Developers should divulge ‘first option’ land deals

DEVELOPERS who pay farmers money for the right to be first buyer of their land if it is rezoned for housing must be forced to declare this publicly to provide cheaper homes, Housing Minister Noel Ahern insisted yesterday.

This system is known as "first option", but the Government has no idea how much land developers have secured rights to buy for future housing throughout the country, said Mr Ahern.

"The key to cheaper houses is cheaper sites but, if some builder has taken out first options on stores of land, this will reduce the State's option to buy that land in the future and build cheaper houses," he said.

The way the system works is that developers who believe agricultural land may be rezoned for housing in the future pay farmers a fee that will allow them the first option to buy it if it is rezoned.

"It is a bad habit. Developers must be forced to legally declare their options so that we can get an exact picture of how much land they have earmarked for development and how many farmers should be paying tax on this income," the minister said.

The legal registration of options on land would also be useful to local authorities when they are being lobbied to rezone land for housing because they could see exactly who has a vested interest in it.

This is all part of the Government's campaign to produce cheaper sites and cheaper houses especially for first-time buyers.

The State's dilemma in producing cheaper houses is that it does not have a lot of land banks because ironically it has sold many of these off to private developers.

Now it has to strike a deal with these developers to get the land back at as cheap a price as possible to build affordable houses.

The All-Party Committee on the Constitution's report on how to provide cheaper housing two years ago recommended forcing developers to register their land options and forcing farmers to pay tax on this income.

But the Construction Industry Federation (CIF) which represents most developers said yesterday that they would not support the legal registration of land options being proposed by Minister Ahern.

CIF housing director Hubert Fitzpatrick said: "We view this information as commercially sensitive for both the purchaser and the vendor. When a planning application is made, it is it very clear who are the interested parties."

One of the countries biggest builders, Century Homes' chief executive Gerry McCaughey has called on the Government to follow the British example and drop the 13% VAT on new houses to help first-time buyers get on the property ladder. This would cut almost €24,000 off the cost of a new €200,000 home or €40,000 off a €300,000 home.

However, Mr Ahern ruled out axing the 13% VAT on new houses because there is no guarantee the builders would pass this saving onto the house buyer.

"Anyone who thinks the builders would take this money off a new house price is codding themselves," Mr Ahern said.