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 residential use.

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 tenants.

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 this crisis.

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