# Bringing down the cost of building houses through compulsory purchase of land



## Brendan Burgess (23 Sep 2021)

A few people have mentioned this to me over the years but I don't see it in the national debate.

*The problem *
A builder told me that he wants to be like any other business. He buys the inputs. He assembles a work force. He builds the houses. He sells them on. He makes a profit. He moves onto the next project.

But he needs a steady supply of ready to go sites.  It can take 10 years from buying a site to getting zoning to getting planning permission.  He is forced to be a land speculator. He is forced to finance this for years. He doesn't want to be in this business but is forced to be in it.  If it does not go according to plan, he ends up with a team of staff and no work for them to do.   Or if it's ahead of schedule, he ends up with lots of sites and not ready to develop them.

Or he can end up buying a site which never gets rezoned.

Rezoning dramatically increases the value of the land. It is very expensive for the state to then buy the land for public services such as schools and healthcare facilities.

And building a school and infrastructure  paradoxically increases the value of the land for the seller.

*The solution *

The local authority designates an area for housing development of starter homes and social housing.
It acquires the land at current use value - normally agricultural use.
It rezones the land.
It builds the infrastructure such as roads, water, and schools.
It grants the planning permission for houses.
It then sells off the "ready to go" sites to builders at market value and subject to building starter homes.
It builds social housing itself on part of the land.

*From the builder's point of view *
He is not involved in land speculation.
He does not have to have a 10 year horizon.
He needs finance for only two years - to acquire the site and build the house.
It's a lot less risky.

*From the state's point of view *
The state gets the benefit of any uplift in the value of land due to rezoning and development.
It ring fences this "development gain" for building social housing.
The state does not have to pay development land prices for building housing.


*From the first time buyer's point of view *
The site value element of their home will be lower so the cost of buying a house should fall.


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## Brendan Burgess (23 Sep 2021)

They do variations of this in Germany and the Netherlands.



			https://www.landcommission.gov.scot/downloads/5dd7d93e9a393_LANDLINES-Land-Value-Capture-Tony-Crook-Nov-2018.pdf
		


This is a long report on the topic which I am wading my way through.

Brendan


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## Mocame (23 Sep 2021)

Thanks for highlighting this Brendan.  This approach seems to work very well in the Netherlands from the perspective of supporting housing supply and also dampening house prices.

As far as I can see the main barrier to implementing it here is a practical one - local authorities have no method of funding long term land banking.  They can borrow to buy land for social housing from the Housing Finance Agency but this is traditionally short term borrowing and the interest is rolled up until the houses are built and then a grant from the Dept of Housing funds the house building and enables them to repay the loan.  If they are to assemble land banks for development over the long term and also to service this land some sort of mechanism will have to be put in place to enable them service the debt.  But this is not a complex issue and could be easily sorted out if the political will was there.

It is also envisaged that the Land Development Agency will have a land banking function so the responsibility could sit with them and not with local authorities.


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## NoRegretsCoyote (23 Sep 2021)

Brendan Burgess said:


> *The solution *
> 
> The local authority designates an area for housing development of starter homes and social housing.
> It acquires the land at current use value - normally agricultural use.
> ...


The problem here is the word "local authority". The issue is that local authorities are not much good for fixing much more than holes in the road and their powers have been progressively centralised over the years. There are "chicken and egg" questions here about whether local authorities are useless because government gives them few powers, or whether government gives them few powers because they are useless. Anyway it is what it is and there is zero hope that a small rural council could conceivably carry out a complex, multi-annual programme of land acquisition and site preparation.

If you want to do this it will have to be a state agency.


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## Brendan Burgess (23 Sep 2021)

I suppose that I am setting out the principle.  If that is agreed, then the very important details can be worked out.

Agree fully with the comments on local authorities not being fit for purpose.  So do you set up regional bodies e.g. The Dublin Regional Housebuilding Organisation.  Would it be any more competent than the local authorities?


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## Brendan Burgess (23 Sep 2021)

Mocame said:


> As far as I can see the main barrier to implementing it here is a practical one - local authorities have no method of funding long term land banking.





Mocame said:


> But this is not a complex issue and could be easily sorted out if the political will was there.



This is linked to the other problem - are the local authorities fit for purpose.

If the political will were there, then the funding could be found.  Not sure how long-term it would need to be? 
Designate the land to be rezoned and acquired. 
Leave the owner on the land until it is ready to be developed. 
If it's developed in stages, buy it in stages.


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## kinnjohn (23 Sep 2021)

what about setting it up along the lines of the old Irish  Land Commission, It was used to redistribute farmland and was abolished in 1999


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## NoRegretsCoyote (23 Sep 2021)

The public (or maybe just the media) is very sensitive to the state seeming to make people rich by either buying their land or rezoning their land.

Think of the planning tribunals, Nama, etc.


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## Brendan Burgess (23 Sep 2021)

So this was, more or less,  proposed by the Kenny Report in 1973 but no government has properly tacked the issue.









						Could the Kenny Report solve the Irish housing crisis?
					

The 1973 report contained measures for controlling the price of building land in the interests of the common good




					www.rte.ie
				




And the NESC in 2018 









						Urban Development Land, Housing and Infrastructure: Fixing Ireland's Broken System - National Economic & Social Council
					

Press Release To view the Press Release click here Social Media   Report Tweets  #NescLandUse   Follow us @nescireland



					www.nesc.ie


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## RetirementPlan (23 Sep 2021)

I'd wonder if there are enough sections of land available in serviceable locations for this kind of approach. Will they all end up being 'out of town' developments with no public transport links, leaving people car-bound for every movement?

Some builders just build. Builders like Walls and SISK build under contract to  developers, so they don't get involved in the risk/reward of development land. Should builders not be sticking to the knitting and taking on building contracts at best price?


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## NoRegretsCoyote (23 Sep 2021)

RetirementPlan said:


> I'd wonder if there are enough sections of land available in serviceable locations for this kind of approach. Will they all end up being 'out of town' developments with no public transport links, leaving people car-bound for every movement?


With Ireland's planned population growth you'll need new towns anyway.


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## RetirementPlan (23 Sep 2021)

NoRegretsCoyote said:


> With Ireland's planned population growth you'll need new towns anyway.


I wouldn't disagree, though I haven't seen many moves in that direction - maybe Cherrywood, which is reasonably well connected for public transport. 
We really can't be building more out-of-town estates, connected by roads with no footpaths, no cycle lanes and no buses.


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## Peanuts20 (24 Sep 2021)

Interesting how you omit one person in your original statement. the landowner. don't they count in all of this.? How do you decide the true market value of the land?

Secondly, I'm not convinced any or Ireland's builders would pass the saving's back to the house buyers. After all, if new houses are being snapped up at current prices, why would they need to cut those prices?. They don't care who buys them so some mechanism would need to be put in place to force builders to reduce their prices and not simply pad their margin. 

In the 1991 census we had 329 dwellings per 1000 people in Ireland, in the 2016 census, we had 421 dwellings per 1000 people in Ireland. More importantly, in 2016, we had nearly 200000 vacant dwellings (that excludes holiday homes, another 60k). Surely the focus should instead be on bringing this vacant stock back to the market? I know some if it will be ghost estates and may only be fit for demolition but it would free up sites and in a lot of cases, the core infrastructure is already in place. 

Imagine what bringing even half the vacant stock back to the market would do for housing demand in Ireland?. we also need to be encouraging more in-town living, more over the shop appartements. Instead of buying sites out of town, buy up the derelict sites in town and build on them?


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## dereko1969 (24 Sep 2021)

NoRegretsCoyote said:


> With Ireland's planned population growth you'll need new towns anyway.


You won't. The National Planning Framework ensures that population growth is focussed on our cities and large towns, not one-off housing or "new" towns.


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## Purple (24 Sep 2021)

dereko1969 said:


> You won't. The National Planning Framework ensures that population growth is focussed on our cities and large towns, not one-off housing or "new" towns.


The English just don't allow the same amount of ribbon development. If you live in a rural area and want to build  a house you should have to build it in a village. That ensures the village survives and the provision of services is much cheaper.


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## NoRegretsCoyote (24 Sep 2021)

Brendan Burgess said:


> Agree fully with the comments on local authorities not being fit for purpose. So do you set up regional bodies e.g. The Dublin Regional Housebuilding Organisation.


The Land Development Agency (in a very slow set up) should be able to do this.


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## Peanuts20 (24 Sep 2021)

Purple said:


> The English just don't allow the same amount of ribbon development. If you live in a rural area and want to build  a house you should have to build it in a village. That ensures the village survives and the provision of services is much cheaper.



No, they don't. And yet, their village communities are dying as services are closed down because the surrounding area is denuded of people.


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## joe sod (24 Sep 2021)

NoRegretsCoyote said:


> With Ireland's planned population growth you'll need new towns anyway.


Surely with lack of housing, the lack of building, the lack of builders maybe the "planned population growth" needs to be slowed down. There are already 5 million people now , during the eighties it was around 3 million thats quite a hectic population growth. Looks like we can only handle 50,000 a year growth


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## Purple (25 Sep 2021)

Peanuts20 said:


> No, they don't. And yet, their village communities are dying as services are closed down because the surrounding area is denuded of people.


Have you been in the South of England recently? It’s thriving.
If you want a village to survive people have to live in it, not in some vulgar McMansion a mile away.


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## Baby boomer (25 Sep 2021)

Not all one-off housing is McMansion stuff.  You can have a tastefully designed dwelling that blends in well to its setting. I live almost a mile away from a village and spend a fair bit of money on local services.  Sure, I'll go the ten miles to the big supermarket for the weekly shop, but so does everyone else in the village!


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## Peanuts20 (26 Sep 2021)

Purple said:


> Have you been in the South of England recently? It’s thriving.
> If you want a village to survive people have to live in it, not in some vulgar McMansion a mile away.


South of England is thriving to a point, but it is a commuter belt with local people forced out because they can't afford to buy in the area they were born and raised in as 2nd home owners and commuters swoop up the houses. Try a village in Yorkshire or the Midlands and they are dying. Even those down the South West are dead outside of the holiday season


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## Purple (27 Sep 2021)

Peanuts20 said:


> South of England is thriving to a point, but it is a commuter belt with local people forced out because they can't afford to buy in the area they were born and raised in


The same thing applies to many cities. Why is it okay for urban dwellers have to move out of the areas they grew up in because they are priced out of the market by people moving into those areas but it's a big deal when it happens in rural areas?


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## Mocame (27 Sep 2021)

Tipperary County Council has started to provide serviced sites on the edge of villages which can be purchased by people who want to build their own home.  These sites are within walking distance to the village shop, school etc.   Initiatives like this are the way to go I think, it will stop ribbon development, bring some life to the villages and also enable people who want to cut costs by self building to do so.


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## kinnjohn (27 Sep 2021)

Purple said:


> but it's a big deal when it happens in rural areas?


Can you explain What you mean please,


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## Purple (27 Sep 2021)

kinnjohn said:


> Can you explain What you mean please,


The majority of people born in relatively affluent areas of Dublin can't afford to live there. Where are the cries of unfairness for them? I haven't heard calls to a ban on culchies moving to Dublin.


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## dereko1969 (27 Sep 2021)

joe sod said:


> Surely with lack of housing, the lack of building, the lack of builders maybe the "planned population growth" needs to be slowed down. There are already 5 million people now , during the eighties it was around 3 million thats quite a hectic population growth. Looks like we can only handle 50,000 a year growth


Are you proposing a "one-child" policy or is there a dog whistle being blown here? For our pensions to be paid for and for people to wash us in our nursing homes in 20 years time there needs to be population growth, it needs to be planned for as in providing houses in cities and towns.


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## NoRegretsCoyote (27 Sep 2021)

Mocame said:


> Tipperary County Council has started to provide serviced sites on the edge of villages which can be purchased by people who want to build their own home.


Is there any public info on this?


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## joe sod (27 Sep 2021)

dereko1969 said:


> Are you proposing a "one-child" policy or is there a dog whistle being blown here? For our pensions to be paid for and for people to wash us in our nursing homes in 20 years time there needs to be population growth, it needs to be planned for as in providing houses in cities and towns.


No of course not, you are just using that angle to shut down debate, can I ask a a question who washed us in our nursing homes and paid our pensions when we only had circa 3 million people for many decades. I'm not arguing against organic population growth but if the government is planning to grow the population they need to first sort out where are they all going to live. In any case all if this planned population increase will also need to be washed in nursing homes and pensions paid for  so that's a false argument.


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## losttheplot (27 Sep 2021)

joe sod said:


> No of course not, you are just using that angle to shut down debate, can I ask a a question who washed us in our nursing homes and paid our pensions when we only had circa 3 million people for many decades. I'm not arguing against organic population growth but if the government is planning to grow the population they need to first sort out where are they all going to live. In any case all if this planned population increase will also need to be washed in nursing homes and pensions paid for  so that's a false argument.


When there was only 3 million, the demographics were different. Ratio of young to old is changing as life expectancy increases.

I don't think the government 'plan' a population increase. They predict for one based on estimates and try to plan accordingly.


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## dereko1969 (27 Sep 2021)

joe sod said:


> No of course not, you are just using that angle to shut down debate, can I ask a a question who washed us in our nursing homes and paid our pensions when we only had circa 3 million people for many decades. I'm not arguing against organic population growth but if the government is planning to grow the population they need to first sort out where are they all going to live. In any case all if this planned population increase will also need to be washed in nursing homes and pensions paid for  so that's a false argument.


I'm not shutting down debate. As has been pointed out population growth is predicted and needs to be planned for, that planning needs to recognise that urban based population growth is key so that we're focussing our spend on much needed infrastructure in the right places, instead of providing poor infrastructure everywhere.


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## kinnjohn (27 Sep 2021)

Purple said:


> The majority of people born in relatively affluent areas of Dublin can't afford to live there. Where are the cries of unfairness for them? I haven't heard calls to a ban on culchies moving to Dublin,


 They could if their parents stopped objecting to more houses being Built in relatively affluent areas of Dublin, serves then right,



the only culchies welcome around  affluent areas of Dublin is a culchie badger,


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