Property levies ‘could lower land prices’

LEVIES on property development have been proposed by two of the country’s stronger property representative bodies, the Society of Chartered Surveyors and the Irish Auctioneers and Valuers Institute.

They are just two of the 30 or so groups making oral submissions and part of 160 submissions to the Oireachtas committee examining constitutional changes on property rights to tackle rising house prices.

Both representative bodies, which have members involved in day to day property issues, argued that levies on land coming forward for infrastructure investment and development would contribute to the common good and common gain.

Distinguishing between such levies and a tax on the windfall gains from land rezoning, they both argued that the levies would ultimately not fuel further house price inflation.

Rather, the levies would decrease the amount developers would pay for land, as they factor it into the cost base.

Former IAVI president Alastair Adair, a Northern Ireland based academic, said the value of development land was a residual of the end value of a house, arguing on classic economists grounds that high house price cause high land value, not the other way around as is commonly perceived, a point also echoed by SCS president, Joe Bannon.

The IAVI, pointed to an unsuccessful series of government interventions into the house supply market to date and claimed that the housing market was already coming into equilibrium.

The further claimed that annual supply had increased 170% over the last ten years and was continuing to grow - up 14% for the first quarter of 2003 on last year’s already record output of new stock and a national housing stock of over 1.1 million homes.

IAVI chief executive Alan Cooke reiterated the case for a national housing forum to cover management of the whole market, not just house construction.

Apart from proposing levies , reflecting the true added market value of zoned and serviced land to cover the cost of infrastructure to be paid by the developers at planning stage, SCS president Joe Bannon said they should be combined with mechanisms to force land suitable for development on to the open market.