Sunday 21 December 2014

Rift in Coalition over plan to tax developers sitting on rezoned land

Proposal a key element of new homes fast-track policy

Fionnan Sheahan Group Political Editor

Published 27/02/2014 | 02:30

There is a housing shortage in Dublin

DIVISIONS are emerging in Government over plans to bring in a punitive tax on developers who are sitting on zoned land without building on the site.

The measure is a key part of a government plan to speed up the construction of family homes, which will be discussed at a special cabinet meeting today.

Ministers are meeting to discuss a raft of measures aimed at increasing the supply of housing and create 60,000 jobs in the construction sector.

A paper prepared for the meeting proposes giving councils the power to introduce a "vacant site tax".

SHOEBOX

Details of the plan, revealed in the Irish Independent this week, include a fast-track planning system to allow builders to change existing planning permissions to build more family homes, rather than shoebox apartments.

Reductions in development levies for builders are also proposed as councils now have income from the property tax.

The controversial requirement for builders to give one-fifth of new homes over to social housing will be reduced substantially or abolished completely.

The vacant site tax will be charged on buildings and sites not being used in urban areas and land that is zoned and planned for development but not built on.

This will particularly apply in Dublin where sites are allowed to remain idle and zoned land banks are not being built on.

The proposal is based on the belief that developers are sitting on land and not building on it.

Putting a tax on the land will result in the developers either building on them or selling the site on.

The Labour Party is in favour the vacant site tax, which is also known as a vacant land levy.

Lord Mayor of Dublin, Labour councillor Oisin Quinn, is opening a conference on the proposed vacant land levy this morning.

But some Fine Gael figures are not convinced by the measure.

"I think it's over-exaggerated as the problem. The big issue in the construction sector is the lack of finance. How are you going to raise the finance?" a government source said.

This morning's meeting will also look at the delays in infrastructure projects, in particular public-private partnerships.

The development of the motorway from Gort to Tuam in Galway and the completion of the motorway to Rosslare in Wexford are among the projects being examined.

LACK

Primarily, the meeting will focus on the residential property sector and lack of home builds.

A shortage of new housing in Dublin and other urban centres is causing property prices to bubble as demand for family homes far outstrips supply.

Investment in water services will be doubled – through "off balance sheet" borrowing for Irish Water that won't impact on the Government's debt reduction – in order to increase the water supply water in Dublin and improve the water quality in the rest of the country.

A more formalised system of planning will be put in place to look at the housing, demographic and immigration trends.

The whole plan is aimed at doubling the amount of building activity on houses, offices and infrastructure.

The Cabinet will hold a special meeting today to discuss a draft of the plan, but decisions are not expected for another month.

The plan aims to triple the number of houses built from 8,000 new units in 2013 to 25,000 by 2016.

The Government believes the level of construction is not keeping pace with the new housing demand and infrastructure requirements of the country.

At the moment, there are 90,000 construction workers drawing the dole, with doubts over whether they can be retrained for other jobs.

The plan is aimed at doubling the level of economic activity in the construction sector. The construction industry is actually under-performing as it accounts for just 6pc of GNP.

The aim is to bring this up to 12pc and create 60,000 jobs in the process – 12,000 in the next year alone.

Irish Independent

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