(Site) Tax the bejazuz out of them…

Take a walk, or the Luas,  down Abbey street, past the Jervis Center (converted from a major hospital back in the 80s), down towards Heuston Station.   Get off at Heuston, and walk, weather permitting, back up the quays, the north quays in particular. I have been travelling this route , along that axis, since the late 1990s when we moved from leafy south Dublin to ineffably leafier north Kildare. What strikes me, and I warrant would strike anyone, is the sheer amount of vacant land. In some cases these plots have become overrun with  fully-grown mature shrubs, city gardens of buddleia and willow and hazel.  A particularly large plot is, with irony that would make Myles Na GCoppaleen bilious with envy, right beside the land registry. Google Maps tells me that this plot alone is some 50,000 sqFt.  Another plot, derelict also, is beside the pubic appointments commission, some 40,000 sq ft.  Smaller plots abound, such as a 20,000 sq ft plot on ushers island. So these three together have 100,000 sq ft of land. Right in the city center, serviced, accessed and ready to go. They have lain idle for years.  At 1250 sq ft  per apartment and allowing 15% for overage (curtain walls, entry etc) theres room for 70-80 apartments each story, and at 10 stories…well.

The same story persists in Cork, limerick, Galway, sligo, Tralee, every large and medium sized town. We have land lying idle. At the same time, we have managed a feat unique to world history. We have simultaneously a housing shortage and a massive amount, numbering in the hundreds of thousands at the upper end of estimates, of empty houses.  Rents are at a level never before seen even at the height of the madness, and that is with some degree of quasi-rent slowdown or control in place. Pity the renters when the brakes come off. We have 2000 children in emergency accommodation, homeless. This is a scandal and an affront to our humanity. But, we have a committee. So thats ok then.

House supply has all but collapsed. Having built all the houses in the wrong place the market is now building no houses in the right place. Blessed be the market.

houses2Local Authority housing, which up to the early 1990s had accounted for about 30% of the new builds, and from then to about 2010 10% has dwindled to almost nothing. We have, willy nilly and after an economic calamity caused by an overenthusiastic worship of the private housing sector, decided to place all our housing eggs in that selfsame basket.   Words are not adequate, and libel laws too loose, to speak of the folly of this action. Private housing markets in Ireland do not deliver a socially optimal mix of houses. There is a massive market failure. In the face of market failure governments, no matter how much they worship free markets, they intervene.


Houses take time. Take the 5y average of population and a 5y average house build, and from 1970-1995 we had a fairly stable relationship of about 0.5%. A population of 3.5m, a housebuild of 16,000 -17,000. Now that stands at .2%. We have a supply problem. Everybody is aware of this . We are 20,000 housing units short per annum with little evidence that these will be built anytime soon. So we have a supply problem

The leaked draft report from the Oireachtas committee on housing and homelessness , and it is as yet only newspaper reports on a leaked draft, seems to suggest that the politicians only partially grasp this.  The headline issue is one of they decrying the central bank macroprudential actions, the loan to value and loan-income ratios. These, lets recall, were they in place the last boom, would have gone a long way to cool it down. So, the central bank has taken action, appropriate and sensible action, to clamp down on any demand led house price boom. That is their job, and to critique them for so doing is perverse, given they did not do it in the last boom. Thankfully in Philip Lane they have a governor who is I  suspect mostly impervious to the bleating of politicians.

Right now we don’t have an issue with house affordability per se. We have an issue with house availability. Suggestions on reducing VAT, on more sensible (but no less stringent please) standards, all these are useful in terms of making homes more affordable. But that presumes they are built.

We know, we have known for decades, that we have an issue with land hoarding. We need to intervene in the market at the source of failure – one main such is the hoarding, the non use, of land. It is seen as more potentially profitable to hold onto land in hope of its value rising than to build homes. Lets have a sensible and savage land value tax. Planning permission for homes on a plot should result in rapid movement towards utilization. If after a year there is no building on the land a 10% value tax. Every 6months another 10%, and so on. This would in short order sort out land hoarding.  At the very least we would eliminate that element of supply failure from the housing value chain. We can then move to examine the other elements. If, as is claimed, it is not profitable (but might be with freed up land…) to build, then we need to move to social provision, as we did for decades, as an integral part of the mix. It is simply inexcusable, unconscionable, that we have let this fester.

The government have been like a deer in the headlights for years, facing the oncoming train. If they are overwhelmed that’s one thing. If they refuse to move as they are in thrall to ideology, that’s quite another.


a longer version of an Irish Examiner column published 11 June 2016

5 thoughts on “(Site) Tax the bejazuz out of them…


    Everyone seems to forget that the Derelict Sites Act of 1990 allows the imposition of a 3 percent levy on derelict sites, after some fairly straightforward procedural steps. It also allows for the compulsory acquisition of the sites, which is not the same thing as compulsory purchase, even though they are often confused. There are, and have been, solutions to many of our land use problems in that Act if anyone bothered to use it.
    Add a dash of lateral thinking to the statutory powers and it has the potential to be a wonderful weapon of rectification.
    I walk that same route most days, as far as Blackhall Place anyway. Imagine what 3% of those land values would yield.


  2. mike flannelly

    The median houshold income in Ireland ( according to the Daft / Trinity guy is 36,000 euro net and 45,000 gross.
    The 300,000euro house is 21 times 14,000 annual rent and is out of reach for the median Irish family.

    The max shelter needs mortgage affordable to the median Irish household seems to be 150000. (30% of net income to cover mortgage, insurance and property taxes).

    Have wages fallen behind the affordable mortgage or rental shelter needs of just Irish citizens or is it ALL European citizens?


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