[Article] House levies nothing to do with benchmarking - Cullen

Victor

This follows an earlier misleading story (bottom).

http://home.eircom.net/content/irelandcom/breaking/1946351?view=Eircomnet

House levies nothing to do with benchmarking - Cullen
From:ireland.com
Wednesday, 12th November, 2003

Development levies imposed by local authorities on new houses have nothing to do with benchmarking, according to the Minister for the Environment, Mr Cullen.

Under the Planning and Development Act 2000, local authorities have to come up with a new scheme for levies on new houses by March 14, 2004 or face losing funding to put in place infrastructure programmes.

Mr Cullen today denied claims that levies imposed by councils on developers had anything to do with the cost of benchmarking to councils.

He said the levies have been in place since 1964 and were to pay for public and community facilities in an area and the money raised from levies could not be used by councils for anything other than infrastructural or facilities programmes. The new scheme of levies are to show transparency in the process.

"These levies have been in place since 1964. What I'm doing is making it much more transparent from a public point-of-view," Mr Cullen told RTÉ news.

The Minister also dismissed claims that levies in some local authorities could be as high as €28,000.

"People are just plucking figures from the air," he said.

However, director of the Irish home builders Association, Mr Hubert Fitzpatrick, said that levies were going to increase "three-fold" in some cases.

He said in Fingal County Council the charge was going to be €140 per square metre for residential and €100 for commercial developments.

A spokesperson for Dún Laoghaire County Council said the levy charged to developers for building new homes in its jurisdiction was €11,500.

Meanwhile, the chief executive of the Chambers of Commerce of Ireland has said he "supported the introduction of service levies on new houses that are to be imposed by local authorities".

Mr John Dunne said: "Every house that is built represents an increased cost to local authorities in terms of services and it is not unreasonable that the people who are going to live in the houses and benefit from these services should have to contribute".

"At the moment, small and medium sized enterprises (SME's), which are struggling to survive, are being forced to fund the provision of services for new houses through rising commercial rates and, in many cases, these SMEs are not benefiting in any way from the development of more houses in their areas," he said.

http://home.eircom.net/content/unison/national/1941848?view=Eircomnet

Big pay deals force €28,000 levies on new home buyers
From:The Irish Independent
Wednesday, 12th November, 2003
Treacy Hogan Environment Correspondent

BUYERS of new houses will have to pay up to €28,000 in levies to compensate for benchmarking.

Cash-strapped councils in counties across Ireland are imposing significantly increased service levies on all new homes.

In one county, Wicklow, the price of a modest three-bed semi-detached home will soar by €17,500, while larger, stand-alone properties will be hit by a €28,000 bill, the Irish Independent has learned.

Buyers of new houses in Kerry will have to pay up to €9,500, while those in Clare face bills of €12,000.

All other councils are looking at just how much more they will charge.

Before benchmarking drained their coffers, most councils levied modest amounts on new houses. But now, financially crippled by government cutbacks and facing a €220m benchmarking bill, they are being forced to increase them by huge amounts.

From March 2004, councils are legally obliged to introduce levies on new developments to bankroll infrastructure such as sewerage, roads and water. But few anticipated the levies would be so big.

The money is ringfenced to provide services and infrastructures linked to new houses, but that will come as little compensation to tens of thousands of potential buyers.

It will also send house prices soaring at a time when the Government is trying to dampen property price inflation.

Those worst affected are likely to be first-time buyers, who will effectively see the equivalent of a deposit taken from them in levies.

The disclosure is certain to become a major political issue for the Government, which has spent the past five years trying to halt the upward house-price spiral.

But councillors all over the country are up in arms. Council officials face an uphill battle to push through the increased levies and they feel they are in a Catch-22 situation - if they bring in the new charges there will be uproar in the run-up to next year's local elections, but if they don't they will not have sufficient resources to improve dangerous roads and other vital services. The Irish Independent learned last night that Wicklow Co Council has just proposed a development levy of €140 per sq metre on all new houses in the county. It will apply to new homes in estates or on their own sites in the countryside.

The new service charge will add €17,500 to the price of an average three-bedroom house in an estate, according to Wicklow's Fine Gael TD, Billy Timmons, who described the proposed charges as "astronomical".

Buyers of one-off houses of 200 sq metres connected to the council sewerage system will be expected to pay €28,000.

And one-off houses of a similar size in the countryside and providing their own septic tank and other waste treatment facilities will incur extra bills of up to €20,000.

In Co Clare there was a walk-out by Fine Gael and independent councillors over the council's plans to put in a place a levy of up to €12,000 on new homes across the county.

The levies are needed to generate €67m in improved infrastructure up to 2009 and will be raised by imposing levies on 4,500 houses that will be built in Clare before that date.

The Planning and Development 2000 Act lays down that if a council does not agree on a levy scheme by March 14 next, it will have no funding to put in place its infrastructural programme and will not be able to impose any levies attached to planning permissions.

Kildare and Dun Laoghaire Rathdown councils have also indicated that they will be forced to seriously increase their development levies on new houses, and all councils are expected to follow suit shortly.

Wicklow's Billy Timmons said: "This is a frightening figure and is very unfair.

"We might as well put up a sign saying 'No more housing' or 'No more room at the inn'," the Fine Gael TD said.

Villain

The Taoiseach was questioned about this this morning in the dail and he said the money would go into resources in the area.

However my parents got planning permission about a year a go and had to pay over 3000 in charges and where the site the council will never supply any services, we have our own well and sewage systems and its a private lane

BigEejit

What I dont like about this is that NEW house builders/buyers will be financing facilities for the whole community ... which is insane considering how much houses cost now and the financial burden people are under already .... I wouldnt be surprised if someone took this to court

Its just another tax to cover the cost of the governments stupidity in blowing incredibly large quantities of cash on the civil service for absolutely no gain whatsoever ....(yeah, I know that they have to reach targets etc ... I can tell you now that most of that mullarkey has already been forgotton about ... i know this from talking to a friend in the guards, a teacher and a civil servant working for the Dept of Telecommunications etc etc)

Victor

Financially, this will only affect the developer, house prices are primarily being driven by interest rates and earnings, nothing else. It won't hurt the pocket of anyone else, but provide benefit to the community. It will make developers think things out properly before development.

The argument of new houses supporting existing is marginal as often the new houses are the reason for implementing a specific project (be it a new sewer, upgraded road, whatever). Also the money is ringfenced to keep it within the specific area, so if a new estate of 200 houses is added to a small town, the money stays in that town, it isn't spread across the council area.

Victor

The area being used in these calculations is 125m2. The typical grant aided has was I believe 105m2 (1125 ft2). I am also unsure if county councils levy VAT.

http://home.eircom.net/content/irelandcom/topstories/1948938?view=Eircomnet

Development levies by local authorities defended by Cullen
From:ireland.com
Thursday, 13th November, 2003

The Minister for the Environment and Local Government has defended the imposition of development levies by local authorities which could add several thousand euro to the cost of a newly-built home.

Responding to Opposition criticism, Mr Cullen said there was "nothing new" in the housing charges, which paid for local authority infrastructure. He said some media outlets had "erroneously" claimed the charges were new and would fund benchmarking increases.

Councils across the State are debating a new charge on developers to fund, roads, drainage, parks and community centres. Seventeen planning authorities have issued their proposals to date, with those in or near Dublin looking for the largest amounts. The new, fixed charges will replace the existing ad hoc system of levies.

Fingal and Wicklow county councils have proposed the highest charges - €140 per square metre, or about €17,500 on a traditional four-bedroom home. VAT of 13.5 per cent would bring this up to €19,863. Sligo is proposing the lowest charge at €5,675 after VAT.

There are concerns that the measure will have a particular impact on first-time buyers in the greater Dublin area.

Councils have until March next year to agree levies under the Planning and Development Act 2000.

The measure was welcomed yesterday by Chambers of Commerce Ireland. "Every house that is built represents an increased cost to local authorities in terms of services and it is not unreasonable that the people who are going to live in the houses and benefit from these services should have to contribute."

The Taoiseach, Mr Ahern, also defended the levies, telling the Dáil they were "an advance in social thinking and should be welcomed".

Mr Cullen described as "absolute nonsense" claims that the levies would add €28,000 to the cost of a new 200 sq metre home in certain counties.

"These are just figures that have been plucked out of the sky and being extrapolated to take extreme possibilities," the Minister said.

He did not wish to see "huge regional variations" between local authorities, although he admitted "the final say on all this lies with locally elected representatives, as it should be".

Mr Cullen added: "I have urged local authorities to take a reasonable approach to the imposition of development contributions to ensure that they don't affect house prices, which in any case, relate more to market demand than to the level of charge imposed on the developers."

The Labour Party environment spokesman, Mr Eamon Gilmore, said "there is nothing wrong with the principle" of development levies but "the amounts now being proposed are far in excess" of those envisaged.

"In the absence of any price control on new housing, these levies will end up being passed on to the purchaser, in most case, first-time buyers."

Mr Cullen said the charges had been in place in 1964 and "always have been levied on everybody".

All that had changed was that local authorities were now obliged to disclose the level of charges and the improvements for which they were to pay, in the interests of transparency.

"Councils can no longer pluck figures out of the air and apply them on new development," Mr Cullen said. "Councils must justify their demands on developers by applying these new transparent schemes."

As for benchmarking payments to local authority staff, the Minister told RTÉ that funding would be made available through the Department's Local Government Fund or through fund-raising mechanisms of local authorities.

Development levies announced to date

Proposed development levy, plus VAT, on typical family home, except South Dublin which is per bedroom

Clare - 12,000
Cork - 5,448
Dublin City - 11,918
DL-Rathdown - 13,053
Fingal - 19,863
Galway City - 11,350
Galway Co - 11,350
Kerry - 9,500
Limerick - Co11,918
Laois - 7,378
Offaly - 6,753
Roscommon - 6,810
Sligo - 5,675
South Dublin - 5,675 [per bedroom]
[South] Tipperary SR - 13,870
Waterford - 9,125
Wicklow - 17,500

Victor

http://home.eircom.net/content/unison/national/1949260?view=Eircomnet

Outrage over 'stealth tax' on buyers of new houses
From:The Irish Independent
Thursday, 13th November, 2003
Brian Dowling Political Correspondent

THE GOVERNMENT was last night accused of hitting buyers of new homes with severe "stealth taxes".

Revelations that buyers of new houses face the prospect of major increases in prices provoked a furious political row.

The Government and opposition parties clashed over disclosures in the Irish Independent which revealed that some local authorities are planning increases of up to €28,000 in development levies.

The increases are planned to compensate for massive payouts under benchmarking agreements.

Environment Minister Martin Cullen tried to minimise the political impact of the increased charges. He insisted they would not result in house-buyers facing massive increases.

But that was firmly rejected by opposition parties. They argued it was inevitable that developers would pass on increased charges to housebuyers.

Fine Gael leader Enda Kenny claimed buyers faced a "triple whammy" that would ruin their prospects of buying a property.

Labour's environment spokesman Eamon Gilmore said the increased levies would be a tax on first-time buyers who would have to pay up to €10,000 more for their home.

Mr Gilmore predicted that, in the absence of any price controls on new housing, the increased levies would be passed on to purchasers.

But Mr Cullen claimed that estimates of levies up to €28,000 on a new house were nonsense and described them as scaremongering.

He said there was no question of three and four-fold increases in the levies and claimed they were already part of the house and that any increases would be carefully monitored.

Many local authorities are preparing to substantially increase the levies - by up to €28,000 in some cases per new house. Although the levy is placed on the developer, there is widespread concern that it will inevitably be passed on to buyers, and that would spark significant increases in house prices.

Mr Kenny warned that buyers could end up footing a €600m bill in "stealth taxes" next year as a result of the increased charges.

He said new home buyers had been hit three times: by the scrapping of the first time buyers grant, the addition of 1pc in the VAT rate on building materials, and now the prospect of increases on levies on new homes. He said the kind of increases being contemplated would "cripple" those already at the limit of their capacity.

Mr Cullen insisted that the levies were not being used to fund the cost of benchmarking.

"This has nothing to do with benchmarking whatsoever. Nor indeed can any of the levies that are raised be used for benchmarking - they have to be used specifically for the infrastructure that is provided."

....

Mailman

I'm betting that the levies for Westmeath, Kildare, Louth, and Meath are going to be close to 10,000 lower than for the Dublin Co. Co. areas.
Dublin City will be bigger than Los Angeles before we know where we are.

Just as an aside, anyone ever see Chinatown with Jack Nicholson where the city boundary for LA was extended into desert so that property developers could see the value of their property increase and LA authority funds were used to service this land which was previously worthless.

These levies are a mad idea - give me rates(with an accountable local authority) any day in preference to this lunacy.

If house prices are based on affordability then I'm betting that your €250,000 will now only buy you a 900 sq. ft property instead of a 1,100 sq. ft. property as developers see their profits squeezed.

[entering rant mode now]

Young people like those who frequent this board are the ones who will suffer, not those who are already on the property ladder.
The government is victimising the young of this country.
You pay through the nose to buy or rent property thanks to this levy.

[rant node notched up]
You are screwed for motor insurance.
You can't afford childcare if you decide to have a family.
You are screwed through income tax on your labour and always will be because you are not able to save to become asset rich so you can't accumulate wealth\possessions which generates still further wealth\possessions with little tax exposure thanks to our uber-thatcherite inner cabinet.
This is a mad social model we have here in this great country of ours - this country treats it's young like an inexhaustible resource to be exploited rather than as citizens.
[end rant]