Reducing the appeal of land hoarding

Sir, – Further to “Residential land tax will unjustly penalise many landowners while pushing up the price of housing” (Business, Opinion, December 5th), the general thrust of Keith Lowe’s article on the “vacant sites tax” is that builders are in considerable difficulty coping with a dysfunctional planning system and are now saddled with a residential-zoned land tax. The danger, according to Mr Lowe, is that the additional cost resulting from the tax will increase development costs and may result in increased house prices for young buyers.

While I would have sympathy for any business facing the burden of a new tax, I wonder whether Mr Lowe’s concerns regarding the impact of the tax are correct. Cost is obviously a factor in the determination of house prices but the key factor is affordability.

It stands to reason that if cost takes house prices beyond affordability then there will be few houses built.

It is interesting to note that the one cost component in the construction of new houses which presents the possibility of real flexibility is the site. The price of development land is not cast in stone. In that regard a residential-zoned land tax may prove to be a positive insofar as it will inevitably make the hoarding of development land less attractive and logically make the owners of such land more amenable to selling at prices which will attract builders.

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The ownership of zoned development land is not an open book. Certainly it is not all owned by builders and developers. The cyclical nature of the property market (particularly in relation to land for housing) has always attracted investors seeking to benefit from crisis sale situations and the possibility of capital gains as markets recover.

The cost of land as part of the development process is critical. Any measure that reduces the attractiveness of land hoarding and, putting it bluntly, encourages sales has to be seen as progressive and beneficial to society. – Yours, etc,

LEO ROCHE,

Rathmines,

Dublin 6.