Why rezoning land does not always deliver housing

The planned sale of the former Chivers factory in north Dublin for €25 million had everyone reaching for their jam-related puns, with Dublin city councillors saying they had been fooled into rezoning the land for housing on the basis of "sugared" promises, but were left with a "sour taste".

Such bitter regret might seem surprising. All zoned residential development land started out life as something else, mostly farm land and sometimes industrial sites, and for the last 50 years at least had to be rezoned if it was to be developed for housing.

Zoning is generally done through the city or county development plan every five years, but can happen outside this process if there is a particularly strong reason not to wait for the next five-year cycle. Sometimes it is on the instigation of the planning department, as was seen last year with the rezoning of 16 relatively small pockets of old industrial land dotted around Dublin.

Very occasionally a land-owner will make a case for rezoning his land, as happened with Chivers. In Dublin this special-pleading zoning is rare outside the city council area, with the other three local authorities already having more than enough zoned land for housing.

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To condense the Chivers case: an owner made a case for rezoning industrial land to residential (nothing untoward in that); councillors rezoned a long-abandoned industrial site for housing (also fine); and the value of the land went up (entirely normal). But despite these predictable things happening, councillors, across all parties were livid.

Essentially their anger boils down to feeling they were misled into rezoning the land. Site-owner Andrew Gillick had originally presented them with a low-rise affordable rental scheme for "normal people". He subsequently annoyed them by applying for a nine-storey instead of a five-storey scheme. The recent news he intended to sell the Coolock site, instead of developing it, was for councillors the last straw.

Mr Gillick for his part said the Government's policy on height had changed since he first sought the rezoning, so he applied for extra height and more apartments. He had taken a site, derelict for years, managed to get it rezoned, secured planning permission, and now it was ready for someone to "complete the final stage" and build the homes, he said.

Jam tomorrow

But here is where councillors have a legitimate concern. If Mr Gillick is not going to use his planning permission for building there is no guarantee that the next owner will either because zoning land is a promise of jam tomorrow.

"Since the 1960s we have effectively created a land market that enriches a small few. When industrial land is rezoned for higher-value purposes whoever is in situ gets a major one-off windfall boost," says Conor Norton, head of the school of environment and planning at TU Dublin and president of the Irish Planning Institute.

It is how “flipping” is enabled. “The land is put on sale with the value of zoning or possibly a banked permission. It is taken on by another investor, who might be unlikely to develop someone else’s proposal and submits a new application, and maybe they sell on the site... and so it goes on.

“Basically it is using zoning to achieve massive increases in value. The planning system is not supposed to be used for setting land values.”

Anecdotally planners say they receive applications from certain “developers” who they know are not developers at all, but speculators seeking a grant of permission to increase land values.

“It’s a waste of time, and for planners extremely frustrating dealing with planning applications they know will never be used. Flipping is perfectly legal, but deeply frustrating,” Norton says.

Logic dictates that eventually someone has to develop the land, because without homes being sold it has no intrinsic value, but each flip adds to the delay in the provision of those homes, and their cost. “It might not have mattered as much in the past, but in the centre of a housing crisis it matters a lot,” says Norton.

Value uplift

The Government does have a plan to make flipping less attractive by introducing a system of land value sharing. This system, still in development, would theoretically see the State getting a portion of the value uplift of rezoning.

While this should reduce flippers’ gains it won’t necessarily guarantee homes, Norton says. “You only need a couple of per cent of an increase to make it worth holding the land. You can still do well by sitting on it and waiting for inflation, or the inflation of the property market, to do the work.”

The State getting its cut wouldn’t have stopped councillors feeling the Chivers site was not being used for the purpose they rezoned it.

“Clearly the councillors weren’t aware of the potential outcomes there. This isn’t their fault; when rezoning councillors should have a better view of what outcome will come from rezoning.”

A solution could be to mandate that rezoning be accompanied by a masterplan for the site that must be adhered to by subsequent owners.

“What should happen is a plan-making process, something more sophisticated than just zoning. Really what we are saying is that along with rezoning there needs to be something else, something that says what is expected of the land and to give certainty in relation to the outcomes. The critical issue is activating the site.”

A new zoning proposed by Social Democrats councillor Catherine Stocker for the new Dublin city development plan could fit this bill.

Sites with this new Z16 zoning would require a masterplan which would incorporate specific percentages of social, affordable and private housing, as well as employment, open space and community facilities.

“What happened at the Chivers site has had a chilling effect. I want to see land rezoned for housing, but no one wants to end up lining the pockets of a speculator who is flipping land,” she says.

“Over the next five years we are going to be asked to rezone substantial amounts of land for housing and we have no control now over what type of housing is built there. We need to have affordability locked into the zoning. This Z16 zoning would prevent the value of the land shooting up astronomically and would reduce the cost of delivering housing.

“There are no guarantees ever when you rezone land that it will be built on, but at the very least the value of the land, its saleability, will be curtailed.”

Very nervous

Sinn Féin housing spokesman Eoin Ó Broin agrees the Chivers incident might make councillors wobble over future rezoning.

“If we are going to meet climate change targets we are going to need to use inner urban land, lands currently used for light industry, but councillors are going to be very nervous if the first thing they rezone for housing turns out the way this did.”

While he is in favour of the concept of “bespoke zoning” a national directive would be preferable, he says.

“Local authority managers are risk-adverse. It would be much better if there was a circular from the department in relation to zoning of inner urban land and mixed development.”

Mr Gillick rejects the characterisation of the Chivers sale as “flipping”, saying this means trading on a site without having done anything to it which was “not the case here”. Considerable money, work and skill went into securing rezoning and planning permission, he said.