New housing plan to allow State recoup part of land value increase after rezoning

Land value sharing is seen as a way to rein in property speculation and cool the market

Housing for All plan is expected to set a goal of delivering 33,000 houses a year by 2025. Photograph: The Irish Times

Housing for All plan is expected to set a goal of delivering 33,000 houses a year by 2025. Photograph: The Irish Times

 

Property owners and developers will have to pay the State up to half of the increase in the value of land when it is rezoned for housing under a key measure to be unveiled in the Housing for All plan.

It is understood senior ministers have agreed that “land value sharing” will be included as part the Government’s major plan to tackle the housing crisis.

The Housing for All document is set to be published after a Cabinet meeting to sign off on the final details on Thursday.

Land value sharing is seen as a way to rein in property speculation and cool the market, while also providing funds for the State to invest in housing.

Similar measures were proposed as far back as the early 1970s in the Kenny report, a landmark document on controlling property prices, but were never advanced.

The aim of the initiative is to ensure the State gains from significant increase in the value of private land that arises from zoning and investment decisions by public authorities. Government sources have previously suggested such funds could be used for spending on infrastructure and social and affordable housing.

The Housing for All plan is expected to set a goal of delivering 33,000 houses a year by 2025, though the split between public and private and social and affordable has not yet been revealed.

Affordable housing is to be delivered through a shared equity scheme but also a separate Local Authority Affordable Purchase Scheme.

Opposition TDs have criticised plans for the shared equity scheme, aimed at boosting home ownership, which would see the State taking a stake of up to 20 per cent in the purchase of a new home in a bid to bridge the affordability gap. It will apply to homes costing as much as between €450,000 and €500,000 in parts of Dublin. The caps are to be lower in rural areas.

Minister for Housing Darragh O’Brien previously defended the price caps in the face of Opposition claims this did not amount to affordable housing, saying they were based on the median prices in all of the regions.

Homes to be delivered under separate scheme where local authorities would be empowered to build or acquire afforable homes are to cost an averge of €250,000.

Housing for All will include an annual target for the delivery of cost rental accomodation - where rents are based on the cost of building, managing and maintaining the homes, and not market rates.

A proposed vacant property tax is on the table for inclusion in the plan as is an incentive for people who want to downsize to smaller homes.

A plan code-named Project Tosaigh would see the Land Development Agency play a role in activating thousands of dormant planning permissionss.

The Department of Housing has also earmarked land controlled by commercial State companies for the expansion of the planned home-building programme, including sites controlled by CIÉ and the ESB.

The Government is also advancing plans to transfer some 1,400 social housing units to the Land Development Agency from the National Asset Management Agency (Nama).