In the current edition of the construction industry magazine PassiveHousePlus there is an excellent article by Mel Reynolds outlining the deliberate policies that have been introduced by the Fine Gael government to encourage hoarding of land and ensure that only a paltry supply of new housing would be made available. Some of us here have been pointing these policies out for years but it is good to see that they are finally getting a more widespread airing.
I would urge everyone with an interest in the Irish and UK property sector to subscribe to this magazine.
Capital Gains Tax Exemption 2012.
Section 604A of the 2012 was brought in to encourage the sale of sites by NAMA at fire-sale prices and the hoarding of those sites for 7 years in order to avail of a zero rated Capital Gains Tax.
Only 8800 new units have been constructed since then.
Vacant Site Levy Tax 2016
Posponed until 2019, and when they are finally introduced they will be easy to minimise by structuring the funding appropriately. Ideally designed to allow land hoarders to benefit fully from the 2012 CGT exemption.
Capital Gains Exemption 2016
Section 739k of the 2016 Planning Act is a further five year CGT exemption to encourage the hoarding and non use of development land. The 5 year period starts from the date of purchase and is designed to prevent a glut of property from undermining values at the end of the 2012-2019 scheme. Revenue commented that this would act as a “lock on the residential market”.
Planning and Development (Amendment) (No.2) Bill 2017
The ‘don’t use it, don’t lose it’ bill. It allows 10-12 year old planning permissions to be extended further with no pressure on the land owner or developer to actually build.
That’s a rough summary of the article. Worth reading the original.
The only sector of society that benefit from these policies are land speculators and landlords. Tenants and young couples seeking to enter the market are being completely screwed, and because the policies are distorting the market to such a massive degree ultimately they are unsustainable and this bubble will burst.