Compulsive Hoarding

at

screen-shot-2016-10-11-at-13-04-44

Minister for Finance Michael Noonan in the Dáil, on October 11, delivering his sixth budget speech since 2011

Minister for Finance Michael Noonan has delivered six budget speeches since 2011.

On October 14, 2015, in relation to Budget 2016, he said:

“There will be no return to the past where tax incentives for developers drove supply.”

On October 11, 2016, in relation to Budget 2017, he said:

“There is an acute shortage of new houses being built in Ireland and I am introducing a Help to Buy Scheme to address this problem.”

Further to this…

First-Time Buyer writes:

No one would deny that we have a housing and homelessness problem. However despite house prices increase ranging from 20% to 50%, there has been very little increase in output.

So what is the problem?… Land hoarding.

Brendan McDonagh recently told the Housing and Homlessness Committee that since the start of 2014, NAMA has sold land that could provide up to 20,000 units – but just 5% of that has so far been delivered in new homes.

In addition, local councils have zoned enough land to provide for 16 years’ demand but many of these sites are not being developed because owners are holding onto sites in the expectation that prices will rise, allowing them to maximise profits.

Unfortunately, councils have no legal powers to force owners of zoned lands to build, even if planning permission is in place and demand for homes is high.

The 3% annual level on unused development land that was introduced in the Urban Regeneration and Housing Act does not take effect until three years after the land is identified as being suitable for housing and the earliest owners will have to pay is 2019.

Furthermore, the CGT exemption that was brought in 2012/2013 allows people to buy land, hold it for seven years and not pay any tax on its sale. So, rather than selling the land people are sitting there waiting until 2019 before they’ll release it to the market.

Even at an individual level, the Government has ensured that properties are passed from one wealthy generation to the next rather than be placed on the open market.

The Government increased the inheritance tax threshold by 11% to €310,000 and Noonan has refused to close an openly abused loophole which allows parents gifting homes worth €1m or more to their children and avoid tax.

So, rather than address the supply side issues, the Government has decided to introduce a Help To Buy Scheme. This will do nothing to address the supply side constraints and, according to Davy’s economists, will simply push up house prices next year and the following year.

The best part though is that in 2015 the same Government commissioned an ERSI report entitled “Tax Breaks and the Residential Property Market” in which they concluded that “tax breaks aimed at stimulating house and apartment building should be avoided”.

The Governor of the Central Bank, Philip Lane, is one of the many critics of the new Help To Buy Scheme and has said that it will end up serving as a subsidy for builders…

Anyone?

 

Sponsored Link

23 thoughts on “Compulsive Hoarding

  1. phil

    Are there no developers in the UK that could come here build?

    Maybe they consider this place too corrupt ….

  2. jambon

    This seems consistent with the government’s housing plan: DO NOTHING THAT WILL MAKE AN OUNCE OF DIFFERENCE TO ANYTHING EVER.

  3. DubLoony

    A bloody great fat tax on derelict land – use it or lose it.
    So annoyed by the amount of derelict land around for years.

  4. Mourinho

    I don’t know many developers that can buy land in January 2014 and deliver houses to market by October 2016.

    A tax on derelict land and buildings might work.

    Better still to stop taxing the arse out of property.
    VAT and stamp duty refunds for any house less than 2000 sq/ft and under €200k would help.

  5. Zaccone

    A tax on unused land is the very obvious solution. It would raise revenue for the government, increase the supply of housing, and increase employment in the construction sector.

    The only people who suffer are property speculators trying to maximise their gains from the land. But what sort of government would put their demands over all else?

    Oh.

    1. 15 cents

      completely the right solution .. but if these are the guys the gov gave cheap deals too, they obviously are paly with them and would never implement a measure that would upset them. remember, the gov dont work for the people. never will.

    2. scottser

      tax on derelict property doesn’t go far enough. it should be subject to compulsory purchase and part 8 planning to erect rapid build housing if it’s lay vacant for more than 5 years.

  6. realPolithicks

    The local councils should be building homes which can be rented to people who need a home. This worked very well for many decades and would work again now.

  7. Junkface

    They should also put a HUGE tax on Foreign Property buyers like they did in Vancouver to halt their property bubble. How many new homes will actually go to Irish people in dire need and not just more foreign property speculators?

  8. Turgenev

    It’s not just land; I walked past several houses today that have been empty for many years.
    One is a three-storey early Victorian redbrick house on a leafy square where boys from a private school practise rugby. It could house three families. The perky yellow doorway calls attention away from the rotting windows; the back garden is chest-high in vegetation, and the steps that once led to the kitchen return at the back have long since fallen away and been removed.
    One is a nice little corporation house opposite a home for the terminally ill; its grimy lace curtains conceal the fact that no one has lived there for years.
    And a row of houses, blocked up, beside a small park; they were rumoured to have been sold, but there’s no sign of anything being done with them; they’re still faceless and cemented-up, each a house that could be a home for a family.

  9. Truth in the News

    County Councils and Local Authorites have powers of Compulsory Purchase
    under legislation dating back to 1919 to aquire land for housing and in the interest
    of the common good.

  10. Kolmo

    In a property speculator-led economy, (and political system..) the problem is land hoarding, is it?
    Daylight is caused by the rotation of the Earth in relation to the Sun and bears take dumps in forests.

Comments are closed.

Sponsored Link
Broadsheet.ie