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Reducing Land Costs to Deliver Affordable Homes

  • 27-10-2020 2:44pm
    #1
    Closed Accounts Posts: 186 ✭✭


    https://www.irishtimes.com/business/economy/housing-crisis-will-be-permanent-unless-there-is-radical-rethink-industry-warns-1.4392410
    The housing crisis will be a “permanent issue in Irish society” unless there is a radical rethink on how to deliver more affordable homes, industry body Irish Institutional Property (IIP) has warned.

    In a report, the group warns that the supply of new homes is grossly out-of-kilter with demand and that this mismatch is “intrinsically linked” to affordability.

    As many as 47,000 homes will have to be built each year for the next five years just to meet demand, it says, while noting that the Government’s target in Project Ireland 2040 is just 25,000.

    It estimates that Dublin alone needs an additional 125,000 apartments to meet demand.
    IIP also insists that land costs, often cited by critics of the State’s housing policy as a key driver of costs, is not a major expense and typically range from 8 to 18 per cent of the total delivery costs.

    The report suggests there are certain costs that the private market must pass onto buyers and renters such as land, VAT and levies.

    It suggests that these costs could be “subsumed” or “loaned” by the State to bring down the delivery cost of both housing and apartments.

    “This policy may require the State to forego this cost in the short to medium term by way of an equity loan or home equity share arrangement as European Union market rules may not allow them to be forgone totally,” it says.


Comments

  • Registered Users Posts: 2,242 ✭✭✭brisan



    if the state forgoes these costs the developer will still charge the same and pocket the rest
    Property is not sold for what its worth or cost ,it is sold for the maximum achievable price


  • Registered Users Posts: 529 ✭✭✭Smouse156


    brisan wrote: »
    if the state forgoes these costs the developer will still charge the same and pocket the rest
    Property is not sold for what its worth or cost ,it is sold for the maximum achievable price

    Claims land costs 8-18% are not a major cost, what nonsense! Land needs to be taxed until it’s 1% or less of the development cost.


  • Registered Users Posts: 2,000 ✭✭✭Hubertj


    Smouse156 wrote: »
    Claims land costs 8-18% are not a major cost, what nonsense! Land needs to be taxed until it’s 1% or less of the development cost.

    1%? How would that work? Sounds like something the PBP or Sunny Fein would propose. What’s the incentive to see your property if it is taxed that heavily?


  • Registered Users Posts: 2,203 ✭✭✭PropQueries


    Hubertj wrote: »
    1%? How would that work? Sounds like something the PBP or Sunny Fein would propose. What’s the incentive to see your property if it is taxed that heavily?

    It’s actually Not that far off Fianna Fail’s policy Prior to getting into government.

    “Fianna Fáil supports the implementation of the Kenny Report from the 1970s to put a cap on the price of land sold for housing, according to Fianna Fáil leader Micheál Martin.

    Mr Martin has asked the party’s justice spokesman, Jim O’Callaghan, a senior counsel, to examine whether the Kenny Report could be implemented without the need for a referendum on the right to own private property.

    In 1973, Judge John Kenny recommended in the Report of the Committee on the Price of Building Land that building land should be compulsorily acquired by local authorities at no more than 25pc more than its agricultural value.”

    Irish times link: https://www.irishtimes.com/news/ireland/irish-news/cap-the-price-of-building-land-to-ease-housing-crisis-says-miche%C3%A1l-martin-1.3646449


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Hubertj wrote: »
    1%? How would that work? Sounds like something the PBP or Sunny Fein would propose. What’s the incentive to see your property if it is taxed that heavily?

    Development land is way too expensive as wealthy people have brainwashed governments into collecting taxes through wages and services instead of assets.

    I’m not talking about home taxes, only heavily taxing land hoarders and vacant/underused sites. Look at McWilliams latest article in the Times


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  • Registered Users Posts: 2,000 ✭✭✭Hubertj


    Smouse156 wrote: »
    Development land is way too expensive as wealthy people have brainwashed governments into collecting taxes through wages and services instead of assets.

    I’m not talking about home taxes, only heavily taxing land hoarders and vacant/underused sites. Look at McWilliams latest article in the Times

    I would agree that rezoning of land should address costs. Also entities that buy / hoarse speculatively. However I think it is a more complicated subject. What about a regular person with a large garden at the side of their house - if the apply for planning and then put the “site” up for sale should they be so heavily taxed? What about the impact on banks balance sheets in terms of the values of property they granted mortgages on? Many that already owns a property would be in immediate negative equity. That’s fine for people who don’t want or need to move. What about people starting families that need to trade up? It’s a lot more complicated than just taxing or limiting prices.


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Hubertj wrote: »
    I would agree that rezoning of land should address costs. Also entities that buy / hoarse speculatively. However I think it is a more complicated subject. What about a regular person with a large garden at the side of their house - if the apply for planning and then put the “site” up for sale should they be so heavily taxed? What about the impact on banks balance sheets in terms of the values of property they granted mortgages on? Many that already owns a property would be in immediate negative equity. That’s fine for people who don’t want or need to move. What about people starting families that need to trade up? It’s a lot more complicated than just taxing or limiting prices.

    There will naturally be winners and losers but in the long term it’s for the benefit of society. It could also be done progressively rather than all at once.

    Why should a farmer making 30k a year get 30 million for a few fields, paid for by all the home owners that end up buying homes on those fields. Wouldn’t it benefit society if the site cost went way down? While the developer/Brickie will charge the maximum the market will take they could also make profit off lower home prices if site values are lower.

    Instead vested interests want the government to continue to give huge windfalls to the very few and to date they have got their way!


  • Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Mod Note

    Thread Split


  • Closed Accounts Posts: 117 ✭✭zf0wqv9oemuasj


    Hi, interesting discussion.


    I personally feel it's not a good road to go down, one where land is artificially kept cheaper. Landowners should be entitled to get market value for their land like any other person selling an item, asset and so on.


    I think following the UK and having no VAT on new builds would be a very quick and easy way to reduce costs. The builder is not benefiting so it would hopefully not cause prices to shoot up and would cut prices by 13.5% in an instant.


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Hi, interesting discussion.


    I personally feel it's not a good road to go down, one where land is artificially kept cheaper. Landowners should be entitled to get market value for their land like any other person selling an item, asset and so on.


    I think following the UK and having no VAT on new builds would be a very quick and easy way to reduce costs. The builder is not benefiting so it would hopefully not cause prices to shoot up and would cut prices by 13.5% in an instant.

    This would work fine if land wasn’t essential to society. I don’t propose taxing farm land either just to bring back the windfall tax for change of use and heavy taxation to prevent obsolescence. Many city centre buildings are dilapidated due to the inexpensive cost of holding them. We shouldn’t be incentivising this.

    We have laws in other sectors for the benefit of society such as young people subsidising health insurance premiums of older people so health care is affordable for all. Or social welfare.

    What you propose is total capitalism! It would be fine if land wasn’t so essential but it definitely is.


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  • Registered Users Posts: 4,315 ✭✭✭Pkiernan


    Smouse156 wrote: »
    Development land is way too expensive as wealthy people have brainwashed governments into collecting taxes through wages and services instead of assets.

    I’m not talking about home taxes, only heavily taxing land hoarders and vacant/underused sites. Look at McWilliams latest article in the Times

    You should also tax people who dont fill every bedroom in their homes with lodgers while you're at it.


  • Registered Users Posts: 18,855 ✭✭✭✭Donald Trump


    Smouse156 wrote: »
    There will naturally be winners and losers but in the long term it’s for the benefit of society. It could also be done progressively rather than all at once.

    Why should a farmer making 30k a year get 30 million for a few fields, paid for by all the home owners that end up buying homes on those fields. Wouldn’t it benefit society if the site cost went way down? While the developer/Brickie will charge the maximum the market will take they could also make profit off lower home prices if site values are lower.

    Instead vested interests want the government to continue to give huge windfalls to the very few and to date they have got their way!




    Farmers don't get 30m for a few fields. Not unless you know there are plans for a prison and you have a relation who is a senator.


    Most land suitable for development is land banked by developers.


    What would happen in the case of a land cap would simply be that developers would use it to buy up land on the cheap...........then they'd still sit on it to create undersupply so that they could make even more.



    The only solution to the problem is to have a levy on land zoned for development but not actually being developed. There is plenty of it around, often being sat on for decades.


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Pkiernan wrote: »
    You should also tax people who dont fill every bedroom in their homes with lodgers while you're at it.

    Ok vested interests


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Farmers don't get 30m for a few fields. Not unless you know there are plans for a prison and you have a relation who is a senator.


    Most land suitable for development is land banked by developers.


    What would happen in the case of a land cap would simply be that developers would use it to buy up land on the cheap...........then they'd still sit on it to create undersupply so that they could make even more.



    The only solution to the problem is to have a levy on land zoned for development but not actually being developed. There is plenty of it around, often being sat on for decades.

    Well yeah, a levy is the same as taxing it. Just so the price comes down and they can’t hoard it.


  • Registered Users Posts: 18,855 ✭✭✭✭Donald Trump


    Smouse156 wrote: »
    Well yeah, a levy is the same as taxing it. Just so the price comes down and they can’t hoard it.




    A windfall tax will be collected when that windfall is realised. It does nothing to encourage the land to be used.


    A levy for every year it is undeveloped does.


  • Registered Users Posts: 17,834 ✭✭✭✭Idbatterim


    brisan wrote: »
    if the state forgoes these costs the developer will still charge the same and pocket the rest
    Property is not sold for what its worth or cost ,it is sold for the maximum achievable price

    yeah I have thought about this, I reckon the price would probably drop a little bit, but most of it being pocketed by developer...

    There is really no way around all of this, except for the state to build the housing. Look at this EPIC, EPIC farce in the link below (basiscally DCC have refused a 15 floor block in ringsend, but are ok if its 15 floors, once they can rent it for obscene money on a 20 year lease for social housing only)! DCC are constantly fighting legal challenges against increased residential density plans in the docklands , 6-7 floors in the docklands! you couldnt dream this **** up, its actually an off the wall banana republic! This isnt just costing homes, jobs, its also costing substantial sums in lost investment into the country! a country which is headed for financial disaster pretty quick, if a vaccine doesnt come along, very, very soon!

    https://www.irishtimes.com/news/social-affairs/dublin-city-council-seeks-to-use-docklands-tower-block-for-social-housing-1.4393441?mode=amp


  • Registered Users Posts: 529 ✭✭✭Smouse156


    Idbatterim wrote: »
    yeah I have thought about this, I reckon the price would probably drop a little bit, but most of it being pocketed by developer...

    There is really no way around all of this, except for the state to build the housing. Look at this EPIC, EPIC farce in the link below (basiscally DCC have refused a 15 floor block in ringsend, but are ok if its 15 floors, once they can rent it for obscene money on a 20 year lease for social housing only)! DCC are constantly fighting legal challenges against increased residential density plans in the docklands , 6-7 floors in the docklands! you couldnt dream this **** up, its actually an off the wall banana republic! This isnt just costing homes, jobs, its also costing substantial sums in lost investment into the country! a country which is headed for financial disaster pretty quick, if a vaccine doesnt come along, very, very soon!

    https://www.irishtimes.com/news/social-affairs/dublin-city-council-seeks-to-use-docklands-tower-block-for-social-housing-1.4393441?mode=amp

    The developer would make more yes but in downturns they could keep building and the Govt would get more overall too. The only loser is vested interests and land hoarders. If the Govt got more, they could use that extra to reduce VAT etc when building margins get very tight and construction drys up which would prevent the total collapse we had last time in output.

    On a side note, I agree it’s madness the council renting these schemes for obscene money. Why not take lower quality, cheaper older stock?


  • Registered Users Posts: 529 ✭✭✭Smouse156


    A windfall tax will be collected when that windfall is realised. It does nothing to encourage the land to be used.


    A levy for every year it is undeveloped does.

    Yeah that’s a decent idea, whatever is effective is seriously reducing land prices


  • Registered Users Posts: 2,242 ✭✭✭brisan


    Idbatterim wrote: »
    yeah I have thought about this, I reckon the price would probably drop a little bit, but most of it being pocketed by developer...

    There is really no way around all of this, except for the state to build the housing. Look at this EPIC, EPIC farce in the link below (basiscally DCC have refused a 15 floor block in ringsend, but are ok if its 15 floors, once they can rent it for obscene money on a 20 year lease for social housing only)! DCC are constantly fighting legal challenges against increased residential density plans in the docklands , 6-7 floors in the docklands! you couldnt dream this **** up, its actually an off the wall banana republic! This isnt just costing homes, jobs, its also costing substantial sums in lost investment into the country! a country which is headed for financial disaster pretty quick, if a vaccine doesnt come along, very, very soon!

    https://www.irishtimes.com/news/social-affairs/dublin-city-council-seeks-to-use-docklands-tower-block-for-social-housing-1.4393441?mode=amp

    I have said the following in numerous threads on here
    SF have said they will use a magical money tree to borrow to build houses
    FFG laughed at the idea that the magical money tree existed
    Along comes Covid and hey -ho FFG find the magical money tree and borrow billions for social welfare and grants
    If SF borrow 5 billion they could build 25,000 houses at 200k each on state land (or get a developer to do so at a fixed cost with no over runs allowed )
    Sell 20,000 at 250k and use 5000 for social housing
    Rinse and repeat
    After 5 years you have 100k new private homes and 25k social houses paying some rent
    Houses only sold to owner occupiers
    Major tax on any profit on a sliding scale if sold within 10 years
    Let the private developers continue to build the 400k and up houses
    SF housing policies MAY not work
    FFG housing policies DO NOT work
    Young voters and their parents may just take the gamble at the next election
    The housing crisis was the big issue in the last election and it will be the big issue in the next one ,even more so with record unemployment just around the corner


  • Registered Users Posts: 3,098 ✭✭✭Browney7


    Smouse156 wrote: »
    The developer would make more yes but in downturns they could keep building and the Govt would get more overall too. The only loser is vested interests and land hoarders. If the Govt got more, they could use that extra to reduce VAT etc when building margins get very tight and construction drys up which would prevent the total collapse we had last time in output.

    On a side note, I agree it’s madness the council renting these schemes for obscene money. Why not take lower quality, cheaper older stock?

    No no, it's a much better deal for the state to borrow 20 year money for close to 0% and use this money to then lease property for 5 to 6% rental yields per annum for 20 years to foreign funds who pay no tax in the country and then lose use of the asset in twenty years.

    Much better to waste tax payers money than borrowing to invest in a long term asset to remedy a housing shortage.


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  • Registered Users Posts: 8,412 ✭✭✭Markcheese


    A windfall tax will be collected when that windfall is realised. It does nothing to encourage the land to be used.


    A levy for every year it is undeveloped does.

    That's grand but what if I own a farm , genuinely am a farmer ,with development crowding around my land - do I have to pay a development tax every year
    Or ,say I'm a developer who has bought a large farm as a land bank , I still farm it ,so don't have to pay this annual development tax ??

    Slava ukraini 🇺🇦



  • Registered Users Posts: 529 ✭✭✭Smouse156


    Markcheese wrote: »
    That's grand but what if I own a farm , genuinely am a farmer ,with development crowding around my land - do I have to pay a development tax every year
    Or ,say I'm a developer who has bought a large farm as a land bank , I still farm it ,so don't have to pay this annual development tax ??

    Let’s be clear first: no developer is farming!

    On having a farm near urban areas should not be taxed while zoned as residential. Once it changes, windfall tax should apply. Farmer still makes decent money and far far more than if his farm was in a very rural area but not obscene money paid for by hundreds of home owners


  • Registered Users Posts: 18,855 ✭✭✭✭Donald Trump


    Markcheese wrote: »
    That's grand but what if I own a farm , genuinely am a farmer ,with development crowding around my land - do I have to pay a development tax every year
    Or ,say I'm a developer who has bought a large farm as a land bank , I still farm it ,so don't have to pay this annual development tax ??




    Once it is zoned as development land.



    There would obviously have to be an opt out where there could be a submission made that a person does not want the land to be rezoned. But in general, there is quite a bit of work involved in getting land rezoned. The very odd person might have it done for them for "free" because the neighbour next door does the work to get their bit though. But in general it's not something that is done against an owners wishes




    Would a developer try to change the zoning back to agricultural to save the levy? Possibly, if they were stupid, but if they do that and housing in needed then somewhere else can be zoned for the development then and it can take place in other areas...perhaps changing the original zoning to greenbelt....




    The issue is now that if there are 100 acres zoned at the edge of a town and the developer is just squatting on that, and if a new local authority development plan is proposed, well there is a "plausible" objection against any other rezoning because "shure isn't there already enough rezoned land sitting there not being used - we shouldn't be rezoning more".


  • Registered Users Posts: 8,412 ✭✭✭Markcheese


    Smouse156 wrote: »
    Let’s be clear first: no developer is farming!

    On having a farm near urban areas should not be taxed while zoned as residential. Once it changes, windfall tax should apply. Farmer still makes decent money and far far more than if his farm was in a very rural area but not obscene money paid for by hundreds of home owners

    No big developer is farming , but many have working farms, ! And I know a few smaller developers ( used to be just called builders 20 years ago ,,) who do farm.

    Maybe an area plan could designated x percentage of an area to be residential , x amount commercial, x percentage green space , if you get in early with planning or a definite zoning then you get start paying a development tax ..

    Slava ukraini 🇺🇦



  • Closed Accounts Posts: 117 ✭✭zf0wqv9oemuasj


    brisan wrote: »
    I have said the following in numerous threads on here
    SF have said they will use a magical money tree to borrow to build houses
    FFG laughed at the idea that the magical money tree existed
    Along comes Covid and hey -ho FFG find the magical money tree and borrow billions for social welfare and grants

    I’m afraid you simply cannot compared SF daft policies to the current covid situation. All if Europe is borrowing like crazy at 0% or even negative interest rates to try manage the biggest crisis in many decades.

    This cannot be compared to finding the money to pay for all these SF promises in normal times.


  • Registered Users Posts: 17,834 ✭✭✭✭Idbatterim


    I’m afraid you simply cannot compared SF daft policies to the current covid situation. All if Europe is borrowing like crazy at 0% or even negative interest rates to try manage the biggest crisis in many decades.

    This cannot be compared to finding the money to pay for all these SF promises in normal times.

    nonsense! we cant afford proper metro or anything in dublin it seems, for absolute pittance in the scheme of things, it would also massively improve housing supply. Along comes covid and a blank cheque is avaialble, its an absolute farce!


  • Registered Users Posts: 5,322 ✭✭✭JustAThought


    <SNIP>


  • Registered Users Posts: 2,242 ✭✭✭brisan


    I’m afraid you simply cannot compared SF daft policies to the current covid situation. All if Europe is borrowing like crazy at 0% or even negative interest rates to try manage the biggest crisis in many decades.

    This cannot be compared to finding the money to pay for all these SF promises in normal times.

    Weather I agree with you is irrelevant
    Have a look at the threads about people struggling to buy a home
    As I have said
    FFG housing policies do not work
    SF housing policies may not work
    Young voters may take the risk


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