Thursday 26 April 2018

Government to punish 'land-hoarding developers' who fail to build on sites

Almost 21,000 new homes are needed every year but the number coming on stream remains low. Photo: Ben Birchall/PA Wire
Almost 21,000 new homes are needed every year but the number coming on stream remains low. Photo: Ben Birchall/PA Wire
Paul Melia

Paul Melia

The Government is to punish landowners who fail to build homes on zoned lands - by classifying alternative sites nearby as suitable for housing.

The move is aimed at forcing land hoarders to build homes close to town centres and essential services, and to boost housing supply.

Councils have been told that if land is being hoarded and left undeveloped, then nearby sites should be zoned for housing instead.

The move will effectively reduce the value of sites being hoarded by some developers. Many of these sites were bought at the height of the boom.

Their losses would be further compounded if they are later refused planning permission to build, on the basis that housing demand is being met from the newly-zoned lands.

The new policy is aimed at tackling the housing crisis in built-up areas near Dublin, in the commuter belt, and in large provincial towns with a proven need for houses and apartments.

Despite the Housing Agency saying almost 21,000 new homes are needed every year just to keep pace with demand, the number of homes coming on stream remains stubbornly low.

Last year, fewer than 13,000 were constructed. So far this year, just over 6,600 have been delivered.

In an effort to ramp-up delivery, councils have been told to zone more land - despite there being sites capable of meeting 16 years' demand already available.

A 2014 survey from the Department of Housing found there was 17,434 hectares of residential zoned lands which could be used to build 414,000 homes. But many of these sites in "key demand areas" are not being developed because owners are holding onto sites in the expectation that prices will rise, allowing them to maximise profits. In other cases, they are tied to receiverships and subject to large outstanding loans. Sourcing the finance needed to build houses is also an issue.

A circular letter sent from the Department to the country's 31 local authorities says that in many cases, the sites have been zoned "for many years" but are not being made available for development.

Read more: Rise in planning appeals 'reflects an increase in building activity'

It says the city or county development plan, which dictates the zoning which applies to all land in a council's area, is designed to ensure an "effective supply" of development sites so that housing can be provided in a "timely and affordable fashion".

But councils have no legal powers to force owners of zoned lands to build, even if planning permission is in place and demand for homes is high. Sources said that an option "on the agenda" was giving local authorities increased powers to seize land needed for housing, but lying idle, using ramped-up compulsory purchase powers.

In the meantime, the Department of Housing says councils should consider amending their development plans and zone additional lands where building is likely to occur.

"Despite the large reserve of zoned lands across all planning authorities, not all of that land would appear to be readily available to the broad range of housing providers," it says.

"It is often reported that landowners may not sell their lands to housing providers until prices match their expectation, regardless of what might be a realistic land price in terms of the overall price of housing that it is economically viable to provide on those lands."

It adds that councils should examine if other "well-located and ready-to-go but unzoned lands" should be considered for rezoning, "where the prospects of making available for development of such alternative lands is better".

Additional sites will only be zoned if the landowner enters into a formal agreement to begin delivering homes after the rezoning process is complete.

Sources said varying the development plan could take as little as three months. They added that owners of unused land could later be refused planning permission, as demand had been met from the new zoned lands. In cases where landowners sought to extend an existing approval, permission could be refused on the same basis.

The Government's housing plan promises to deliver 25,000 units a year by 2020.

Irish Independent

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