Housing crisis: Land sale to highest bidder must ‘be reviewed’

Selling land for top price not yielding best result, says society of chartered urveyors

The price of development land can constitute more than 40% of the cost of a residential development. Photograph: Alan Betson/The Irish Times

The price of development land can constitute more than 40% of the cost of a residential development. Photograph: Alan Betson/The Irish Times

 

Government should reconsider its policy of selling land to the highest bidder for building affordable housing, the Society of Chartered Surveyors Ireland has said.

Selling public land for the highest price usually does not produce the best outcome for affordable housing delivery, the society has said. This is recognised in Germany, which has a stable housing market.

The price of development land can constitute more than 40 per cent of the cost of a residential development. And residential development land is rising in value at a rate of approximately 14 per cent per annum.

“Selling public land to the highest bidder for affordable housing is not working,” said the society in a pre-budget submission.

“The methodology in Germany is to value the site, then allocate it to a particular type of delivery, for example residential, and then sell it competitively, with the price fixed at the valuation level for the ‘best’ scheme,” said the society.

In the United Kingdom the concept of abandoning the usual approach of selling land to the highest bidder is being assessed.

“The pursuit of the highest offer is not always the best option for public policy. It is important that the priority objective is reached which is to deliver housing at affordable levels,” noted the society.

Supply problems

While Minister for Housing Eoghan Murphy has criticised housing delivery by local authorities, the society said that “delivery is close to the required annual target” for social housing.

However it said the practice whereby local authorities buy homes from the private sector for use as social housing, reduces the supply of affordable properties in the private sector.

The cost of delivering a standard three-bedroom semi-detached house in Dublin is approximately €330,000. This means that even a couple with an average combined incomes of €80,000 face a challenge in getting a home, said the society.

Failure to improve the situation concerning vacant housing is also a focus of the society’s submission. The Central Statistics Office has said 12 per cent of housing stock is vacant. Schemes introduced over the years to address this problem have suffered from low take-up and the society suggests that a study be commissioned to examine why this is so. A €140 million “repair and lease” fund lies largely unused.

‘Livid about it’

Meanwhile, managing director of Tegral Building Products Paddy Kelly has also expressed concern about local authority practice of buying houses in the private market so as to supply social housing. Mr Kelly is to participate in a Guaranteed Irish talk on the building sector on Monday.

“County Councils should be building houses to address the social housing issue. They have swathes of land available to them and they should be building their own houses on their own land,” said Mr Kelly.

He said his daughter is trying to buy a home and has found herself bidding against local authorities. “I’m livid about it,” he added.

He believes that Mr Murphy is correct to criticise local authorities and that they could do more to build houses. “They are saying they have a shortage of skills, but I don’t believe them.”

Mr Kelly, who is vice-president of Guaranteed Irish, said a significant number of electricians, blocklayers and carpenters who have left Ireland do not want to return because of the high cost of living .

The building sector is doing well in eastern European countries and increasing demand for construction workers here will have to be met locally. The Government needs to do more to encourage apprenticeships, he said.