Mick Clifford: Strategy is a gentle squeeze when the housing crisis really needs radical action

Housing For All will gently skim profit from private landowners, when affordability is the real crux of Ireland's housing crisis

The Government's new housing strategy has positive aspects — but it only puts a minor squeeze on property owners, when what we really need to see is ground being broken and houses being built. Picture: Larry Cummins

Darragh O’Brien rolled the dice on Thursday. The Minister for Housing is gambling that his Housing For All strategy will save Fianna Fail’s bacon at the next election. Of course he and his party leader, Taoiseach Micheál Martin, want to solve the housing crisis for society at large. To do so would be to leave a lasting legacy. But they also know that if a major dent is not made in the crisis, their party is probably toast the next time the country goes to the polls.

The plan is ambitious and innovative but then so was its predecessor, Rebuilding Ireland, launched in 2016. That was an abject failure as evident from the worsening crisis since then. Noticeably, the website for Rebuilding Ireland and associated links on the Government’s portal was wiped over the last week, much of it replaced with the bright new, shining Housing For All. 

This approach to out-of-favour plans resonates with that of various dictatorships where the images of executed or imprisoned former leaders are removed from public display in order to avoid reminders of the previous regime. Rebuilding Ireland is dead. Long live Housing For All.

Two encouraging elements in the plan

Two elements in O’Brien’s plan are encouraging. The ramping up of the provision of public money — effectively doubling existing investment in public housing from €2bn to €4bn per annum — is to be welcomed. This was not a radical step. All observers, including notably the ESRI, had stated that this was the least amount required in order to begin addressing the crisis.

The other element that appears to be present this time around is political will. The Coalition’s success depends on making housing some way affordable for ‘generation rent’ and available for those on the lengthening public housing waiting list. That kind of political imperative could work wonders in freeing up the various planning and procedural blockages that are a feature of housing. It wouldn’t be a magic wand, but a plain old stick could produce some of the results in the delivery of houses.

The apparent political will to get things done properly, however, only goes so far. If this were really considered a crisis in government, one might reasonably have expected something radical to tackle affordability, the real problem at the moment.

As housing policy analyst Lorcan Sirr puts it about the general thrust of policy with the current Government: 

A lot of what is being done is helping people to afford what is on offer rather than making what’s on offer more affordable. 

One example of this is the crucial element of the sector, the price of land. We do not know the exact price of land on which houses are built because there is no land price register. What we do know is that once a local authority deems that land be rezoned for housing in the public interest, the private interest that owns the land sees the price of their holding balloon in value. This massive uplift feeds into the unaffordability of homes. In effect, prospective homeowners are contributing to the hugely disproportionate profits accruing to landowners for doing absolutely nothing other than speculating.

Homes would be far more affordable if the price of the land on which they were built was not artificially increased. This was recognised in the Kenny Report published in 1973, which recommended that rezoned land be valued at the agricultural price plus 25%.

John Kenny, who chaired the committee, was not a radical socialist, but a High Court judge appointed to the bench by Fianna Fáil and later promoted by Fine Gael. His proposal was a modest measure in attempting to rebalance a system in which a small number of individuals became hugely wealthy by piggybacking on the public interest.

In 2009, the government introduced an 80% windfall tax on rezoned land as an attempt to address some of this. The measure was pushed on a weakened Fianna Fáil by its partner, the Green party. Five years later, a Fine Gael-led government, heavily lobbied by the construction industry, dumped the tax.

Now Housing For All is taking a run at it. O’Brien’s plan includes a measure called land value sharing (LVS). This, the plan says, “is a fundamental transformation to the planning and land value system in Ireland that has been identified since the 1973 Kenny Report”.

The report sets out how the land increases in value when rezoned.

The increased value goes to the landowners, who get higher prices if they sell to a developer. The Government’s LVS measures will ensure that this additional value is shared in a fairer way with the state and that the community will benefit as a result. 

This is unvarnished spin, portraying the measure as a nod in the direction of Kenny. It is nothing of the sort. Kenny attempted to make housing more affordable. Darragh O’Brien’s initiative simply involves the State taking a share of the profits in the rezoned land, which will continue to push up the price of houses built on it.

Treading softly across landowners' Lotto dreams

The wodge taken by the Government will then be invested directly in housing and ancillary services, but homes will be no more affordable. Instead, the plan treads softly across the Lotto dreams of landowners, gently squeezing the profits they make on the back of the public interest. A radical step, one with an eye on the future and the centrality of housing in society, would have either embraced Kenny or a variation on the 1973 report.

Housing For All exercises similar gentle squeezing of landowners’ power to dictate housing needs with the proposed vacant property tax.

This is designed as a toll on owners who are hoarding vacant or zoned sites in order to manipulate the market. The concept is positive and is a follow on from the vacant site levy (VSL) introduced in 2018.

The VSL was largely a boon for lawyers as the legislation was designed with enough caveats and clauses to keep a battery of lawyers in jam for months. The result was that the tax take didn’t come within an ass’s roar of projections, with most landowners finding a way to avoid it. Many local authorities effectively gave up pursuing it as a bad job.

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Now, son of VSL is here with the vacant property tax. But wait. The plan says the intention is to “collect data on vacancy with a view to introducing a new Vacant Property Tax”.

That’s the kind of language to bring solace to anybody who may have thought themselves liable for the tax. Don’t worry lads, it might never happen.

So it goes with Housing For All. A good plan, not a great plan; something for everybody but nothing to discommode those who have the power to dictate who will be housed and when.

Time will tell whether it is the answer or just another pitstop on the road to nowhere in particular.