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Building Lands.

Dáil Éireann Debate, Wednesday - 2 June 2004

Wednesday, 2 June 2004

Ceisteanna (3, 4)

Eamon Gilmore

Ceist:

3 Mr. Gilmore asked the Minister for the Environment, Heritage and Local Government if he has considered the report of the All-Party Committee on the Constitution on property rights; his views on the findings of the committee that legislation can be introduced to cap the price of building land without the requirement for a constitutional amendment; if he intends to introduce legislation to give effect to this recommendation; if he has completed his consideration of the results of the research he has commissioned from consultants (details supplied) into the ownership and control of building land in certain development areas, particularly Dublin, to determine whether current practices are retarding the overall delivery of building land or impeding long-term market stability; when the results of the research will be published; and if he will make a statement on the matter. [16763/04]

Amharc ar fhreagra

Bernard Allen

Ceist:

5 Mr. Allen asked the Minister for the Environment, Heritage and Local Government the reasons he has not published the report commissioned by him on the hoarding of building land in the greater Dublin area; and if he will report on the status of that report which he stated was to be completed by the end of 2003. [16762/04]

Amharc ar fhreagra

Freagraí ó Béal (13 píosaí cainte)

I propose to take Questions Nos. 3 and 5 together.

My Department continues to examine possible measures aimed at moderating land costs for housing and other essential public infrastructure. As part of this process, my Department is giving consideration to the report on ownership and control of building land, which was commissioned from Goodbody Economic Consultants, and to relevant recommendations in the Ninth Progress Report of the All-Party Committee on the Constitution, on the subject of property rights. The National Economic and Social Council is conducting a major study on housing and land policy and its report, which is expected to be finalised shortly, will also be very relevant in this regard. I intend to publish the Goodbody report in conjunction with the publication of the NESC report.

I welcome the report of the all-party committee. I note its assessment that, having regard to modern case law, it is likely that the central recommendation of the 1973 Kenny report, namely, that land required for development by local authorities should be compulsorily acquired at existing use value plus 25%, would not be found to be unconstitutional. Based on this assessment, the committee has recommended that this "designated area scheme" should be re-examined with a view to its implementation following such modifications as are necessary or desirable in the light of later experience.

The committee has also identified a number of different mechanisms that could be considered as an alternative to the designated area approach in order to recover betterment, including development levies, planning gain, and new taxation initiatives. Moreover, it has suggested that, notwithstanding its view on the constitutionality of the Kenny proposals, change along the lines recommended in 1996 by the Constitution Review Group may be desirable, that is, that existing constitutional provisions concerning property rights would be replaced by a single new provision. As I am sure the Deputy will agree, these are complex issues with significant implications for the role of public authorities and the operation of the building, and in particular the housing, markets. They merit, and are receiving, careful consideration by my Department.

Meanwhile, the operation and future potential of Part V of the Local Government (Planning and Development) Act 2000 as a mechanism for the provision of social and affordable housing should be emphasised. Following its amendment in December 2002, activity under Part V has increased significantly. During 2003, 163 housing units were acquired, with nearly 1,900 units under construction or proposed on foot of Part V agreements; this compares with delivery of only 46 affordable units in 2002. A further significant increase in output under Part V is expected in 2004.

In the week when we have been told the average price of a new house in Dublin has gone up to €320,000, that is an obtuse reply from the Minister about the issue which is at the centre of high house prices, namely, the cost of building land.

I have a number of specific questions arising from the Minister's reply. First, when did he receive the Goodbody report on land hoarding, particularly in Dublin? Why is he now proposing to delay its publication until the NESC report is published? What is in the report that will cause discomfort to supporters of Fianna Fáil that he is delaying its publication? Why will he not publish it immediately? Second, for anyone who has not read the report of the all-party committee it is useful that the Minister should summarise its contents for us but can he tell us what he intends to do about it? He told us that he welcomes the report. Does he accept the recommendations in the report and will he do anything about implementing them?

As I already told the Deputy and am happy to repeat, the report was received at the end of 2003. There is nothing in the Goodbody report that discommodes me.

Why does the Minister not publish it?

If the Deputy will let me answer I will tell him. The NESC is doing a major study on this issue — we referred it to NESC — and it is important that the two reports are published together. That would be helpful. We will then have the differing assessments, and I would be interested to see the NESC report on these issues, which are complex.

I and I am sure all Members, appreciate the work of the All-Party Committee on the Constitution which paves the way in one particular area for dealing with these issues. The NESC report, which should be published soon, is badly needed. I would be interested to see what is in the report, although I have no foreknowledge at this stage of its views on this issue, particularly in terms of land policy, its usability and availability and all the questions that surround that. We must have a factual discussion on these issues to come to conclusions.

Even though there is not a simple pathway forward, based on some of the issues that have been signalled already, I am struck by the level of activity under Part V which I have seen while travelling throughout the country. That is beginning to bed down and managers and the various developers in different parts of the country are putting much better methodologies in place, which are speedier, and we can see from the figures what has actually been built and what is beginning to come through the system.

There is another aspect I find difficult to understand. Ten days ago I opened an affordable housing scheme. It happened to be in Tramore, in my constituency, but no one would consider Tramore to be a poor or backward area. Property in the area can be very expensive but this affordable housing scheme consisted of three bedroom houses, with three bathrooms, the main bathroom being en suite. They had fine gardens and were finished extremely well, yet the price of each house was €118,000. To say I was surprised at the value is to understate how I felt, particularly in terms of the quality of the houses which were built by a major national company, not a small local builder. I have opened other schemes throughout the country and the prices of those houses are €138,000 and €140,000, which leads to some questions.

I am coming around to the view that in regard to this issue the problem is largely focused on Dublin — that was probably always the case — in terms of people getting housing here. I am aware in other county council areas, and Deputy Allen will be aware of this in Cork and other areas, that there was a shortage of people to take up the affordable houses being built. That is not common to particular areas; it happens throughout the country.

We need a rational debate on this issue and what the Oireachtas committee has said points the way forward. I am enamoured by the view that where land is becoming available, it is vital that the local authorities' land banks do not diminish and that we continue to enhance them, particularly for housing. If we do that, and the report highlights an existing land use value, plus 25%, to the local authorities, that would be extremely helpful throughout the country, not just in Dublin. If the Deputy is asking me my view, I am certainly positively disposed to that. In fact, I believe it is necessary.

The Minister appears to be living in a cocoon. He has mentioned figures but I am aware that his PR people pumped up the issue of affordable houses being available but not being taken up.

That did not come from me.

The reality is that in Glenheights Road, Cork city, there were more than 400 applications for approximately 20 houses. That is the level of demand. If affordable houses were available, people would take them. That is the reality. The Minister should not believe everything he hears from his PR people.

Will the Minister agree that since his Government took office, house prices have trebled? Houses are now 25% more expensive here than in the United States yet the Minister abolished the first-time buyer's grant, opposed development levies and increased VAT. There is now a 45% take by Government.

I want to ask the Minister a simple question, although it will not be the answer to all the problems in the housing area. Why is he suppressing the report on land holding in the Dublin area? Last October in this House he promised that the report would be published at the end of the year but we are now into the month of June and the report is still being suppressed in that it is not being made available to Members of this House. We can examine the spectrum of factors involved in housing because it is the most crucial issue for economic development and social cohesion but Members of this House are not getting the full picture because reports available to the Minister are not being made available to us. Why is the Minister going back on his promise to make the report available so that we can judge whether or not there is exploitation of first-time buyers and of all house buyers by a small few? Let us get the full picture.

I refute the suggestion that I am suppressing the report. I did the courtesy to the NESC, which is preparing a substantial report, of giving it sight of this report.

What about courtesy to the House?

The basis of the Deputy's supposition is that land hoarding is going on in Dublin. He might be surprised to see what is in some of the reports.

Why does the Minister not publish the reports?

I am anxious to publish this report. I have done the courtesy of showing the report to the NESC, which is preparing a major report on this area. So that we do not have just one view but an overall balanced view coming into the marketplace, it is better for the Oireachtas and those who are interested in the discussion nationally to see all the reports made available together. We should be able to do that shortly. That will lead an interesting debate on this area.

There are many conflicting views, as Deputies know. I am sure Deputies Allen and Gilmore have been told that land hoarding is taking place, as I have been. I have also heard the that land hoarding is not taking place. A recent report, which was not carried out by my Department, said there was no land hoarding in Dublin and showed that the land bank in Dublin is held by 27 different developers. One could not describe 27 developers as four, five or six, as is the perception. We need to get to the root of the facts in these reports. That will help to point our way forward and to come to conclusions.

I accept Deputy Gilmore's point, which was previously made in the committee. There must be a basis for local authorities to acquire land at existing land use value plus approximately 25%, as the All-Party Committee on the Constitution has suggested. There is a solid basis for that. The upholding of Part V confirms that we will be within constitutional grounds to do that and that will play a useful role.

I do not suggest to Deputy Allen that we have resolved all problems in this area and I did not mean to point specifically to Cork. There are areas where tremendous value is being given and other areas where we cannot build enough quickly enough. I accept that. We must strike a balance between the two.

No more than the Deputies, I want to see the cost of housing reduced. People's incomes and costs have gone through the roof in recent years. I do not say that is a bad thing. People's standard of living and their earning capacity is enormous. However, as a percentage of people's disposable income, there is very little difference between house prices now and 20 years ago. Like me, most Deputies were caught at the time when interest rates reached 29% and 30% and nearly destroyed us all. Those rates were not sustained over a long period but rates of 14% and 15% were the norm when we were trying to buy houses years ago. It also took us some time to save 20% of the cost of a house to get an 80% mortgage. I do not say this as a justification for the way things are today but we must take a balanced view.

We are building more than 72,000 new houses every year and the majority of them are being bought by first-time buyers. The funding is there to do that. I accept that we have a gap. People are falling between below the income level for a commercial mortgage and are above the level which qualifies them for social housing. We are trying to fill that gap by imaginative mechanisms. Part V is one of those. Other initiatives in that area will also be helpful.

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