To make sure the state gets a share of the new wealth created when councillors rezone land for homes and its price shoots up, the Department of Housing says it will bring in a new law by the end of this year.
But Dublin City Council is at risk of missing out on some of this land-value sharing, says Colm Healy, a director of the Ó Cualann Cohousing Alliance, a developer of affordable homes.
The council is drawing up plans to rezone loads of sites across the city this year, as part of its new city development plan, for 2022 to 2028.
The plan, and its land rezonings, should be finished and voted through by November this year which is before the law, and any transitional period, is expected to be rolled out.
“The upshot of all this is that any re-zoning that takes place under the current cycle of new development plan will NOT attract the [land-value sharing] charge and that it will be 2028 or 2029 before it bites,” says Healy.
He is calling on councillors across Ireland to consider holding off on rezonings until new land-value sharing legislation is in place. Especially, he says, in Dublin city – where land available for development is scarce.
Said Labour Councillor Dermot Lacey, who chairs the council’s housing committee: “Anything that stops the outrageous profiteering from rezoning would have my support.”
A spokesperson for Dublin City Council didn’t respond to queries sent last Thursday about the idea to delay rezoning lands.
A spokesperson for the Department of Housing says it is up to the councillors in each local authority area to decide whether or not to rezone land.
What Is the Problem?
Many of the rezonings proposed as part of the process of drawing up Dublin’s new city development plan are appropriate, says Healy. “We do need compact development.”
He points to places like the Dublin Industrial Estate in Glasnevin, theClontarf Golf Club, and industrial estates around Naas Road that are earmarked for massive change as part of new neighbourhoods under the City Edge project as areas that should be zoned for housing.
But at the moment, if those are developed, the vast majority of the homes built there are likely to be expensive private-rentals unaffordable to those on average incomes, he says.
Social Democrats Councillor Catherine Stocker, who has been pushing for a way to zone some land in the city specifically for affordable homes, says the same.
“The problem is if we rezone the big industrial sites, what we end up with is likely lots and lots of build-to-rent apartments and a whole load of windfall profits for developers,” says Stocker.
That means land-value sharing as proposed would be brilliant, says Healy.
Because the council could use that to significantly bump up the proportion of social and affordable housing, he says.
The Department of Housing spokesperson said that the Land Value Sharing and Urban Development Zones Bill is scheduled for enactment in the last quarter of this year.
And “any necessary transitional arrangements will be applied”, they said.
It’s unclear if the department will meet that schedule though, and how long any transitional arrangements would last and what they would be, and so how long the council would have to hold off on the rezonings as a result.
Holding off on the rezonings, given that uncertainty, could leave councillors vulnerable to criticisms that they are preventing the development of homes.
But rezoning for homes doesn’t necessarily mean homes are built. “Sometimes it doesn’t result in any housing at all,” says Stocker.
As with the Chivers site in Coolock, where landowners promised affordable homes if the industrial land was rezoned, but didn’t build them instead putting the land back up for sale at a steep mark-up.
At the end of 2020, only 19 percent of homes that had been approved under strategic housing developments in Dublin were built or being built according tofigures from the housing supply coordination task force for Dublin.
Stocker says that the public should get some benefit from the upcoming rezonings, so she would fully support holding off on rezoning land any land in Dublin city for homes until land-value sharing comes into effect.
How Would It Work?
Under the proposed draft law around land-value sharing, councils would capture up to a 30 percent share of the additional value reaped by a landowner when land is rezoned to allow for more profitable uses.
That means the benefits of rezoning land to more profitable uses, like for homes “will be shared in a fairer way with the State, and that the community will benefit through improved infrastructure provision”, says a spokesperson for the Department of Housing.
The state will use its share of the increased value of the land to provide public infrastructure “including roads, public transport, schools, parks and community facilities”, says the draft legislation.
It may also, where required, include additional social and affordable housing above the minimum currently provided for in legislation, it says.
Legislation known as “Part V” says at least 10 percent of homes built in private estates should be social homes, and that is set to increase to 20 percent social and “affordable” in the coming years.
Under land-value sharing, when the owner of the rezoned land applies for planning permission to build on it, the council would have the power to grant that on the condition it gets public infrastructure to the value of 30 percent of the uplift from the rezoning, says Healy.
Councils could do deals with landowners, to get them to build infrastructure, parks, roads and affordable homes, or they could buy land off them at the existing use value, he says, which is the value before the rezoning.
“There is a similar scheme in the UK,” said Healy. “This stuff works, it’s a good thing.”
The government housing policy Housing for All states that land-value sharing is similar to what was recommended in the Kenny Report, which was published in the 1970s and promised to control the cost of land for residential development.
But Healy says it is very different. “It’s not the Kenny report.”
The Kenny Report advocated that the state purchase land before it was rezoned for housing, paying the price it was worth before the rezoning, plus 25 percent.
In the Netherlands, the state used to develop land that way, says Healy. It bought the land at its existing use value, serviced the land, putting in roads and sewerage systems and then licensed it out to the developers to build on.
It could then stipulate how much of the housing should be affordable, he says. Land-value sharing “is not as radical as that but it is an improvement on what we have at the moment”, he says.
Could It Be Done?
Lacey, the Labour councillor, said he is open to the idea of holding off on major residential rezonings until the state can get a cut of the value.
But if the councillors don’t put all these big rezonings into their development plan, will they have to wait six years until they are writing the next one, to try to push the city to grow in the ways – and places – they want it to?
Council managers proposed multiple major rezonings during the lifetime of the last city development plan, says Stocker, so she thinks they can do the same thing this time.
“It absolutely is possible to do variations after the development plan has been completed,” she says. “There would be no technical issue with holding off.”
Lacey said he isn’t certain whether councillors can propose rezonings after the development plan is published. “My understanding is that material contraventions to the development plan have to be proposed by the chief executive.”
Dublin City Council didn’t respond to queries about this.
The Department of Housing spokesperson says what to do about zoning is an issue for councillors to decide. “It would not be appropriate for the Department to comment.”