Labour bill aims to reduce price of building land

THE price of land for building should be capped at just 25% above its existing un-zoned value, according to the Labour Party.

The party also wants to tackle land speculation by granting compulsory purchase order powers to local authorities and introduce a punitive capital gains tax on hoarded land.

Publishing a bill to control the price of building land, Labour environment spokesman Eamon Gilmore said measures to control the price of building land were essential to bring down the price of housing if young families were ever to have any hope of owning their own homes.

“The cost of a site now constitutes between 40% and 50% of the price of a house.

“That means that the purchaser of an average house is paying over €100,000 to whoever owned the site, which was probably worth little more than €1,000 in its original agricultural use. There is no excuse for allowing this situation to continue,” he said.

The proposed cap is in line with the recommendation made in the Kenny Report published 30 years ago and will also cap owned land at its current value.

While the party was planning to bring forward these proposals anyway, the Labour announcement yesterday at their parliamentary party seminar in Wexford coincided with the revelation that a senior Fianna Fáil figure stands to make a profit of up to €8.5 million after his land in Co Louth was rezoned.

The decision by Louth County Council, controlled by Fianna Fáil, to rezone 47 acres of land owned by Donal Kinsella, a property developer and FF activist, increased the price of the land from around €10,000 an acre up to around €200,000 an acre.

According to Mr Gilmore, the situation in Louth is a good example of what the Labour Party bill is aiming to deal with. If Labour’s proposals were adopted and passed into law, he said the law could be implemented retrospectively, thereby reducing the price of this particular land to just €12,500 an acre.

Under his plan, the profit would be significantly reduced to just under €120,000 in this case.

The property manager for Mr Kinsella yesterday rejected suggestions his client was involved in a typical Fianna Fail ‘rip-off’ property deal.

Sean McCormack said the media had taken a typical anti-Fianna Fail slant in the way the story was broken.

The fact was that 97% of those involved in a Dunleer poll recently had voted in favour of a factory village in their area.

In addition, he said, the five mid-Louth councillors had voted unanimously for the land rezoning.

Labour’s bill will also allow local authorities to step in and force hoarded building land to be used by giving councils the power to purchase the land compulsorily and release it to builders who want to use it.

The party also want to reintroduce the 60% rate of capital gains tax on the sale of hoarded building land.

The tax rate was originally brought in by the Government in 1998 after the Bacon Report, but was subsequently dropped after lobbying from developers and builders, Mr Gilmore said.

“The original intention was to reduce the capital gains tax to 20% for a period of time and then impose a 60% rate on unused building land in order to encourage developers to release land, especially in urban areas,” he said.

According to Mr Gilmore, the party was confident the bill would achieve its objectives and greatly assist in bringing the price of housing under control.

“We are also confident on the basis of the legal advice to us that the bill will be enacted within the existing constitutional framework and that no constitutional amendment would be required,” he said.