Compulsory purchase orders can create financial hardship for those forced to sell their homes to make way for new roads, writes John McGrath
There is a belief among the public that those whose properties are required by the State for development are very fortunate. This belief has been created by reports of landowners becoming multi-millionaires overnight because their fields have been rezoned for housing or, as in a recent case, the building of a prison.
It may come as a surprise to readers to learn that families whose homes have been appropriated by the State for the construction of motorways do not qualify for such favourable treatment.
On the contrary, many of these families have suffered significant financial losses and severe mental anguish.
The reason for the difference in treatment is that the State applies the compulsory purchase order (CPO) system to properties which are required for motorways, but not for properties which are required for other forms of public infrastructure such as housing or prisons.
The compulsory purchase order system, as applied to the appropriation of the family home, is an extremely brutal business. It is based on the principle that while the family are entitled to "fair recompense" for the demolition of their property, they must not gain financially from the loss of their home.
The emphasis which the State places on ensuring that the evicted families do not gain a cent from their unfortunate experience means that, in practice, many of the families suffer significant financial losses.
These losses occur for a number of reasons. Firstly, the State will only pay what it considers to be the market value of an equivalent home. Typically the homes which are being demolished are unique and there is no meaningful equivalent in the local area.
In these cases, the only benchmark which the State has for determining the market price are houses of a similar size and this approach often fails to capture features of the houses which make them so cherished and valuable to their owners.
The IFA has succeeded in persuading the Government to pay a premium to farmers whose properties have been acquired under CPO in recognition of the fact that market value alone cannot adequately capture the value of the property to the farmer.
However, the Government has refused to extend this payment to the non-farming family home.
The State will pay what it calls a "disturbance allowance" but this is usually quite modest. In my case it amounted to 8 per cent of the estimated market value of my home. There is not a great deal left when one pays for removal and storage expenses, re-stocking the garden and the other items which need to be done to try to recreate what one has lost.
The biggest financial loss by far, however, occurs because the State will not compensate the family for house price inflation while they are searching for a new home. Replacing a home is not like buying a new car; it takes time to find a suitable property especially as most families, for obvious reasons, wish to stay in the local area.
In these days of spiralling house prices, no one in their right mind would sell their property without first arranging the purchase of their new home. Yet that is exactly what the State forces these families to do.
The losses occur because the State insists on only purchasing the homes at or close to the time the notice to treat - the eviction order - is served and it then freezes the purchase price at that point.
It is often the case that there are not any suitable houses available in the local area when the notice to treat is served. When this occurs, inflation will rapidly erode the real value of the price paid by the State to the extent that within a relatively short time the evicted family will not be able to afford to purchase a property equivalent to the one that they have lost.
That is exactly what happened to me. My 150-year-old home, Kilboy House, is to be demolished by Wicklow County Council this summer to make way for a motorway.
The notice to treat was served in May 2005. The recent Permanent TSB house price index shows that prices increased by an average of 15 per cent over the past 12 months. However, the rate in north-east Wicklow where I live has been significantly higher than the national average. As I was paid €600,000 for my former home - the State's valuation of a 157 sq m (1,700 sq ft) house with period features, large lofted outhouse on over half an acre of gardens containing rare plants - I estimate that I have lost at least €150,000 while searching for a new home.
These losses could be avoided if the State adopted a more flexible approach. There is usually a very long period - four years in my case - between the time the local authority chooses the route for the motorway and the serving of the notice to treat. Invariably suitable and affordable houses become available in the local area during this time. If the State purchased these properties by agreement with the families, they could become their new homes without any financial loss occurring.
Unfortunately, as I know from my own painful experience, the State will not assist families in this way. A suitable property became available in my local area in March 2002 and I asked my local authority to purchase the property, using a combination of the market value of my home at that time and my own funds. The National Roads Authority, which is the budget holder, refused to provide any money to the local authority for this purpose, despite a written request from me.
I again wrote to the National Roads Authority (NRA) in March 2003 pointing out the problems posed by rapidly rising house prices and pleading with them to buy my house so I could immediately buy an alternative property without incurring any losses. The NRA responded in May stating that "no allocation is available for purchase of property in advance of the normal compulsory purchase order procedures".
I immediately took my case to the All-Party Oireachtas Committee on the Constitution which was at that time considering the issue of private property rights. In two written submissions and one oral submission, I urged the committee to recommend indexing the market value of houses seized by the State under compulsory purchase order, to the local house price inflation rate while the evicted families were searching for a new home.
The committee declined to accept the recommendation in that specific form, but members assured me they would include a recommendation to protect families whose homes were the subject of a CPO against incurring such losses in their report.
The report of the committee was published in April 2004 and they duly recommended that the State should pay a premium of 25 per cent in addition to market value to protect people from the possibility of incurring financial losses, and bluntly warned the Government that such a payment was necessary "if only to repel any possible constitutional challenge". The Government to date has ignored that warning.
Families whose homes are being seized by the State under compulsory purchase order are being asked to make an enormous personal sacrifice for the public good. The least the Government could do is to facilitate them in their search for an alternative home by adopting a more flexible and humane approach.
As for my future, I have decided to try to build a home in the area and I have a planning application with my local authority to that effect. I hope there may yet be a happy ending to this saga.