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9. Compulsory Purchase

1. The rights to possession and enjoyment are an important entitlement of property and a fundamental human right. The case outlined above for recognition of community rights in property in natural capital is not an argument for widespread State appropriation of land of existing private titleholders - even with compensation. It has been applied notoriously inconsistently with different treatment of developer landowners and farmer landowners under Part V. The preferential treatment of farmers for compensation for compulsory acquisition for road projects is another illustration of its vulnerability to special pleading and political pressure. . A CPO ‘use it or lose it’ policy can not be fairly enforced in the current situation where too much land is zoned in some locations (urban areas) and too little is zoned in others (most rural villages with no Area Plans).
2. Compulsory Purchase should only be considered where development is required of a scale requiring land covering a number of properties where the existing owners are not capable of the collective action to develop it themselves for the benefit of the community. More effort should be made by the government to obviate the need for compulsory purchase for sustainable settlement development by promoting Community Land Companies / Trusts for example by removing stamp duty on the transfer of freehold private property into its equivalent in company shares.
3. Compensation for compulsory purchase is a separate issue and one that does touch on the concept of common share. The question arises whether the compensation for land value should be that of the existing value before the needed development takes place or potential value of the land following development. Where an effective annual land tax is charged, the difference would be significantly reduced. In any case, the landowner should not be paid more than existing value following the logic that the community has itself created the increased value in the land. However, Feasta recommends that along with existing value and relocation expense compensation, a further sum should be paid to the landowner arising from the compulsory nature of the transaction. Compensation moreover should be adjudicated quickly and paid promptly to minimise harmful impact to the landowner
4. In general, it can be argued under the social relations and common share principles that individuals have rights to the existing (previously socially negotiated) use rights to their land but not automatically to new, previously unused use rights. Under this reasoning for instance, the individual property owner has no rights in relation to previously unused space deep under his land that is needed for a tunnel or rail system and should not be compensated for them. Nor, under this reasoning, does the land owner have automatic rights to housing, industrial or other development on land previously used and zoned for agriculture.
5. The fact that compulsory purchase under the Kenny report or under a ‘use it or lose’ basis is being considered by the Government is testament to the poor functioning of the market based on a flawed property ownership model and the lack of annual rent or taxes on land.

10. The Zoning of Land

1. Attempts to capture the betterment value created by zoning, infrastructure provisions and planning permission by way of development site tax or other CGTs or planning gain on development and sale have always failed. The nature of land is that it is fixed in location and supply and thus competition is limited. Landowners can and will withdraw their land from development where their profit expectations are disappointed. Demand then builds up and political pressure is brought to bear to eliminate the offending tax or regulation. Attempts to raise the 20% CGT on development land after the ‘temporary ‘ period elapsed for this concession was stymied by this inherent set of relations. With interest rates at a historic low, the costs of holding land can be negligible if the land was bought some time in the past. By recouping the common share on an annual basis through an annual site value tax, the government can rebalance the relative strengths of buyers and sellers, increase land sales turnover and lower land values within the current market system without onerous regulation.
2. Development Plans typically zone lands for need far in excess of their 5-year timeframe in order to ensure that an acceptable level of development is carried out and (according to elected representatives) to distribute the benefits of such designation to as wide a group as possible. This has led to leapfrog development and excessive sprawl, as those landowners with least economic power to wait (in the least favoured locations) will develop first. Economically powerful landowners (often with land in the best locations) will wait until conditions are optimum before selling or developing. Sprawl and premature development places a cost on the community and on the environment.
3. An annual development site tax, levied at zoning would ensure that the benefit of designation is partly captured by the community . This tax, based on the value of the land (thus higher for more valuable locations), would ensure that the best-located sites are developed early where the community has already made the investment in infrastructure and services. Less pressure for premature zoning from landowners on planners and elected representatives would lead to Development Plans with a more compact footprint and greater credibility
4. Zoning is not a necessary condition for the betterment value created by the community to be captured by private landowners. Nearly 38% of all new housing is built on un-zoned land in the countryside availing of publicly provided and maintained roads. The granting of planning permission creates this value and estimates of its total value are ¤810 million per annum. Furthermore, the landowners selling such sites are exempt from Part V of the Planning and Development Act, which provides for some distributive element to the community. Given that the annual servicing of scattered dwellings will place further burden on the community this seems a particularly anomalous exception. In the very limited cases where the granting of planning permission for housing or other development on un-zoned land is sustainable, a very high multiple of the tax should be exacted on such land sales so that the intent of the annual site value tax on zoned land is not undermined .

1. Economists will describe how the high cost of housing land is related to the demand and supply in housing. Housing demand is high because of demographic change, low interest rates and economic growth. A shortfall in housing supply allows sellers to extract a high if not the maximum price from buyers. Land price is a residual of the market price less construction, fees and finance costs. Land now represents 60% of the total cost of the housing unit compared to 10-15% before the boom. The larger part of developer’s profits derives from the increase in land values from the time they bought it to the time they sell. Thus, developers try to amass a land bank well in advance of their capability to build - adding to scarcity.
2. The government introduced measures to increase supply though tax relief’s and incentives directed at landowners and developers - with mixed effects. Equally if not more effective, would be measures to increase supply by preventing land hoarding and land banking through an annual site value tax. In the latter case, the revenue would accrue to the community that created the value.
3. As well as reducing prices in the medium term through increasing supply, an annual site value tax would reduce the price of land in the short term through its capitalisation into calculations by intending buyers, as Part V did when it was introduced under the Planning and Development Act.
4. It is not necessary to introduce new compulsory purchase powers to ensure a ready supply development land at an affordable price as shown above. It is also impractical given the sheer level of land purchase involved if the CPO powers were not to discriminate to some landowners over others.
5. Furthermore CPO acquisition would still leave the problem of the mechanisms for the appropriate allocation of the land to new developers and of ensuring they or the subsequent purchasers of the housing do not make windfall gains at either the community’s or earlier landowner’s expense.
6. Finally, the impact on the general housing market, on developers who develop promptly in good faith (on land they bought at full price for instance), would be very problematic. On the other hand, a general site value tax on all designated development land would be fair and simple, would reward efficient and prompt housing development and foster competition in design and construction quality.

The right to a common share of the National natural resources is a fundamental universal right based on the individual existence. It implies a right to shelter irrespective of need which is a stronger and less divisive than a simple ‘right to shelter’ with its concomitant risk of moral hazard and lack of limits. The lack of good affordable housing in sustainable integrated settlements is caused by the nature of the current property ownership model that does not fully recognise common share in natural resources which can be redressed by appropriate taxation.

1. The social housing sector and others involved in social and community developmental work have put forward a compelling case for a ‘right to shelter’. Feasta supports much of their argument but suggests that a more fundamental right that of common share would deliver both shelter, sustainable settlements and access to the resources for a sustainable livelihood without the potential unintended consequences of a ‘right to shelter’.
2. The term ‘right to shelter’ suggests provision based on need. History has shown the difficulties of basing rights and supports on need without at the same time creating a perverse incentive not to provide for oneself, of creating further markers of social difference and exclusion of recipients and of undermining the general tax payer support necessary for sufficient investment.
3. The ‘right to shelter’ is also somewhat problematic in terms of sustainability as it could be interpreted to privilege existing individuals at the expense of future generations and it does not acknowledge the limits of natural resources. Feasta accepts that the promoters do not intend that interpretation, but we have seen how narrow interpretation of broad concepts has led to inequality and environmental damage in the past. Absolute rights are appropriate for rights dependent only on human will i.e. justice, free speech etc. Rights that relate humans to finite natural resources are better framed within the limits of those resources.
4. Irish housing policy has historically focussed on providing housing directly by local authorities for those in need and this is widely acknowledged to have led to problems of ghetto-isation and exclusion. Recent development by housing associations and social rental co-operatives to deliver wider housing provision have been constrained by lack of funding and their charitable remit. Part V of the 2000 Planning and Development Act has introduced yet another sector of housing provision and recipient; - the affordable house and eligible buyer. All of these sectors are mutually exclusive with little movement of users between tenures, categories and local authority areas. The system to support each sector is getting more unwieldy and complicated. There is also no easy way to cross compare each sectors effectiveness and value for money.
5. The Rental Supplement programme, introduced very much as a stop-gap measure, provide some flexibility to housing benefit recipients and some element of social mix. But as the rent supplements were paid to tenants in an unregulated private residential rented sector and as they had no effective competition from the not-for-profit sector (because of sectoral barriers described above), they inflated rents at the bottom end of the market. The government had to cap rental supplements as costs grew out of hand.
6. A single housing benefit or voucher paid directly to the recipient, usable for all sectors would give much needed choice and flexibility and help create more heterogeneous communities. All other supports and tax reliefs should be removed. The community land tax (see below) would provide ample resources for a universal single housing benefit. Even better would be a broader single benefit (more like a citizens income) usable for all public services, housing, health and education.
7. In general, the tenant / home purchaser would pay the open market rent or price for the housing. But it may also be possible to provide reductions arising from the retention of land in community ownership provided under Part V for all tenures. (See Feasta submission on Part V).
8. Under such an universal, transparent system, there would be no fundamental reason why all housing sectors;- public, private and third (not-for-profit) sector should not provide housing for all social groups. Indeed such competition would be necessary so that the housing benefit would not simply inflate prices and rents as happened in the rental supplement scheme. Each sector would bring their particular ethos, sources of capital finance, efficiencies and skills to their task and competition would ensure quality and innovation.

13. Infrastructure Development

Infrastructure Development by the local and central government is necessary for well-planned, efficient and sustainable development. That it generally benefits the common good is not sufficient reason to fail to recoup the very significant gains by private landowners as part of common share arising from such community investment.

1. Infrastructure development can range from small water schemes to elaborate public transport projects. All add value to land that should be recouped in annual rent or tax for the community. The recovery of the actual costs of the infrastructure should not be the basis to recoup the community for its common share. The value added often comprises more than the cost of the construction and other direct costs as it includes the value of government powers to consolidate land, create way leaves and rights of way etc.,
2. Conditions to planning permissions or development charges requiring payment for infrastructure provision is an unsatisfactory method of capturing common share for a number of reasons. It is almost impossible to work out the exact cost of the relevant infrastructure relative to a single site bearing in mind further development sites will also benefit. Existing developed property owners who equally benefit in many cases from new infrastructure get a free ride. The huge variation in the level of these charges between different local authorities and different projects undermines its legitimacy and creates damaging uncertainty. An annual site value tax on all landowners benefiting from new infrastructure is a fairer, simpler method to recoup betterment value as part of the common share in property.
3. The cost of major transport infrastructure projects has led the government to consider Public Private Partnerships financed by taxes and tolls on users. It is unfair to require the community to pay all the costs of these projects while the millions of capital value added to private property is largely untouched. In fact, were the government to decide to capture this value through an annual site tax or levy or bond on benefiting landowners, the PPP process might be unnecessary as the government might well be able finance the project on the projected tax income stream.

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