just does not have the funding.
To get back to this Bill which proposes to take property off people. These are human beings as well and most of these people mean well. We have to look at it seriously. We should let the Bill progress and let it be evaluated in the other forums but I have a concern, as I always had, about putting a CPO on property belonging to someone else because it is not the right way to do it.
Land availability and pricing is the key to addressing our dysfunctional, rollercoaster housing system and, to our eternal cost, we have ignored and not implemented the Kenny report. The State should be heavily engaged in active land management and that means owning, controlling and releasing land for development in a sustainable and planned way. A recent National Economic and Social Council report, Urban Development Land, Housing and Infrastructure, Fixing Ireland's Broken System, highlighted how active land management in the Netherlands, Germany and Austria has worked in the public interest to limit land cost, improve affordability and prevent price shocks and housing shortages. It is a no-brainer.
We need urgent measures to deal with land hoarding and this Bill is welcome. The Bill has a similar approach to parts of our own Urban Regeneration and Housing (Amendment) Bill. This Bill also sought to eradicate anomalies created in the 2015 Acts that allowed landowners to avoid the vacant site levies. Our Bill ensured that the levy would apply to sites of any size that could accommodate housing, provide for a vacant site levy to be increased every year that the site remained on the register and provided for the repeal of subsections 16(2) and 16(3) of the principal Act which set down lower or zero rate levies depending on the size of the outstanding loans on the site.
This Bill is not radical and we have to ask ourselves what is radical. What is radical is putting housing affordability beyond the vast majority of people on ordinary incomes and that is what is happening. What was radical was not adopting the Kenny report. What is radical is selling off State assets to vulture funds. They are the real radical things that are happening. It is time that we did something in the common good and I believe that this Bill is going some way to doing that.
We have had housing shocks in every second decade and it is time we realised that what we do is creating the problem and we have to change our approach and that must address the issue of land affordability and availability. We know what needs to be done and it is time it was done. We will be supporting this Bill.
The Green Party will also support the Bill. A couple of things that were done during our time in government may be useful or additional to this Bill, or may show that it is not impossible to take a different approach. We introduced and passed a Bill on a supernormal tax on rezoning profit. It was an 80% tax on rezoning gain, which does not belong to the landowner but to the public decision-making process. That Bill was pulled by the last Fine Gael-Labour Party Government because it was not raising any revenue but of course it was not because in 2011-2012 we were not in the part of the cycle that we are in now. It was a terrible mistake, and for no good reason, to remove a Bill that went one step towards capturing some of that value. While I very much welcome the provisions set out in Deputy Wallace's Bill, when we were in government we brought forward the introduction of a site value tax which would also help towards really efficient use of land. The Department of Finance fought that tooth and nail for no good reason, as far as I could see, other than at the time, back in 2009-2010, we did not know much of the ownership of land. There was a real problem around landownership particularly in Dublin city because there was not a proper, updated, modern land registry which showed who actually held the title on large sections of land. We started setting about rectifying that, updating the register and in the transfer to the new Fine Gael-Labour Party Government we pushed the site value option. It was put in the programme for Government and then abandoned as the Government went for a straight property tax model which was good at raising revenue in the short term but gave us none of the benefits that we could have got in the way of efficient use of the land which a site value tax would bring. As well as a vacant site tax to tackle the issue of land not being used but hoarded a site value tax still makes real sense. It makes real sense environmentally because it would push and promote what we need to do, denser development back in the centre and core of the city and it would provide a disincentive for our long-held tradition of spreading ever further outwards, disregarding the cost to the public purse of having to provide ever increasing infrastructure in a more and more dispersed population. We should reintroduce the tax on zoning profit because that does not belong to the landowner. As well as the provisions in this Bill, we should consider a site value tax rather than the current property tax and we attitude. We need to stop seeing property developers as the solution to our housing problem. They are there to work for us not for their own interests.
I welcome this Bill, commend Deputy Wallace for bringing it forward and confirm my support for it. As a very young clerical officer in South Tipperary Council County Council in 1973, 45 years ago, I remember the publication of this report. There was widespread support for it and for its implementation. Unfortunately the Government of the day and Governments since bent to landowners and now we have the housing crisis that we all see around us.
The differential rent scheme now being operated by local authorities, particularly the scheme being reviewed and operated by Tipperary County Council, is based on section 58 of the Housing Act 1966, which was amended by section 31 of the Housing (Miscellaneous Provisions) Act 2009. That section made the making of differential rent scheme a reserved function of the members of a local authority. That was never implemented despite promises made by the then Minister of State, Deputy Penrose, in 2011 and by the current Minister for Housing, Planning and Local Government, in January of this year. Now senior management in councils throughout the country are using the non-implementation of the section to impose savage increases in local authority rent. That has happened very recently in Tipperary County Council where I estimate the increase in rents will come to in excess of €2 million. The increases are unacceptable. Significant numbers of tenants are subject to increases of anything between 30% and 100%. That is being done by way of changing the method of treating joint incomes of spouses or partners and subsidiary earners, and also carers who save the State millions of euro a year. They are being assessed on their half rate or full rate carer's allowance and lose one fifth of that income which is outrageous. The same is happening to those in receipt of family income supplement who are on low pay. I want the Minister of State to instruct Tipperary County Council to defer these increases and I want the Minister to commence section 31 of the 2009 Act which allowed local authority members, as a reserved function, to have a say in this scheme. This is an outrageous situation and one that the Minister should deal with immediately.
I had a sense of déjà vu when I first read Deputy Wallace's Bill because it brought me back to the early days of my predecessor, the late Tony Gregory, when he came into the Dáil. He was facing what we are facing today, the extent of the land hoarding going on in Dublin city. It created a major housing crisis. When he spoke in May 1982 he lamented the fact that the Kenny report from 1973 was still being ignored almost ten years later. It has been ignored for 45 years. We know it came out of a crisis which involved a huge increase in the price of building land yet it contained proposals that would have made a difference. We can only speculate on the differences it would have made today if it had been implemented. When we ask why we are told that one of the reasons is that it revolves around Article 43 of the Constitution under which the State guarantees to pass no law that attempts to abolish the right of private ownership. I do not believe that the authors of the Constitution intended protecting the kind of private ownership we are seeing today, the land hoarding, sitting on vacant sites until the market guarantees an astronomical price, the speculating and putting owning one's own home out of the reach of most people, not to mention the disastrous effects on social housing. When Tony Gregory spoke in the Dáil in 1982 he said that "[t]he speculation and profiteering in building land is a crime". He described speculators as "being on the same level as heroin dealers. Both profit from the misery of their victims".
The sense of déjà vu continues until 2005 when there was an incredible rise in the cost of houses, massive increases in prices, which had spiralled out of control, lengthy waiting lists for local authority housing and a small number of multimillionaire developers controlling most development land. In 2005 the average price of a house in Dublin was in excess of €300,000. The term "affordable housing" meant absolutely nothing. In Dublin we saw the rise in gated community complexes, houses and apartments at very high prices which played a role in furthering social inequality. In 2006 the average price was over €420,000. We could be talking about today. The collapse of the public private partnerships promised so much for the residents of O'Devaney Gardens, Dominick Street and St. Michael's Estate but they were left frustrated. I acknowledge that the first sod is being turned in O'Devaney Gardens tomorrow morning. Good complexes have been built in Dublin city, such as St. Bricins, Father Scully House and Peadar Kearney House.
We know that the principal contributory element in the increasing cost of housing is the very high cost of building land. That is fuelled by owners who are allowed to sit on vacant sites. There have been too many examples over recent years of what has not worked. The 3% vacant levy has not delivered the land that is needed. If something is not working a plan B is needed. This is the plan B. It is good that the Bill is moving forward but I hope it will not take a meandering route through various Stages and not see the light of day.
I welcome the debate on this important Bill and its intent to target the large-scale developers who have been hoarding land yet pay nothing for the privilege. The Bill will increase the vacant site levy to 25%, remove exemptions that decrease the levy, provide restricted definitions of what constitutes a vacant site and offer the owner of a site deemed vacant the opportunity to enter into negotiations with the relevant local authority or estate agency to sell the site for 60% of its value instead of paying the 25% vacant site levy.
Deputy Wallace is right. We need to stop developers sitting on land. That has led to land becoming overvalued, creating a housing supply which does not meet the needs of the population and which has created a homelessness crisis. It seems we also need to stop the Government, together with the developers, because the Government makes it work for them. The only way we can do that is by getting rid of Fine Gael and Fianna Fáil. That is the only way this will be changed.
The Minister of State, Deputy English, stated he felt that a 7% site levy was adequate. From whom did he get that sense? Where did it come from? How was it arrived at? That is what we have to know.
What has frustrated me the most throughout the housing crisis is that this Government and successive Governments, of which Fianna Fáil was a part, have made it their central policy to financialise housing, which has escalated this mess. The former Minister, Deputy Noonan, back in the day, gave a very big welcome to vulture funds and multinational developers coming into this country and made them a handsome profit at the expense of the welfare of the ordinary citizens of the country. The Government's relationship with developers has been so cosy it has led to developers sitting on land waiting for a handout until they can maximise their profit margins even further and the Government has been more than happy to feed the beast.
This profit-driven model has been in existence for half a century but was accelerated dramatically when Fine Gael came into power. Little or no social housing has been built, which fits into its model of the private sector reigning supreme and minimum intervention has since been carried out in the private sector. Every single housing measure the Government has put out to boost housing supply has utterly failed. That is because its policies give preferential treatment to land developers and not to ordinary people.
While the Government has claimed time and again that measures being introduced as part of Rebuilding Ireland would unlock more construction sites to delivering more housing units, this has not been the case after three years and house prices have been increasing year on year. Not only that but rental prices have been increasing as increasingly, more people cannot afford to buy a house and little or no social housing is available to them.
Housing is a fundamental right. People cannot live full lives without it and other rights fail to be realised without housing. That is the reason I have twice introduced the Thirty-fifth Amendment of the Constitution (Economic, Social and Cultural Rights) Bill, which includes the right to housing but which was voted down by Fianna Fáil and the Government because once again, they consistently prioritised private sector interests above the needs of individuals.
It is time for the Government to rights-proof decision making and bring the rights of the individual to the core of policy making. It must build social houses, increase tenant rights, control rents and invoke proposals such as the one Deputy Wallace has presented here today by putting the onus on developers to use land wisely, for the people and not themselves.
If we make housing a right, which the State then defends, we can prevent the same situation from occurring over and over again by having developers dominate our decision making process and finally we can have a Government that is accountable to the people. That, however, will not be a Fianna Fáil or Fine Gael Government.
The hoarding of land is a long established and very profitable practice in the property development and construction business in this country. As long as there are big profits to be made, land hoarding will continue. Land hoarding was recognised as a key factor in driving up house prices going back to the 1960s.
The Kenny report was commissioned and published in the early 1970s and proposed a workable, if far from radical, solution to the problem. Kenny based his report on a long-established practice in England whereby the Government decided where new towns or estates were to be built, a Bill in Parliament set up a planning commission, the land required was taken into public ownership and parcels were released to developers to build on. He proposed a version of this system where development land would be acquired by local authorities at no more than 25% above agricultural value. It was never implemented. We had the hoary old chestnut about a conflict with property rights in the Constitution. Yet, Part V measures in the Planning and Development Act 2000 were challenged in the courts and failed. The Supreme Court ruled Part V measures as being constitutional. From this, my understanding would be that a challenge to the implementation of the Kenny proposals would also be likely to fail and that it would fail in regard to Deputy Wallace's Bill.
The real reason the Kenny report was shelved was the opposition of powerful vested interests with strong political connections. A succession of Governments, involving Fianna Fáil, Fine Gael, the Labour Party and even the Green Party, did not want to know when it came to this issue. As a consequence, instead of a rational system of development led by planners to meet the needs of society, we had a free-for-all led by speculation and corruption. Speculators would buy land, usually just above agricultural value and then push for rezoning. Rezoned land could rise in value by ten times. Purchasing such rezonings with brown paper envelopes was simply good business. Corruption in the planning process still continues, as recent events in Donegal and Monaghan demonstrate.
The current vacant site levy will not deal with this issue. A good question to be asked would be whether it ever was intended to do so. There has been a very slow response by local authorities in drawing up the vacant site lists in their areas. South Dublin, Fingal and Dún Laoghaire-Rathdown county councils have yet to declare any and that is also the case in Cork, Galway and Limerick. There are too many loopholes and the fee is too low. It is having no effect. For example, the National Asset Management Agency, NAMA, sold land to developers with a potential for 50,000 units but only 3,000 have been built. There is enough zoned land nationally to build half a million homes but, at the current rate of construction, it will take 100 years to achieve that potential. There is no urgency on the part of the Government to drive building in a planned way in response to the housing emergency.
The measures outlined in this Bill are a big step in the right direction but to solve the housing and homelessness crisis, we need a complete change of direction. Housing must be seen as a right, not as a means to superprofits for developers, and in particular, we need cost rental affordable models that would make housing accessible for ordinary people.
I thank the Deputies who spoke and Deputy Wallace for introducing his Bill. As the Minister of State, Deputy English, said earlier, while the Government has some differences of opinion and emphasis, it is remarkable that the Government's position on the levy, and its establishment, has been echoed by all those who spoke on the Bill. There is a significant difference in terms of scale of the levy but I welcome this opportunity to have a discussion on it. As most Members said, the value of land is a very significant component in the cost of house production, whether it is public or private. As land is a finite resource, there is an unquestionable public interest in ensuring it is efficiently used, particularly in urban areas but also in rural areas.
As the Minister of State, Deputy English, indicated the vacant site levy was introduced in 2015 with the aim of incentivising the development of vacant and under-utilised sites in urban areas for both housing and regeneration purposes. As a Government, we are open to ensuring that the levy continues to be an effective land management tool. While the levy has been levied since this year, it will not be payable until 1 January next year. It would be fair to say, therefore, that its impact would be difficult to measure now but from speaking to a number of local authorities that have put together a register, there has been activity in terms of ownership, planning applications and inquiries about planning applications on sites that are included on the vacant site register.
The Minister of State, Deputy English, has brought through the other House a number of reforms by way of amendments to the original 2015 Act to strengthen some of its key provisions that he outlined earlier. I would have a naturally more hesitant way of approaching some of these issues, but with respect to Deputy Wallace's provision of a 25% levy, most of people to whom I have spoken in the legal profession would say it is in contravention of Article 43 of the Constitution. The Government's role cannot be to put forward legislation it believes to be unconstitutional. Through the levy's introduction in 2015 and on foot of it becoming payable from 1 January next year, we will have a standard with which to compare activity in the housing market and the impact the levy is having on it in Dublin and right across the country.
On the amendments that were recently brought through the Seanad by the Minister of State, Deputy English, there was much discussion in the agricultural community around the definition of vacant and idle lands for the purpose of the vacant site levy. Many family farmers who had operated lands for agricultural purposes before the land was ever zoned, and who never sought for the land to be rezoned, were deemed to be liable for the vacant site levy despite the fact that most people's definition of vacant and idle would not include an active family farm. By differentiating between lands that were purchased following a zoning change to residential, and lands that were long held and operated as family farms, the proposed amendment will target developers or speculators who hoard zoned, serviced land that has been zoned for residential use. It would allow farmers who have operated their farm for a number of years prior to its rezoning from agricultural to residential, to continue to operate that farm without liability for the levy. It is important to point out that if those same farmers wish the land to remain zoned for residential purposes it would fall liable to the levy into the future. It should not, however, be used and it was never designed to be used, as an instrument to remove families from farms they have farmed for generations.
I particularly welcome the balanced and targeted amendment brought in by the Minister of State, Deputy English, which brings clarification to the specific point of implementation of the levy, along with the other amendments which further strengthen the levy provisions. In response to some of Deputy Wallace’s points, the Government’s amendments include proposals to increase the levy to 7%, to remove the application of reduced rates, to strengthen the Ministers regulating powers generally, and to provide that the Minister can change the levy rate, within the 7% ceiling, by regulation to enable the levy rate to be varied to respond promptly to future changes. These were matters that Deputy Wallace wanted to see addressed, and we are doing that in a reasonable and legally sound way.
I must echo the Minister of State, Deputy English’s comments regarding serious concerns of a legal and constitutional nature about how this Private Members' Bill proposes to address these issues in a way that exposes the legislation to the likelihood of a legal challenge, which could undermine the entire concept and progress of a vacant site levy.
Many Members have referred to compulsory purchase. This Private Members' Bill proposes to facilitate the purchase of vacant sites deemed suitable for housing purposes from site owners for not more than 60% or 40% of their market value in specific circumstances. There is already a range of State bodies and agencies that have existing compulsory purchase powers for a variety of functions. These powers are important instruments in facilitating public interest objectives in regard to housing, transport and other areas. It is fair to say that the existing rules around compulsory purchase often lead to a very cumbersome process that becomes legally embedded in the courts process, which is also a very expensive process. Many local authorities and other agencies are reluctant to go down that route. This is why the Government recently asked the Law Reform Commission to conduct a review - the commission has commenced the project - on how best to reform and update the law and procedures around the compulsory acquisition of land. The outcomes of this review will be considered fully and speedily by the Government. There is much agreement that the current system of compulsory acquisition belongs to a different era.
In addition, and as referred to by Deputy Wallace, against the backdrop of the national planning framework, it is proposed to establish a national regeneration and development agency to assist in ensuring a more effective approach to strategic land management, particularly in terms of publicly owned land. The establishment of this agency was one of the main recommendations in the national planning framework and is endorsed in National Economic and Social Council's recent report, Urban Development Land, Housing and Infrastructure: Fixing Ireland’s Broken System, to disrupt the current land market and make better use of State controlled lands to shape the development and revitalisation of our cities, towns and villages. The agency will work with and support local authorities, public bodies and others to harness public lands to stimulate regeneration and achieve compact, sustainable growth, with a particular emphasis on regeneration projects and the provision of affordable housing. Detailed arrangements for the establishment of the agency are currently being developed and are expected to be finalised shortly.
I will now return to the levy itself. We first need to introduce the Government amendments proposed, and I look for the support of the House in this regard, and then focus on implementation in a clear, consistent and proactive way. Under the 2015 Act, planning authorities are required to establish a register of vacant sites in their areas, beginning in January 2017, and to apply the levy in January 2019. On foot of a recent review by my Department of the online vacant site registers across all local authority areas, I understand that 14 authorities have populated their vacant site registers to date, collectively amounting to more than 230 individual sites, and the majority of these will be subject to the levy in January 2019. There are 17 other local authorities that have not yet populated the register. Those local authorities have members from different groups in the House and they should really get down to it. Most of the local authorities are involved in that work but they have not yet produced a populated register. They really need to do this.
The implementation of the levy is an ongoing process and it is expected that further sites, both in public and private ownership, are being added to the registers as these authorities and others continue their assessment of suitable sites and undertake the necessary preparatory work and procedures set out in legislation prior to putting the sites on the register. My Department actively engages with local authorities in relation to the levy implementation by providing guidance and organising information seminars. Most recently, in May, a workshop was held with all 31 local authorities to assess progress generally, to facilitate a sharing of best practice among authorities and to ensure consistent application of the levy across local authority areas.
We will continue to monitor implementation of the levy to ensure that it is being fully used, in line with its intended purpose of incentivising the development of vacant or under-utilised sites in urban areas. Further guidance and clarification can be provided to planning authorities, on foot of the introduction of the proposed Government reforms.
Despite some of the concerns expressed by the Minister of State, Deputy English, and me, the Government has addressed some of the concerns in its most recent amendments, as introduced by the Minister of State, Deputy English, and we do not intend to oppose the Bill at this Stage.
I put it to the Minister of State, Deputy Phelan, that contrary to his assertion, the Government's position has not been echoed by anyone in this House. It is quite the opposite. Everyone is saying that the Government is in total denial and if it keeps on this path the housing crisis will get worse.
By my count, since the start of this Dáil just over two years ago, there have been 31 motions, statements or Bills about the housing crisis. We also had a specially convened Committee on Housing and Homelessness. The issue of housing is raised every single day in this Chamber and yet the situation is getting worse. The Government seems to think that the measures it implements are helping but everybody else can see they are not helping. Every citizen in the State is affected by this issue, not just the people who tonight are awake on the streets or those who cannot sleep because they are so worried about having the money to pay rent or whatever. It even affects the people who are sitting on the property they bought in the 1990s. They saw the value of their property increase by 431% between 1995 and 2007 but they may have their adult children at home with them tonight, probably with their children too. These adult children are trying to save for a deposit. Every single citizen knows that land hoarding is one of the key contributing factors in the lack of affordable housing. This Bill is an attempt to deal with that.
For me this is a crossroads discussion in the House tonight. We now either move decisively on the issue, which has not been done for 45 years, or we continue as we are. It is totally disingenuous for the Government to come into the House and say the measures it puts forward are making a positive contribution. The Government is putting up the card saying that it might be unconstitutional, even though the foremost legal minds have evaluated this aspect and have said it is not unconstitutional.
Even if we did not have that advice and the Government genuinely believed it was right, it would be proposing a constitutional referendum on the issue, it is that important. It is not good enough for the Government to sit here and pretend we are on the right road when, unless it moves on this, it will only make matters worse. Land speculation and hoarding are at the core of much of what is wrong with our housing market.
Also at that core is NAMA's interference. I will cite a brief example from my area. A group of individuals had been trying to purchase the old rugby club in Malahide from NAMA since 2015. They did not want to make a killing on the deal, only to provide for local families, and were willing to pay NAMA above the odds. The Minister for Finance told us that the lands were part of NAMA's residential delivery programme. However, those individuals were cut out of the equation and houses are now being developed, with NAMA seeking €700,000 for them. It is a joke.
The measure before the House could transform the situation overnight in a way no other could. I plead with the Government to forgo the nonsense of killing the Bill with kindness and pretending it does not oppose the legislation. Otherwise, it will do our citizens a great disservice. They deserve better. The Government can step back from its position and progress the Bill in a genuine and positive way.
My Bill does not deal with compulsory purchases. Under my proposed arrangement, a developer who was willing could agree a sale with a local authority at approximately 60% of the market value instead of paying the 25% tax rate. At 50% over two years, it would be cheaper for the developer to sell the property if he or she were not in a position to hold it and pay the tax. This would have given site owners a way out.
The idea is to stop landbanking by making it less attractive. Deputy Jan O'Sullivan stated that Labour could not achieve a higher levy than 3% because it would have been illegal, but now the Government can achieve 7%. Explain that. If 3% and 7% are okay, the principle is the same whatever the figure, so if 25% is illegal, then 7% is as well. That does not make any sense. Come on. The notion that 7% would work is total bollocks. The average price of a house in Dublin is €357,000. Let us say that, last year, it was €300,000 before increasing by 10% to €330,000. However, build costs did not change, which means the land price did, increasing from €100,000 to €130,000, or 30%. Where is the Government going with its 7%? It is a waste of time. No one in his or her right mind will bother with 7%. Nor will it catch the majority.
The Minister of State, Deputy English, stated his belief that there could be a legal problem with the appeals mechanism. He mentioned introducing it in January 2020. If the four appeals were left, it would take only five or six years for anyone who went to the effort - it would pay plenty of people to do it - to get into the net. That means 2026. Where will the housing crisis be then? Let us tackle it now. We must. It is the elephant in the room, but the Government does not want to see it and is pretending it is not there. Jesus, it is so attractive to buy these large tracts of land. NAMA sold 3,800 sites in Cherrywood to Hines, a vulture fund, for €27,000 each. Hines then sat on them because it did not have to pay annual tax for doing so. No hassle. Hines moved the first of those sites at €72,000. I know to whom it sold them. It sold the next little bundle for €100,000. Then it started selling sites for €120,000. I do not know what it has done with the rest. It is probably still sitting on them.
We encourage landbanking in Ireland. Through the policy decisions made in this Chamber, we encourage houses to be unaffordable. That is a fact. Thirteen consecutive Governments have refused to deal with landbanking. We will never have affordable housing if the Government does not deal with landbanking. As Deputy Ó Broin said, it is not just about supply. Supply was never greater in the history of the State than it was in 2006 and 2007, yet affordability was non-existent. Prices went through the roof and reached their highest levels ever. The idea that prices reduce when there is greater supply does not stack up. It can happen, but it does not necessarily happen. There is no rationale behind this. Look at the history.
One of the reasons for apartments and housings growing so expensive when they are plentiful is that those who own landbanks will not make the land available until the price goes high, when it will then pay to sell. They will not do it otherwise. Over the past six months, I have examined sites in this city. People are putting a price on apartment sites that a builder cannot afford. The equation between what a builder is asked to pay and what his or her build, financing, legal and other costs are does not work at the moment. By the time the builder sells, there is no money in it. That is why no one is building apartments. The people who own the land in the private sector have no incentive to sell because they know they will get more for it later and do not have to pay any tax while they are sitting on it and watching its value grow.
In the meantime, the Government is not getting sites freed up to deal with the housing crisis. What is it thinking? This is so frustrating. If the House did nothing else this year other than deal with the issue of landbanking, it would not solve every problem overnight because Rome was not built in a day, but it was started. We have not even started. The Kenny report came up with an idea, but I am not suggesting we use that report, since that will never happen.
The Bill's measures would have a major impact on and be game changers in how we supply housing, but the Government has to have the appetite to do so. Stop being afraid of legal types saying this or that cannot be done. I can understand. I would say they wore the carpets out in the Department of the Environment, Community and Local Government when the Government was trying to introduce the site levy. Let them come. Let them take their case to the courts. Let us test it if we have to, but I do not believe for a second that it needs a referendum. It needs the Government's will to do things differently. More than 99% of the people of Ireland would benefit from this, but the Government still will not do it because it claims there is a legal issue. Come on, do the right thing.