Landowners sitting on 63 unused acres in city centre

A land bank with a total size seven times greater than St Stephen’s Green lies vacant in Dublin city centre.

An unprecedented 15-year building boom, which saw Dublin workers move from the capital to far-flung locations in Cavan and Tipperary and beyond in search of housing failed to bring these 63 acres spread over 320 sites into use.

In fact, while many of these vacant sites pre-date the boom, their number actually grew with the rising property market, as buildings were bought in groups and demolished so that large sites could be created for new schemes.

Then the crash intervened. The sensible thing for a landowner to do was to put up hoardings and sit and wait for an economic recovery to push land prices back up. After all, there was no penalty to pay for doing so.

Since the introduction of the residential property tax everyone who owns land pays something towards the running of their local authority.

Owners of commercial property pay rates; and even those whose buildings are empty pay half the standard rates for their council area. Owners of derelict buildings are charged 3 per cent of the market value annually. The only property owners to pay no charge were those sitting on vacant sites.

Worsening condition

This anomaly was recognised as far back as 1979 when a government committee tasked with formulating solutions to the worsening condition of inner-city Dublin recommended the introduction of a levy on sites left undeveloped. Successive governments chose not to implement this recommendation, opting instead for tax-relief schemes. These resulted in some urban renewal, notably the development of the the International Financial Services Centre and the docklands area, as well as the filling in of some large gaps along the quays, but are now blamed for contributing to the bubble that burst leaving developers who entered the market at the wrong time with sites on their hands.

Concerns emerged about 18 months ago that while the construction market was becoming viable again, particularly in the capital, land was not being released for development, with land-hoarding artificially driving up prices.

A taskforce – headed by former lord mayor of Dublin Oisín Quinn and including Ibec’s Danny McCoy, David Begg of Ictu, the ESRI and several academics and business organisations – last year recommended to Government that a vacant site levy be introduced to stop land-hoarding and force owners to bring their sites into use. It noted some land “had the benefit of tax incentives but still remains undeveloped”.

The levy was needed to tackle the “no-cost lock on vacant land currently enjoyed by landowners that is advantageous only to them”.

Commercial use

Not all of the vacant sites will be used for residential development. A substantial portion is zoned for commercial use, and in many instances it would be neither desirable nor possible to rezone them for housing.

Nor are all the sites privately owned. Some of the largest are owned by the State, including the site of the former Maguire and Paterson match factory on Church Street, bought by the Office of Public Works in 1999, and unused since. The city council itself is a substantial vacant landowner. A report on exactly how much of the vacant land is council owned is expected to be given to councillors next month.

When asked yesterday if the State and the council would also be subject to penalties for leaving land idle, Minister for the Environment Alan Kelly said “everyone will have to be treated the same”. Exactly how that will happen would be dealt with when the Bill was drafted, he said.