Third time lucky on housing?
Time for McCreevy to reconsider Sinn Féin's housing proposals
BY ROBBIE MacGABHANN
With house prices rising way faster than inflation again this
year, there is once again a clear need for action on the housing
crisis in the 26 Counties. Leaks in Dublin newspapers over the
last week have hinted at new radical proposals in the third
report on housing by economic consultants Bacon and Associates.
The proposals on tax measures to target speculators in the
housing market are an important validation of policy proposals on
housing made late last year by Sinn Féin.
The urgency of taking action on the imminent Bacon report was
intensified with the publication of figures by the Department of
the Environment this week showing that serviced land can
accommodate up to 96,000 new housing units in Dublin, Kildare,
Wicklow and Meath. Now Environment minister Noel Dempsey is
worried about builders and developers sitting on building land in
order to keep house prices artificially high.
Last November, Sinn Féin's South Dublin councillors Sean Crowe
and Mark Daly tabled a motion calling on the finance minister to
formulate new radical proposals to tackle aspects of the housing
crisis in the 26 Counties.
Crowe's proposals for an increase in capital gains tax to 40% and
60% rates on speculative home owners, as well as abolishing stamp
duty for all first time buyers purchasing homes priced under
£150,000 and the introduction of rent control on private rented
accommodation was supported by a majority of the councillors and
the Finance minister Charlie McCreevy was mandated to reply to
the council's request.
In early March, a cryptically written response returned from the
Department of Finance written by civil servants at the minister's
office. The only concession to Sinn Féin's proposal was the
promise that from 6 April 2002, capital gains tax would be
applied at the 60% rate on sales of development land zoned for
Sinn Féin had believed that their proposals on capital gains tax
would increase the number of second hand houses on the sales
market and help depress prices especially in the highly expensive
Dublin market. Their proposals on rent control would help the
extortion ate rents being demanded by landlords throughout the
state who were increasing rents not in line increases with their
costs or even inflation but with the rate of house prices. In the
four years to the end of 1999, house prices had increased by over
96% on average. Many private sector tenants had seen their rents
increase at the same rate.
Now Bacon Three has found, surprise surprise, evidence of
speculation in the housing market. They have found that house
price rises cannot be accounted for by demographic factors such
as increased demand or by rising incomes.
Increasing capital gains tax on the owners of land zoned for
housing is not favoured by Finance minister Charlie McCreevy.
This is not surprising as he halved capital gains tax in his
first year as finance minister.
Other options such as the compulsory purchase of housing land,
could, we are told, be tied up in constitutional challenges. It
has been well reported in the media that a small group of
builders and property developers are sitting on thousands of
acres of land zoned for residential dwellings around Dublin. It
was not until this week that Noel Dempsey woke up to that fact.
To make matters worse, some of Bacon's previous proposals have
increased the rents being sought by landlords in the private
sector. Landlords have been passing on their increasing costs to
However, there is some evidence that the Dublin Government is
learning from the Sinn Féin experience as a new Finance Bill is
to be brought before Leinster House in the autumn which would
increase stamp duty on purchasers of multiple homes.
Speaking to An Phoblacht, Sean Crowe said that it was good to see
that the Dublin Government were ``finally on the learning curve as
to how to tackle the housing crisis''. However, Crowe said that
initial reports of the new Finance Bill and other proposals
sounded like a weak version of what was really needed.
``There is huge public goodwill for whoever can come up with a
fair and quick solution to the housing crisis. Sinn Féin has set
out some radical proposals which they believe can break the log
jam on housing'' said Crowe (see inset box).
The real question that none of the three Bacon reports can answer
is whether the Dublin Government really has the will to solve
Sinn Féin proposals on housing
Increase rapidly the building programme of local authority
housing without a return to the planning disasters of the past
where communities were abandoned without adequate services,
facilities and employment opportunities;
- Introduce rent control linked the year of house purchase to
control extortion ate rent levies;
- Increase capital gains tax over a two year phased basis to
40% and then 60% rates on owners of speculative housing property;
- Abolish stamp duty for all houses who's purchase price is
less than £150,000;
- Extend first time buyers grant to all first home purchasers;
- Tackle the profiteering developers and house builders. House
prices have risen by over 90% since 1996;
- Set price controls and monitor new housing development prices
to stop price hiking;
- Tackle planning abuses. The Flood Tribunal has highlighted
extensive abuses of the planning law. Central government must act
to punish anyone guilty of such abuses;
- Encourage social and co-operative housing developments