Developers who hoard land face tax crackdown

HIGH taxes must be imposed on developers who hoard land or who make vast profits on the back of rezoning decisions, if house price increases are to be curbed.

This will be the key recommendation of an Oireachtas committee report to Taoiseach Bertie Ahern next month.

Mr Ahern told the Fianna Fáil Árd Fhéis in September that the Government was determined to punish developers who hoard land and to force them to meet housing needs.

For the first time however, taxing the huge windfalls made by developers after land has been rezoned will be recommended by the Oireachtas All-Party Committee on the Constitution when it submits its report to the Taoiseach.

Mr Ahern first asked the constitution committee more than a year ago to investigate how more land could be freed up for housing without breaching the constitutional right to own private property.

Crucially, Mr Ahern's controversial proposal to cap the price of housing land is not likely to be recommended following fierce opposition from the farming lobby. But the main reason for not recommending this cap is that it would always be open to a constitutional challenge in the courts, committee chairman Denis O'Donovan said.

"The jury is still out on this but the committee is likely to reject this proposal because it would not deliver more houses owners would just go to ground and not release the land," he added.

The constitution committee will also be recommending another tough measure to increase the supply of housing land.

This will force developers who take out secret options on land to register them publicly.

Now developers can pay farmers a deposit per acre to ensure they get the first option to buy their land if it comes on the market.

Because there is no record of these secret deals it is impossible to tell how much potential housing land is tied up around our cities, Mr O'Donovan said.

"It is wrong that those who make huge profits from land hoarding and rezoning are not hit by any taxes no one has a divine right to make huge windfalls from rezoning," he said.

Both the Constitution committee report and a new ESRI report on housing, due to be published in January, will form the basis of the Taoiseach's promised legislation on tackling land hoarders.

Mr O'Donovan stressed that while it has yet to finalise the report, the committee has so far agreed on three ways to bring down house prices, including:

Imposing huge levies on developers who hoard land after the first year of securing planning.

Imposing major taxes on the massive windfalls made from rezoning because the zoning of land is not a personal asset.

Forcing developers to register the secret options they have on lands with farmers so a real picture of hoarded land can be secured.

Constitutional law expert Gerard Hogan will have two meetings with the Oireachtas committee before it finalises its report on housing. But this is unlikely to change its opposition to capping the price of housing land.

Mr Hogan has already indicated publicly he does not believe a constitutional amendment is the panacea for sorting out this problem because it can always be challenged in the courts later.