Dáil Éireann Debate, Tuesday - 27 March 2018
67. Deputy Mick Wallace asked the Minister for Finance his plans to introduce a tax on land, specifically vacant land, which could be used for residential purposes; and if he will make a statement on the matter. [13939/18]
Amharc ar fhreagraI was afraid Deputy Pearse Doherty was going to go again. This question relates to the introduction of a tax on vacant land. The vacant site register is not catching those who are landbanking due to the many holes in the vacant site levy. Will the Minister consider introducing a proper tax on land? Ever since the Kenny report, as far back as 1974, successive Governments have refused to do what is necessary and it has led to untold damage to the manner in which we supply housing in the country.
Following a commitment given in budget 2015, a public consultation was conducted by my Department in that year on the issue of unused zoned and serviced land with a view to examining what taxation measures might be taken to penalise landowners who do not develop such land. Separately, the Urban Regeneration and Housing Act 2015 introduced new powers for local authorities to incentivise the development of zoned and serviced land, as well as providing for other measures which are intended to facilitate housing development. The Act allows for the possibility of applying the vacant site levy to both brownfield and greenfield development sites as long as they are located in designated areas in local authority development plans for the application of the levy. I understand that the Department of Housing, Planning and Local Government proposes to encourage local authorities to apply the levy on as wide a basis as possible in order to bring housing supply on stream earlier than would otherwise be the case.
On considering the outcome of the public consultation and the enactment of the Urban Regeneration and Housing Act 2015, it was determined that no new tax separate to the vacant site levy would be introduced to encourage the development of residentially zoned and serviced land. I understand that planning authorities will be issuing notices to owners of vacant sites by 1 June 2018 in respect of vacant sites on the register in 1 January of this year, indicating that the levy will apply to those sites on 1 January and will subsequently be applied on an annual basis thereafter, as long as the site remains on the vacant site register. As the Deputy knows and I announced in budget 2018, it is proposed to increase the rate of levy from 3% to 7% of the market valuation of relevant sites with effect from January 2020.
The vacant site levy is a farce. The Minister increasing it from 3% to 7% will still not catch the people who are avoiding it. A 0% rate of levy applies if the outstanding amount of the site loan is greater than the market value. When the outstanding amount of the loan is between 75% and 100% of the market value, a reduced rate of 0.75% applies. Where the outstanding amount of the site loan is between 50% and 75%, a 1.5% rate of levy shall apply. No one is buying development land with cash. One would be off one's head to buy it so they are all avoiding it. Anyone who has a loan on development land is not getting caught for the tax. It is borne out by the registers, which are catching the wrong people. Look at the Dublin City Council register and guess who has the most sites on it. It is Dublin City Council because it is a public body. The HSE has two and the Office of Public Works, OPW, has two. The National Asset Management Agency, NAMA, has a site on it. The landbanker is not being caught by this Bill. It does not work. It is not a proper land tax. Does the Minister have an interest in this? It is the biggest problem that we have in housing.
I was going to bring to the Minister's attention those well-known fantastic sites such as O'Devaney Gardens and the bottom of Dominick Street. Dublin City Council has been sitting on those lands and other lands in the city which have been derelict for a long time. Full-scale profiteering in land values is now a serious hindrance to house-building. There are too many people sitting on sites because they are just waiting as the values climb and climb. That is not helping ordinary families who desperately need to see more houses and more apartments built, including by the city council.
As the Deputy knows, I am well aware of O'Devaney Gardens. I hope that there will soon be an announcement on how that project will progress. I know the Deputy will welcome that as much as I will because it is a really important development. With regard to what Deputy Wallace said about the operation of the levy, we now have 235 sites from 12 local authorities - I know Dublin will be one - registered for the application of this levy. As I have described, the levy will go up from 3% to 7% if the land is not developed. The feedback I am getting - I acknowledge it is only feedback and we will have to wait to see until the financial liability is actually paid - is that this is having an impact on decisions that people are making with regard to holding land and what they decide to do with it.
Only recently, the managing director of Hines, a fairly serious player in development in Ireland today, said that there is no question, when house prices go up 14%, that people sitting on that land are rubbing their hands, wondering why they would sell or build now because they will make another 14% next year. He says that there should be a land tax, plain and simple. If one has undeveloped land that is zoned as residential and it is not built then one pays 50%. Like that, one solves the housing crisis. This is the managing director of Hines. We are not dealing with landbanking and I know it is a difficult place to go but until we do so, some Government, some day, will do it. It will do more for how we supply housing in Ireland than anyone has ever done in this State. It would be fantastic. Does this Government have the appetite for it?
The Deputy put a question to me about what we are willing to do. I have said, in the context of the Project Ireland 2040 plan, that we will put in place a State organisation to develop our own landbank. Where I agree with the Deputy, although I differ on the form of taxation policy to deal with the matter, is that the supply and pricing of land are fundamental to the operation of the housing market. I want the State to be in a position where it can acquire land and use that land for the delivery of more homes. We differ as to what impact that tax and new taxes will have on the pricing of land and release of homes. I believe, on the basis of figures that I have just shared with the Deputy, that the vacant site levy will have an effect.
