Could The Increase of Development Land Values Within The Greater Dublin Area Have Been Prevented?

Could the Increase of Development Land Values
within the Greater Dublin Area have been

Prevented?

-

An Investigation into Controlling Development Land
Values and Recouping Betterment within the Greater
Dublin Area from 1996 to 2006, through the
Recommendations of the Kenny Report, 1974.

by
David Cassidy

A dissertation submitted in part fulfilment of the requirements for the Degree in
Bachelor of Science (Hons.) Property Studies.
Galway Mayo Institute of Technology
Supervisor: Eddie Campbell
Student Number: G00215532
April 2010

i

Table of Contents

Chapter 1 Introduction 1
1.1Definition of Topic 2
1.2Hypothesis 3
1.3 Aim and Objectives 3
1.3.1 Aim 3
1.3.2 Objectives 4
1.4 The parameters of the study 4
1.5 Research Methodology 5
1.5.1 Qualitative Research 5
1.5.2 Quantitative Research 5
1.5.3 Research Mechanism 6
1.5.4 Documentary Research 6
1.5.5Interviews 7
1.5.6 Case Study 9
1.6 Limitations 9

Chapter 2 Development Land 11
2.1 Introduction 12
2.2 The Greater Dublin Area 13
2.3 Introduction to Land 14
2.4 Development Land 14
2.5 Understanding the Supply and Demand of Land 15
2.6 Review of Development Land Values within the GDA 16
2.7 Factors influencing the rise in development land values 19
2.7.1 Demographics 20
2.7.2 Economy 22
2.7.3 Speculation and Land Hoarding 23
2.7.4 Financial Lending 24
2.7.5 Fiscal Incentives 27
2.8 Conclusion 28
2.9 Development Land and the Planning System 29
2.10 Introduction to Irish Planning System 29
2.11 Development Plans 31
2.12 Zoning the land 32
2.13 Planning Permission 35
2.14 Servicing the land 36
2.15 Conclusion 38

ii

Chapter 3 The Kenny Report 31
3.1 Introduction 30
3.2 Background to the Kenny Report 30
3.3 The Supplementary Recommendations 44
3.4 The Pre-Emption Scheme Recommendation (Minority Decision) 49
3.4.1 Background 49
3.4.2 How it works 49
3.5 The Designated-Area Scheme Recommendation (Majority Decision) 52
3.5.1 Background 52
2.5.2 How it works 52
3.5.3 Planning Issues 53
3.6 Relevant Issues 59
3.6.1 The Irish Constitution 59
3.6.2 Report to the Joint Oireachtas Committee on Building Land, 1985 60
3.6.3 Ninth Progress Report on Private Property, 2004 60
3.6.4 Evolution of the Compulsory Purchase Code 61
3.7 The British Experience Scott Report 1919 & Uthwatt Report 1942 62
3.7.1 The Uthwatt Report 1942 62
3.7.2 The Scott Report 1919 62
3.8 The French Experience Pre-emption scheme 64
3.9 The Dutch Experience The Designated-area Scheme 70
3.10 Conclusion 71

Chapter 4 Interviews 72
4.1 Introduction 73
4. 2 William K Nowlan Chart ered Surveyor & Town Planner 74
4. 3 James Meagher Devel opment Land Direct or, HTMOR 76
4.4 Terry Prendergast Planner 78
4.5 Brian Hughes Chartered Surveyor & Economist 80
4.6 Dan Boyle Green Party Senator 82
4.7 Noel Ahern Fianna Fail T.D. 84
4.8 Overall Issues 86
4.9 Overall Summary 87
4.10 Conclusion 88

Chapter 5 Case Study 89
5.1 Introduction 90
5.2 The Proposed Development 90
5.3 Zoning 92
5.4 Summary of Proposed Development Information 93
5.5 Case Study Findings 94
5.6 Current Situation in Ireland ~ Analysis 97
5.7 The Designated-Area Scheme ~ Analysis 97
5.8 The Pre-Emption Scheme 98
5.9 Conclusion 99

iii

Chapter 6 Conclusions and Recommendations 100
6.1 Introduction 101
6.2 Hypothesis 101
6.2.1 The Designated Area Scheme 101
6.2.3 The Pre-Emption Scheme 102
6.3 Development land values 103
6.3.1 Market Influences 103
6.3.2 Planning Influences 105
6.4 Landowners Profits 105
6.5 Recommendations 106
6.6 Avenues for further study 108

iv

Acknowledgements
I would like to take this opportunity to acknowledge and express my appreciation to the
following people:
All my Property Study lecturers, throughout my four years in college for all their
help, support, guidance, knowledge and advice.
My dissertation supervisor, Mr. Eddie Campbell for all his time, guidance and
support throughout my dissertation.
My parents, Ann-Marie, Trevor, Mary and Shane for their support and help.
All my friends for their advice and companionship throughout the year.
All the interviewees who took time out to let me interview them.
Finally, I would also like to give a special thanks to Aoife Brennan as without her
persistent help this dissertation would not be possible.
Thank You.

v

Abstract

Development land within the Greater Dublin Area witnessed unprecedented growth
during the boom years. These increases were the largest the Nation had ever seen and
were caused for number of reasons, as will be exposed in this paper. However these
increases proved unsustainable and dropped back to levels similar to where they started.

The Kenny Report was published in 1947 and its purpose was to investigation into
solving the increases in development lands in the late 1960s. Although the report was
created 36 years ago and the increases witnesses were not as dramatic as witnessed in
more recent years, its proposals still bare significant importance and have been revisited
many times over the years as a solution to high development land values.

The dissertation aims to fully investigate the proposals of the Kenny Report to determine
if its schemes could have prevented the rise. To do this the author will study experiences
in other countries with similar schemes to determine what would have been the likely
outcome for Ireland. Professionals with an extensive knowledge on development land
and the Kenny Report were interviewed and a hypothetical case study was compiled.

The results were very interesting and allowed the author to determine what would the
fate of each recommendation, recommend variations to the proposed schemes and
comment on the Irelands future in controlling development land values.

vi

List Of Images

Ref. Description
Image 3.1 Mr. Justice John Kenny with Mr. Bobby Molloy
Image 3.2 Kenny Report Submission Advert,
Image 3.5 Priority Development Zones in Brichambeau, France, 1958
Image 5.1 Streamstown Lane Site and Surrounding Malahide Area
Table 5.1 Summary of Proposed Development Information
Table 5.2 Case Study Findings

vii

List of Tables

Ref. Description
Table 3.1 Arguments for & against pre emption scheme
Table 3.2 Arguments for & against designated-area scheme
Table 4.1 William Nowlan Key Issues
Table 4.2 James Meagher Key Issues
Table 4.3 Terry Prendergast Key Issues
Table 4.4 Brian Hughes Key Issues
Table 4.5 Dan Boyle Key Issues
Table 4.6 Noel Ahern Key Issues
Table 4.7 Indication of viewpoints on main issues.
Table 4.8 Legend for Indication of viewpoints table main issues.

viii

List Of Figures

Ref Description

Figure 1.1 Typical Structure of a Cognitive Map
Figure 2.1 Map of Greater Dublin Area
Figure 2.2 Supply and Demand of Land
Figure 2.3 Development Land Values Dublin, All Sectors
Figure 2.4 Development Land Values Dublin & Leinster
Figure 2.5 House Prices & Residential Development Land
Figure 2.6 Irish Population; G.D. A. as a % of the State
Figure 2.7 Irish Population Aged 20 44 by Region.
Figure 2.8 GVA. of State and GDA
Figure 2.9 GVA G.D.A as % of State Total
Figure 2.10 GVA of State and GDA
Figure 2.11 Irish Bank Lending
Figure 2.12 Adjusted Annual Growth Rates for Credit
Figure 2.13 Affect of Tax Incentives on Development Land
Figure 2. 14 Model Community Development Fund
Figure 2. 15 Effect of Planning Permission on Land Values
Figure 2.16 Development Site Services
Figure 3.1 Kenny Report Timeline
Figure 3.2 Explanatory Diag. of Designated Area Scheme
Figure 3.3 Explanatory Diagram of Pre-emption Scheme
Figure 3.4 France Experience Pre-emption Timeline
Figure 3.5 House building in the Netherlands;
Figure 4.1 Interview indications for Designated-area scheme
Figure 4.2 Interview indications for pre-emption scheme
Figure 5.1 Proposed Development Location Map
Figure 5.2 Zoning Map
Figure 5.3 Landowners Profits & Recoupment to L.A.
Figure 5.4 Increase in land values under each situation

ix

Figure 5.5 Monetary returns under each situation
Figure 5.6 Designated Area Scheme Values v-Betterment
Figure 5.7 Pre-Emption Scheme Values v-Betterment

x

List of Appendices

Appendix Description

Appendix A References and Bibliography
Appendix B Related Planning Sections
Appendix C The Constitution ~ Private Property
Appendix D The Compulsorily Purchase Rules
Appendix E Interviews
Appendix F Case Study

xi

Glossary of Abbreviations

Abbreviation Description

GDA Greater Dublin Area
L.A. Local Authotities
FCo.Co. Fingal County Council
CSO Central Statistics Office
DoE Department of the Environment
GVA Gross Value Added

xii

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Galway Mayo Institute of Technology
Bachelor of Science (Honours) In Property Studies

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DAVID CASSIDY

Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented? Introduction

David Cassidy B.Sc. (Hons) Property Studies 2009/10 | 1

Chapter 1
Introduction



1.1 Definition of Topic
This dissertation was produced to fulfil part of the 4
th
year requirements for the B.Sc.
(Hons.) Property Studies Course 2009/10 in Galway Mayo Institute of Technology.
The Committee on the Price of Building Land, Report to the Minister for Local
Government Robert Molloy, Chairman Mr. Justice John Kenny (hereafter referred to
as the Kenny Report
1
) was published on January 1974. The aim of the report was as
follows;
To consider, in the interests of the common good, possible measures for-
(a) Controlling the price of development land required for housing and other
forms of development,
(b) Ensuring that all or a substantial part of the increase in the value
attributable to the decisions and operations of public authorities shall be
secured for the benefit of the community.
(Irish Government, 1974)
Over the past decade Irelands development values witnessed year after year increases
to staggering heights. However, finally the property boom came to an end resulting in
an immediate and steep decent of the inflated development land prices. This left
behind it a messy trail off overvalued sites and negative equity that critically affected
our Nations financial institutions. The values witnessed during the boom proved to be
highly unsustainable and very little of the increase, usually due to decisions or
provision of services by the Local Authorities (hereafter referred to as L.A.), was
returned to the community. The question now is could the schemes recommended by
the Kenny Report have prevented this.

1
Refer to Appendix G for extract of report including the main recommendations. A full pdf. version of the Kenny Report has also
included on the disk accompanying this dissertation.


1.2Hypothesis
The hypothesis for this study is - Could the increase of development land values
within the Greater Dublin Area have been prevented?
It is common knowledge that property and development land values escalated to
unrealistic heights over the past decade. However it is generally unknown the Kenny
Report of 1974 recommended methods of preventing this phenomenon. This
hypothesis gives the scope to investigate previous development land value trends
within the Greater Dublin Area (hereafter referred to as G.D.A.) and proves or
disprove if originally implemented, the recommendations of the Kenny Report could
have prevented these fluctuations whilst successfully recouping some of the increase
in values for reinvestment in local infrastructure.

1.3 Aim and Objectives

1.3.1 Aim
This dissertation aims to provide a clear indication of development land value trends
within the G.D.A. over the last decade and a half. It is then proposed to investigate
and expose the influences on these trends to understand what needs to be considered
when controlling land values. The author then intends to specifically examine the
recommendations of the Kenny Report of 1974 and the possibilities of
implementation thereby controlling future development land values through state
intervention. Then finally the author aims to determine if the proposed schemes could
have successfully prevented such an increase while recouping the betterment.



1.3.2 Objectives
To gather accurate information on the past development land values and depict
the trends to help expose the extent of the fluctuations.
Determine a set of main influences on the increases in development land values
to set a background on what exactly is required to deal with land increases.
Examine the Kenny Report documentation before providing a clear and easy to
read streamlined explanation of each proposal and reveal the qualities and
drawbacks of each one.
Reveal the extent of the betterment gains witnessed land owners on
development land transactions through a hypothetical residual valuation and
Investigate the foreign experiences of similar schemes as those recommended
in the Kenny Report to determine their success or failure.
Determine if any of the Kenny Reports recommended schemes could have
prevented a rise in development land values
Outline recommendations of possible variations to the proposed schemes to
make them more efficient if required for future implementation in Ireland.

1.4 The parameters of the study
This paper is a study of the Greater Dublin Area and whether its development land
value fluctuations could have been sustained and levied to recoup betterment for the
benefit of the community. Elements of this study refer to Dublin City, Leinster,
Ireland and comparisons are drawn from three other E.U. countries, however the
principle of this dissertation focuses on the Greater Dublin Area.


1.5 Research Methodology
The type of data collected is strongly related to the methods of research chosen and
the research results and conclusions are then reinforced by these methods. The
research methodology can have a great influence on the direction of the study and
consequently the outcome of the study. The key criteria for deciding which methods
of research to use are the relevance to the study, the availability of information and
ethical parameters. (Denscombe, 2003)

1.5.1 Qualitative Research
Miles and Huberman (1994, cited in Denscombe, 2007,) recognized one major feature
of qualitative data: they focus on naturally occurring, ordinary events in natural
settings, so that we have a strong handle on what real-life is like.
To access this type of research the experiences and opinions of various professionals,
planners, politicians and developers were sought. In estimating the probable outcomes
of implementation the Kenny Report proposed recommendations a deal of perception
and qualitative research was required to determine the results.

1.5.2 Quantitative Research
Creswell (1994, cited in Naoum, 2008) identifies quantitative research as objective in
nature. Naoum (2008) continues to explain quantitative research as an inquiry into a
social or human problem, based on testing a hypothesis or a theory composed of
variables, measured with numbers, and analysed with statistical procedures, in order
to determine whether the hypothesis or the theory hold true. According to
Denscombe (2003) greater confidence can be placed in the quantitative findings as


definitive numerical data is collected which lends itself to a more analytical study.
The residual valuation and scenario testing of financial outcomes fall under this
category of research within this paper.

1.5.3 Research Mechanism
To carry out a comprehensive study on the topic focus was placed on documentary
research, interviews and a hypothetical case study. The documentary research
provided valuable information on the topic and help place the study in context.
Interviews were conducted to delve deeper and interpret peoples opinions on the
topic and answer questions that arose during the documentary research. And finally a
case study was carried out for analysis and to illustrate the differences between the
current procedure and possible alternatives.

1.5.4 Documentary Research
The main purpose of the documentary research was to gain factual information on the
topic in hand by reviewing previous work and therefore identifying the areas in need
of further study. The documentary research is transcribed in the literature review
chapters (chapters 2 and 3) and formed the basis of the primary research. This
research was carried out by utilising sources such as published books, journal articles,
newspaper articles, government publications, public records, local authority
publications magazines and internet websites. The relevance and credibility of each
source was considered prior to use.


1.5.6 Interviews
According to Denscombe (2007) interviews are best used when applied to the
exploration of more complex and subtle phenomena and when the researcher needs to
gain insight to things likes peoples opinions, feelings, emotions and experiences, then
interviews will almost certainly provide a more subtle method a method that is
attuned to the intricacy of the subject matter.
Due to the specialised nature of the study and the limited knowledge of the Kenny
Report recommendations interviews were chosen instead, as opposed to
questionnaires. It was also felt that an interview would provide more accurate
information that a broad questionnaire distributed to a large number of people. The
interviews allowed the researcher delve deeper into the issues surrounding the Kenny
Report recommendations and development land values within the G.D.A.
The interviews were conducted in a face-to-face semi structured format containing
open-ended questions on the topic in hand. This meant the interviewer was flexible on
the order of the questioning therefore allowing the interviewee to speak more freely
and develop ideas on the issues raised. The interviewees
2
were selected from a variety
of professions including politicians, property consultants, economists and town
planners. The idea behind selecting a variety of professions was to avoid bias, gather a
variety of different perspectives and provide a contrast for analysing the results.

2
All potential interviewees were contacted in advance and informed of the purpose of the study thus having the
option to refuse to participate or remaining anonymous .The interviews were recorded and all interviewees were
comfortable with this and consented.



The interviews were then analysed to expose the main issues raised in each session.
This was done by a process called cognitive mapping. The aim of cognitive mapping
is to provide assistance with structuring complex or muddled data for problem
solving. It also acts as tool assisting the interview process by generating agendas and
its ability to manage large amounts of data. (Ackermann et.al 1997)
This process avoids bias and increases accuracy as opposed to traditional methods of
depicting selected phases or quotes. This method displays the problems (drivers),
possible solutions to these problems (strategic options) and finally the ideal outcome
of using the possible solutions (goals). To do this firstly the problem or subject must
be represented as a series of short phrases, each a single idea or concept. To do this
the sentences are separated into distinct phrases. Finally the distinct phrases concepts
are simply sorted into layers of hierarchy. (Ackerman et.al, 1992) A cognitive map
was produced then analysed for each interviewee and are included in the interview
chapter (chapter 4).

Goals
Stragetic Options
Drivers
Figure 1.1 Typical Structure of a Cognitive Map, (Ackerman et.al, 1997)


1.5.7 Case Study
Denscombe (2003) outlines explains a case study as a focus on one instance of a
particular phenomenon with a view to providing an in-depth account of events,
relationships or processes occurring in that particular instance. Firstly a hypothetical
residual valuation was used to expose the financial benefits and disadvantages of the
current development procedure. These results were then compared to the potential
financial outcomes of the Kenny Reports alternative schemes. The financial
outcomes were assessed in relation to the developer, the landowner and the L.A.

1.6 Limitations
The main limitation encountered was access to interviewees. This was due to the
lack of comprehensive knowledge on the Kenny Reports recommendations.
Thus, the number possible interviewees that could participate were very restricted.
Many L.A. representatives were contacted however they declined due to the
uncertainty of the main proposals of the Kenny Report.
Throughout this paper reference will be made to the supply of land coming to the
market in relation to the capabilities of the Local Authorities and land hoarding or
banking. This paper will not prove these situations occurred due to the deeper and
more time consuming research required.
When investigating the price increases of development land values the author will
be focusing on the market and planning affects. Due to the word restrictions the
economics of urban land will not be investigated.
There has been much debate on the constitutionality of the Kenny Reports
recommendations in relation to protection of private property rights. The author


accepts this is a large issue with the proposed schemes and for that reason will
cover the basics of the protection of private property rights. However this paper
will not investigate or determine the constitutionality of the schemes involved.
Academic literature on the specific schemes recommended was very limited
however the literature that was available was relatively recent.
The paper will make reference to both commercial and residential development
land. However as the Kenny Report was based on residential development land,
this paper will primarily relate to residential development land.
The case study was kept relatively simple. A more detailed investigation could
have been carried out on the hypothetical development using a Land Market
Assessment System
3
(LMAS) however this was impractical for this study due to
the time constraints.

3
(Refer to Jones et al. ,1994)
Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented? Development Land


Chapter 2
Development Land


2.1 Introduction
This chapter will begin by introducing the study area of this paper and the basic
fundamentals of landed property. This chapter will continue, with a representation of the
inflation of development land values between 1996 and 2006 and a review of literature,
to expose the main factors that influenced these increases. In the second half of this
chapter the focus will transfer to the influences increasing land values by virtue of the
planning system. Finally the concept of betterment will be explained, while also exposing
the origins of this economic prosperity accruing to landowners.


2.2 The Greater Dublin Area
Dublin is the capital city of Ireland. Dublin city has witnessed great population growth
which along with other factors has contributed to the significant dispersal of Dublins
housing activity into an expanded hinterland. (Williams, Shields & Hughes, 2003) The
GDA includes the L.A. area of Dublin City, Dun Laoghaire- Rathdown, Fingal, South
Dublin, Kildare, Meath, and Wicklow and incorporates the regions of both the Dublin
Regional Authority and the Mid-East Regional Authority. (Strategic Planning Guidelines
Office, 2010)

Figure 2.1 Map of Greater Dublin Area
(Source: Brady, Shipman, Martin, 1999. Inset: National Transport Authority, 2010)


2.3 Introduction to Land
Land is a biological essential and humans cannot survive without it. Land can be
explained as everything that we do not create. However it is important to realise that land
is not just its physical existence. Land is actually the rental income that the public is
willing to pay for the benefits of ownership or access to use of the land. (Harrison, 2003)
However each piece of land is heterogeneous making price comparisons and in turn the
land valuation process difficult. Land alone has little or no intrinsic value above
agricultural value
1
if it can only be used for agricultural purposes. However land has a
higher value if can be used for building on and this type of land is called building land or
as referred to throughout this paper development land.

2.4 Development Land
Development land can be defined as an element of natural resources which may in the
future be used for physical development. (Lichfield, 2000) Development is defined in
Section 3 of the Planning and Development Act, 2000, as the carrying out of works on,
over or under land.
2
Two fundamentals must be understood before giving a background
to development land. Firstly, the price of development land is not derived from the cost
of production as it has no production cost. The second fact is high development land
prices is the outcome of high residential and commercial property prices, not the source
as it is often perceived to be. (Dunne, 2003) Therefore development land is a derived
demand. Development Land is merely an ingredient of the end product. It is unique in
that its value is the residue left when one deducts all of the other components in
development process such as construction costs, planning costs, professional fees,

1
Agricultural value is land in its raw form un-zoned or zoned for agricultural use. Agricultural land is valued on the
economic return from type of agriculture carried out on that land.
2
Relevant Extract, Section 3 (Development) of the Planning and Development Act, 2000, can be seen in Appendix B

builders profits, acquisition costs on the site itself, legal costs, etc. (Irish Auctioneers
and Valuers Institute, 2003)

2.5 Understanding the Supply and Demand of Land
As Eccles (1999) explains land is not a perfect market, it is an imperfect market. Land is
heterogeneous in that it cannot be produced or moved. Therefore the location is the main
factor determining the price of the land, with the supply and demand in the immediate
locality influencing that price. As a result if the landowner has land within a region that
has a high demand for land, or a short supply of land, the landowner is in a strong
position to receive large profits. Turner (1977) claimed a lack of knowledge of land
markets, lack of central market place and a fragmented market means purchasers pay
prices that are unrealistic to the current market.
If the demand for development land increases it does not result in an increase in supply,
as is the norm with comities (increase in demand causes increase in supply). Land cannot
be produced therefore the supply of land is fixed; hence land is an imperfect market.
Warren (2000)

Figure 2.2 Supply and Demand of Land (Source: Warren, 2000)

2.6 Review of Development Land Values within the GDA
Currently in Ireland there is no national database for recording development land values.
Brian Hughes (2010) claims this lack of clarity is a fundamental issue resulting to land
value increases. He stating Ireland is one of the only civilised countries in the world that
does not have full openness when it comes to development land transactions. There is
however an annual survey carried out by the Irish Auctioneers and Valuers Institute
(I.A.V.I.) which compiles development land transactions for each year. This information
was gathered by the author and is represented in a series of graphs to depict the land
value fluctuations. The surveys are divided into the four provincial areas and Dublin. All
the graphs were produced to display the trends in development land values between 1996
and 2009.
3

3
The year 1996 is set as the base year at 100%
Figure 2.3 Development Land Values Dublin, All Sectors (Source: I.A.V.I. Annual Property Survey 1996 - 2006)
I
n
d
e
x


The largest increase was seen in the apartment sector with a 135% increase followed by
the housing sectors with increases of 108%. The biggest falls witnessed between 2006
and 2009 were in the apartment sector with a 94% decrease and the housing sector with a
drop of 89%. To put this in perspective a development site that was valued 2,000,000 an
acre in 2006 would have depreciated by 89% leaving it valued at 220,000 in 2009.
This is compared to the 35% drop a Dublin house would have witnessed, setting one
valued 500,000 down to 325,000. (Mc Quaid, 2010) Bill Nowlan (2008) explains the
situation stating land values go up like a rocket and fall like a stone and this seems to
have been borne out of Ireland over the recent years.

Figure 2.4 Residential Development Land Values Dublin & Leinster, Level Comparison Graph
(Source: I.A.V.I. Annual Property Survey 1996 - 2006)

As explained, the apartment sector has seen the largest drop, yet the most substantial
drop in value was witnessed in development land for housing. The housing development
land decrease of 89% deflated values back to levels last seen in 1997 . The remainder of
Leinster has seen a similar drop of 87% during the same period deflating values back to
that of 1998.

As determined earlier, development land is a derived demand. This means that demand
for development land is due to the demand for another good. And in the case of
residental development land that good is housing. Thus a correlation can be seen
between the overall trends between Dublins housing market and development land
market. Analysing the chart shows a slight slowdown in the housing market compared to
a sharp decrease witnessed by development land. This is because any changes in the
market will descend to the development land price. (Dunne, 2004)

Figure 2.5 House Prices & Residential Development Land, Dublin (Source: I.A.V.I. Annual Property Survey
1996 - 2006)

This result also highlights the volatility of the residential development land market. The
information technology recession coupled with the 9/11 terrorist attacks and foot and
mouth scare during the turn of the millennium also had a negative effect on land values.
(Permanent T.S.B., 2007) There is a noticeably steeper drop in development land values
during the recession period after 2006 with development land values dropping 89% in
comparison to the 40% drop in house prices. However housing is not the only factor that
affects development land values as will be made clear in the remainder of this chapter.

2.7 Factors influencing the rise in development land values
Development land is determined by the interaction of supply and demand. With the
supply of development land in the hands of the planning authorities, the demand is
determined by a number of factors. (Ratcliff, 2009) The Irish economy witnessed a boom
dubbed The Celtic Tiger. During this period the demand and supply factors heavily
influenced the pricing of development land. The demand for development land was
determined by both demographic and economic growth during the boom years. The
viewpoint population and economic growth do not take place in thin air, they require
land and lots of it certainly explains the situation that occurred in the GDA over recent
years. (Jones, Ward, Peter, 2004)


2 .7.1 Demographics
Firstly to put Ireland in context it is approximately the size of the Netherlands and
Belgium put together yet has a population nine times less than those countries combined
and similar to that of Milan. On a national level of the 4.23 million people living in
Ireland 39 % or 1.66 million are living in the GDA
4

Immigration was at an all time high and population growth continued to increase. These
two factors created a greater demand for accommodation and development lands. Many
young people flocked to the G.D.A seeking employment creating a younger structure
to the population. (Boyle, 2010) This in-migration happened due to the economic
prosperity of the G.D.A region as can be seen from figure 2.7.

4
All figures were obtained from the 2006 C.S.O. Census and European Spatial Planning Observation Network, Study on Urban
Functions Report, 2007
Figure 2.6 Irish Population; G.D. A. as a Percentage of the State
(Source: C.S.O. Census, 2006)


The population in the GDA region grew on average 23% between 1996 and 2006, 9%
higher than the increase witnesses by the rest of the State. This gives, to an extent, an
indication of the sprawl that took place in the GDA This is reiterated by the fact that
Meath, Wicklow and Kildare alone experienced an average growth of 27% as opposed to
Dublins 11% increase. The largest population rise was witnessed in Meath, which saw
its population grow by a third.
Location 1996 Population 2006 Population Actual Difference % Difference
Dublin 1,058,264 1,87,176 128,9122 11%
Kildare 134,992 186,335 51,343 28%
Meath 109,732 162,831 53,099 33%
Wicklow 102,683 126,194 23,511 19%
State 3,626,087 4,239,848 613,761 14%
G.D.A Average 23%
GDA Average Excl. Dublin 27%
Table 2.1 Population Changes 1996 2006 (Source: C.S.O. Census 1996/2006)
Figure 2.7 Irish Population Aged 20 44 by Region.
(Source: C.S.O. Census, 2006)

2.7.2 Economy
Due to the prosperity of the nations economy the property market and construction
industry likewise witnessed enormous activity during this period. Ireland had
transformed from an export-led economy to a property-led economy during the boom
years. The GDA accounts for almost half of national Gross Value Added
5
(hereafter,
GVA) Between 1991 and 1999, GVA in the GDA increased by 63.4%, compared with
57.1% in the State as a whole. (Brady, Shipman, Martin, 1999)

Although the GVA increase wasnt as significant between 2000 and 2007 at 45% for
both the GDA and remainder of the State, it continued to increase as can be seen from
figure 2.7.The GDA remained dominant, accounting for 49% of the overall GVA in the
State. It is evident that the GDA is the economic heart of Ireland and much of Irelands
prosperity has occurred within its boundaries. Therefore performance of the GDA is
essential to the overall economic health of the State. (Department of the Environment and
Local Government, 2002) Land was the principal component required to fulfil the

5
Gross Value Added (GVA) is the same concept as Gross National Product (GDP. It is a measure of the value of
goods and services produced within a region.
Figure 2.8 .G.V.A. of State and GDA
(Source: C.S.O. Statistic Database, 2010)
Figure 2.9 .G.V.A. G.D.A as % of State Total
(Source: C.S.O. Statistic
Database, 2010)

economic and social needs of the GDA. (Brady, Shipman, Martin, 1999) A maintained
GDP growth averaging at a growth of 6.5% has been the result of an almost full
employment force. The strong construction activity sustained the G.D.P. growth along
with further demands for land. Ireland witnessed the lowest unemployment rate in the EU
in 2003 at just over 3% in 2001.

2.7.3 Speculation and Land Hoarding
A property speculator is basically an entrepreneur who invests in land due to anticipating
a future rise in the price of that land. This is a fair and is a common example of someone
reviewing the market and taking a risk in return for the opportunity to make money.
However it has been suggested by many commentators, that these speculators have
enhanced their chance of making profits by land hoarding. Land hoarding is where the
speculator will deliberately hold onto their land causing a shortage of land therefore
keeping prices up. The Oireachtas All-Party Committee on the Constitution (2004)
Figure 2.10 .G.V.A. of State and GDA
(Source: C.S.O. Statistic Database, 2010)

describes the situation stating that certain landowners had accumulated large
landbanks at the outskirts of urban areas which they then released in dribs and drabs in
order to manipulate the market and artificially to maintain high land prices.
This act by the speculator to intensify future monetary gains is against the public interest,
development plan timeframes and of course the demand of the market. This is a result of
a interaction between the market and the planning system. And it is an obvious sign that
the planning system is not functioning correctly if it allows theses speculators make huge
profits. There was obviously a lack of a mechanism intervening in the hoarding and
releasing the land to the market when needed. This is a defect that needs to be addressed.
(Dunne, 2004) However as Prendergast (2010) pointed out the whole planning system
has to take into account the market, if the planning system tries to work against the
market it is a recipe for disaster. Clear evidence of hoarding was unobtainable
however, Jerome Casey, the editor of the Building Industry Bulletin expressed concern as
over half of all the land in the Fingal area is owned by 25 individuals or companies.
(Casey, 2003)

2.7.4 Financial Lending
As property prices rose, the collateral value of property appreciated. This lead to the
perceived risk of property investments falling therefore instigating financial institutions
to lend in property related developments. This is a normal process and is it is important
that property related lending does happen for the prosperity of the Nation. However in
Ireland this lending was not regulated properly which lead to negligent over-lending by
the banks. (Kelly, 2010)


Ahern (2010) pointed out The financial institutions were lashing out money and had a
large part to play. At the end of 2008 92 billion had been lent in property related
developments which grew to 110 billion by the end of 2009. This finance has been lent
to developers and builders for both construction of buildings and purchase of
development land. The effects of the banks lending on development land were
intensified by the narrowness of the Irish market. For instance if a handful of banks
increased lending by 20% they could drive up property prices by 20 %. (Kelly, 2009)

.

It has been argued that the main cause of the property boom was due to the availability of
cheap credit from both Irish and International banks. At one stage Allied Irish Bank,
Bank of Ireland and Irish Life and Permanent had built up 2.5 times the countrys G.D.P.
in loans and investments. (Boone, 2010) Breaking down these loans and investments
shows an amazing 61% of these loans were property related. (Central Bank, 2007)
Morgan Kelly (2008) sums the situation up saying of every 100 that Irish residents
have deposited in banks, 60 has been lent for property speculation. This large
Figure 2.11 Irish Bank Lending
(Source: The Irish Property Bubble: Causes and Consequences,
Morgan Kelly, 2010)
Figure 2.11 Irish Bank Lending (Source: The Property Bubble; Causes and Consequences)

investment allowed developers compete for lands against each other driving up the price
of land. (Kelly, 2010)

But this was not the only factor. As explained the housing market has a large role to play
on development land (section 2.6) therefore housing lending does also play a role. In a
study by Trinity College on the impact of lending activities on house prices, it was
concluded that excessive mortgage lending had played major role in escalating house
prices beyond their fundamental levels. It also determined that government intervention
could have helped moderate price increases by discouraging speculation. (Sullivan,
2010)
In March 2010, Brian Lenihan, the Minister for Finance, gave a speech in Dail Eireann
on the current banking situation. In this speech he recognised that the regulatory system
failed profoundly and the banking system had engaged in reckless property development
lending.
Figure 2.12 Adjusted Annual Growth Rates for Credit
(Source: Central Bank and Financial Services Authority of
Ireland, 2007)

2.7.5 Fiscal Incentives
Although it may be sensible to provide fiscal incentives in certain locations in
recessionary times they have the effect of increasing land values when the economy is
strong. As Dunne (2003) pointed out tax and other financial inducements intended to
subsidise developers to assist purchasers with the acquisition of property, including
houses, find their way into higher development land values. In 2005 an Idecon review
of property-based tax incentives, a survey was carried out to investigate if the incentives
had caused a rise in development land.

The Governments intervention to control house prices by providing subsidies to
developers unintentionally increased development land values. Although subsidies
seemed to work in theory and the Governments intentions were good and their
intervention in the market had a negative effect. As Dunne (2000) recognised the urban
land marked is prone to speculative bubbles, which can be hugely influenced by
Table 2.13 Affect of Tax Incentives on Development Land
(Indecon Confidential Surveys of Financial Institutions in Ireland / Department of Finance)


government policy. This outcome of State intervention must be kept in mind when
considering the Kenny Reports Schemes.

2.8 Conclusion
This section helped gain a knowledge of the basics of land and its distinctive supply and
demand factors. The chapter exposed the main market influences on development land
and also uncovered the less obvious factors that contributed to the increase of
development land.


2.9 Development Land and the Planning System
The previous section reviewed development land values and the various issues
influencing the increase. This section will continue to expose the influences on
development land values. However, this time focusing on those originating from the
planning system.

The three main influences that will be discussed are;
Availability, or lack of, necessary infrastructure and services
Undersupply or oversupply of suitably zoned and serviced lands
The timeframe in which planning permission can be obtained. (I.A.V.I., 2003)

As well as their affects on land values the betterment issues arising from each one will
also be discussed. According to Ratcliff (2009) the term betterment refers to the gain or
gift accruing to an individual from the actions taking place somewhere else. In the case
of development land values it is the gain witnessed by the landowner due to the decisions
of the Local Authorities, hereafter referred to as L.A.
2.10 Introduction to Irish Planning System
Nine years prior the publication of the Kenny Report the Local Government Planning
and Development Act, 1963, was implemented. This was Irelands first planning system,
and was heavily based on the English system at the time. As Grist (1983) explains the
initial planning legislation was introduced to identify and surmount the obstacles which
exist in the translation of economic and social objectives into buildings, construction
work and other types of development.

Before the introduction of the planning system development land values in Ireland were
not significantly above agricultural value. Although this changed during the economic
prosperity of the late 1960s when development land began to witness an increase.
6

However, this was not anywhere as dramatic as in recent years due to the absence of
zoning. Thus the consequences for the value of development land of introducing the
planning system, and particularly development plans which allowed land zoning, were
not properly addressed in the 1963 Act. (Dunne, 2003). What the 1963 Planning Act
had done was remove the right to develop from land owners. (Dunne, 2003)
The 1963 Planning Act, remained in place until updated through implementation of the
Planning and Development Act, 2000. The government believed a new act was required
due to the nations economic growth and the publics concern for both a planning appeals
system and calls for environmental control.
The core principals of the new legislation were to ensure the planning system would;
Be strategic in approach
Ensure sustainable development
Always deliver a high quality performance
(DoEHLG, 2000)

6
Refer to section 3.2

2.11 Development Plans
The 2000 Planning Act defines the development plan:
A development plan shall set out an overall strategy for the proper planning and
sustainable development of the area and shall consist of a written statement and plan or
plans indicating the development objectives for the area in question (DoEHLG, 2000)

The development plans have been obligatory since the enactment of the 1963 Planning
Act. Each of the eighty eight Local Authorities are required to form a development plan
for their jurisdiction. The local authority consists of democratically elected
representatives and they create the development plan for the next six year period. By the
creation of a development plan the L.A. distinguish which lands can and cannot be
developed on. Thus, it concentrates the demand to the land it has designated for
development. The effect of this is increasing the newly zoned lands and devaluing those
un-zoned lands to agricultural value. The development plans are decisive to whether land
is developed or not, because of this the elected members have come under pressure from
landowners in the past. For this reason the development plan has been appropriately
described as landowners guide to speculation. (Dunne, 2003)
It is questionable that this increase in value or windfall profit received by the vendor
of lands is un-fair. However it is a fundamental fact that the planning system is partially
based on this increase. The elected members through the development plan make an
assumption that due to the zoned lands uplift in value they will come to the market. This
means the profits are acting as an incentive for landowners to release land to the market.
For this reason reducing or removing these windfall profits could be critical to the
planning system and the property market. (Dunne, 2003)

This view was supported by Brian Hughes (2010) as he stated if landowners are
discouraged from bringing land onto the market then the market will collapse until such
time as a heavy taxation sanction or whatever else is removed.
The development plan, through its restrictions removes the right of the land owner to
develop his property in a certain manner. Hence, the development plan is an example of
restrictions on property rights
7
enforced by the state for the common good of the public.
To summarise the development plan aims to promote sustainable development, whilst
protecting the common interest yet also prevents windfall gain to select landowners.
(Threshold, 2003)

2.12 Zoning the land
Zoning is a system used through the development plans to segregate parcels of land and
affix a particular use to each piece of segregated land. This allows planners and elected
members to separate incompatible types of development. For instance by zoning the
lands uses the L.A. can separate housing estates from industrial estates. Zoning is
important to achieve government objectives in relation to urban form, controlling
building densities and prevention of the urban sprawl of Dublin into the surrounding
areas. (I.A.V.I , 2003) Minor changes in the zoning of an area can lead to huge changes
in land values. Densities are a restriction on the amount of units permitted on a site. As a
result the more lenient the density controls, the more profit to be made from the land
which inevitability inflates the price. (Newell, 1974)

7
Refer to section 3.4.1 and Appendix C

Zoning also artificially reduces the free market as it limits the supply of land available
for development. Therefore zoning can have a huge affect on development land prices. If
the L.A. does not zone an adequate amount of land this will automatically increase the
value of the already zoned land. Not only this, but as described earlier theses lands are
assumed to free up and come to the market, therefore an unpredictable shortage will also
drive up development land prices, e.g. landowners personal decisions. On the other side
the L.A. can also attempt to stabilise prices by zoning enough land to meet the demand.
The sufficient amount of land to be zoned is decided on a matter of judgement by the
elected members and judgements about this are hard to make and are influenced by
political and financial considerations. (Dunne, 2010) Therefore the inefficiency of the
L.A. to made theses judgements over the past decade has come under question in relation
to development land rises. (Dun Laoghaire Rathdown Co. Co., 2003)

I have a client that had land valued 50,000 per acre, he got the land rezoned and sold
at 4,000,000 an acre, he had 40 acres therefore selling at 160,000,000 whereas the
land was only worth 2,000,000 before it was rezoned (Nowlan, 2010)

The above quote is in relation to the gains received by a landowner due to zoning. When
the land is rezoned a transition of use takes place. Where this is from agricultural to
residential the value of the land as was the case above the value of land can increase up
to eighty times its original value. Some commentators feel the gain is fair in respect of
the risk speculators take while others disagree totally deeming it unfair. As the increase
in value is not due to the actions of the landowner it is felt they should not reap the
complete increase. Michael Flannery (1980) recognised this stating The transition from
existing use has been realised by landowners and developers through the facility of being
able to avail of public services. Is this equitable?


It has been argued that this increase in the value of land created by zoning for
development should accrue to the L.A. Until the recent introduction of the 80% windfall
tax in Ireland there was no method of doing this. As this tax is relatively new its success
still has to be proven therefore it could not be determined as a definite solution. The
recouped finances should be then returned to the community in order to finance all
community facilities. (Nowlan, 2003) This means not only financing the servicing of the
land but also the surrounding infrastructures. A model of the monetary redistribution of
the recouped gains can be seen in the figure 2.10.



2.13 Planning Permission
In relation to development land values planning permission is pivotal. Without planning
permission development cannot commence on the lands. Therefore granting of planning
permission signifies the transition of use and the increase in value. Speculators will buy
lands with the hope they will receive planning in the future. These lands are strategically
located near urban areas and have an added hope value pricing them above agricultural
lands. Meagher (2010) explains these lands a within a grey area between agricultural
and development value.
Figure 2. 14 Model Community Development Fund (Nowlan, 2003)



When the landowner or developer applies for planning permission they are applying for
the development rights for their lands. These rights are denied to some landowners and
are as a result is magnified in importance. Thus the economic value that flows from the
denial of planning permission is given by way of a gift to others. When the planning
permission is granted an increase occurs that is not inherent in the land. This is also
betterment and there have been many attempts to recoup this planning gain. The
solution is to keep the development rights within the powers of the L.A. (Dunne, 2003)
2.14 Servicing the land
In supplying development land the provision of services to lands by the L.A. is vital.
Every piece of land has to be serviced to accommodate development. The typical
services provided by the L.A. to a future development site are water mains, sewage
piping, ESB, gas lines, footpaths, street lighting and roads. (See figure 2.6). If enough
land is not serviced by the L.A. to meet demands this will drive up development land
Figure 2. 15 Effect of Planning Permission on Land Values
(Premier Land Strategies, 2010, http://www.premierland.com/whyinvest.htm)


prices. This was the case within the GDA during the boom years as there was inability
of the development industry in a totality to provide the serviced sites. (Nowlan, 2010)
The result of this has been due to the inefficiency of the L.A. and a lack finances
available to them to provide adequate infrastructure.

As explained every piece of land is heterogeneous therefore it is impossible to determine
set figures of the costs involved in providing these services. The cost of servicing the
land can only be determined at the end of the servicing as unforeseen expenditures may
arise.
Traditionally the finance for the provision of these services derives from the taxpaying
public and a contribution from the developer through a development levy. This levy was
first recommended in the Kenny Report (see recommendation G, p.46) and then
implemented in the 1963 Planning Act. In 2000 these levies were re-established under
Figure 2.16 Development Site Services (Mott MacDonald Ireland Limited, 2010)
1


Section 48 and Section 49 with the introduction of development contribution schemes
8
.
These schemes allowed the L.A. recoup the cost of provision of the services.

These schemes estimate the costs of providing the piping, roads and similar requirements
to facilitate the given locality. The estimated costs are then levied on each unit within the
development. (Nowlan, 2003) However, Dunne (2003) states this method is flawed in
concept and only goes part of the way to recouping the value created by infrastructural
development.
Many have called for a system where developers and speculators are not profiting from
the development of state funded infrastructure provided by the L.A. As Prendergast
(2010) states it is the planning authorities can recoup the cost, but only the cost, the
authorities cannot recoup the additional value that accrues to the land due to
development led infrastructure.

2.15 Conclusion
This part of the chapter explained the background to the planning system and the
influences it has on development land values. It was determined that the effects
substantially increased development land values. This created huge profits for the
landowners which is argued unfair, yet is fundamental for a supply of land coming to the
market.

8
Refer to appendix B for full details on development contribution schemes.
Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented? The Kenny Report

David Cassidy BSc. (Hons) Property Studies 2009/10 | 39

Chapter 3
The Kenny Report,
1974


3.1 Introduction
The concept of controlling development land values and recouping betterment
requires a sophisticated and foolproof scheme Prendergast (2010). In this chapter the
author will review the Kenny Reports origins and using the original document will give
a streamlined reproduction of its recommendations. Finally the author will review
literature on the Irish Constitution, compulsory purchase legislation and similar price
control and betterment recoupment experiences abroad.
3.2 Background to the Kenny Report
In Ireland the rise in development land values and large profits due to land rezoning was
first noted shortly after the planning systems setup in the 1960s. The Government
recognised the significant increase in values of land surrounding urban areas. They
realised the increase was mainly due to the L.A. providing services therefore deeming
lands suitable for development. Much of the increase in value that comes from zoning
is attributable to improvements or the prospect of improvements, say services or
infrastructure, so there has to be fairness here so society can benefit (Hughes, 2010)
In 1971 to elucidate the causes and investigate possible solutions the Government
sponsored the Minister for Local Government at the time, Bobby Molloy to create the
Kenny Report. Bobby Molloy assembled a committee consisting of six members to
assist him.



The report began by informing the public that between 1963 and 1971 land prices in
Dublin had risen by 530%. In one case the value of a small number of acres went up by
900% overnight due to it being rezoned by the L.A. On the backdrop of these increases
and profits the committee was asked to make suggestions on possible measures to
control the price of land and recoup some of the increase in value i.e. the betterment
element that arose from services.
After much consideration the committee compiled twelve possible solutions. After
further scrutinising these suggestions the committee could not agree on one definitive
recommendation. The committees opinions were split four to two. The majority of the
committee agreeing on the designated area scheme
1
while the minority wanted the
pre-emption scheme
2
. The final report containing the twelve recommendations
spanned over 195 pages and was published in January 1974 bearing the name of the
chairman, Mr. Justice John Kenny. (Walsh, 1999)

1
The designated area scheme is the main recommendation of the Kenny Report, in which the majority of the
committee suggested the land likely for future development should be compulsorily purchased by the L.A., serviced
then sold onto a developer. See section 3.3.3
2
The pre-emption scheme suggests if the owners wish to sell/lease the land within a specially zoned area they must
first offer it to the L.A. at the full market value therefore L.A. will always have a supply of land to release to the
market thus stabilising land prices. See section 3.3.2
Image 3.1 Mr. Justice John Kenny (left), chairman of the committee with
Mr. Bobby Molloy, Minister for Local Government
(Irish Times Archive; 23th January 1973)



Eight years after the report was published the Local Government (Building Land) Bill,
1982 was introduced by Deputy Ruairi Quinn. The purpose of the Bill was to provide
for the better control of the supply and price of building land. (Grist, 1983) The bill
proposed a modified version of the designated area system recommended in The Kenny
Report. In an article in the Irish Times on the 16
th
of May 1980 Mr. Mc Cluskey, the
Labour Party leader at the time, stated the act reflected facing up to reality that the
country cannot continue to pay the artificially inflated prices for development land and
the common good requires we, like other countries, take steps to control land prices.
(Walsh, 1980) The bill was not passed after many days of discussion in Seanad ireann.
It was neither rejected nor implemented by the parliament. Grist (1999) stated that the
report was too radical for popular acceptance decades ago, however it is well worth
looking again at its main proposals.

Image 3.2 Kenny Report Submission Advert,
(Source: Irish Times Archive; March 1
st
1974)



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3.3 The Supplementary Recommendations
Set out below is the authors analysis of the ten subsidiary recommendations. Of the
recommendations two have been implemented in 1975 and 2000, with the remaining
suggestions discarded or modified by the committee. All the recommendations have
been taken from the Kenny Report and have been simplified to determine exact
meaning and outcome.
A. A scheme by which the price of all building land would be controlled
The committee were unable to find an efficient system that could control the price of
land. As described in section 2.3 each piece of land is heterogeneous. Thus the only
method vaguely possible would be to assign a market value to each parcel of land. This
would be expensive, cumbersome and slow.
B. Nationalisation of all development land and payment of compensation
The committee expressed concern with the defining of development land. A tribunal
would have to be set up to determine which lands are development land and the
compensation price of that land. If all the development land was nationalised the
compensation amount would be enormous. Neither the State nor the L.A.s could deal
with the financial or administrative burden involved.

C. Nationalisation of the development rights in all building land and payment of
compensation for these
Instead of nationalising the land the committee considered nationalising the right to
develop the land. This means that the right to develop is vested in the L.A. There would
be a ban on all development of land outside cities and towns. The land when required

for development would then be purchased by the L.A.at its existing use value. There
would be a fund set up by the State which the land owners involved could claim their
lands value from. The problem arises thereafter in affixing the price on the
development rights of each piece of land. The Uthwatt Report (see section 3.5.3) made
similar proposals in Britain which were enacted in 1947, however was abolished shortly
after.

D. A capital gains tax on profits arising from the disposal of land suitable for
building
This capital gains tax is specifically in relation to the gain arising from the transfer of
land suitable for development. The problem arises with delegating who is to decide
what lands future development prospect. The downfall of this method is that the capital
gains tax will not prevent increases in land values in-fact the committee suspected it
would increase land values. This recommendation was implemented a year later on all
Irish land at an initial rate of 26%. (Department of Finance, 2010) This method although
implemented has failed as in Ireland one of our problems is capital gains taxes go
straight back to the Revenue and none goes back to the local authorities (Nowlan,
2010).

E. A betterment levy on the difference between the price realised on the disposal of
the land after planning permission had been granted and the market price of it
based on its existing use
This is a tax on the realised increase in the value of land due to the granting of planning
permission. The tax would be accessed at the difference between the land value before

and after the L.A. granted planning permission. This method would entail a base value
being fixed to the land therefore requiring a large valuation and administrative
organisation. Using the previous British attempts as comparison the committee
explained how the tax would be mitigated by land owners by increasing the sale price of
their land.
F. A scheme under which owners of land suitable for building would be obliged to
offer it to the local authority in whose area it was before they sold or redeveloped
it. We propose to call this the right to pre-emption
The right to pre-emption can also be referred to as the right of first refusal and
basically means the right to purchase a property at full market value in preference to any
other individual or institution. As the full market value had to be compensated no
betterment would be captured. Thus the financial costs borne by them would be
unaffordable. Although the committee rejected this scheme the minority agreed on a
modified version which created more achievable solutions. (See section 3.3.2)

G. An amendment of the Planning Act, 1963 so that planning permission would be
granted on the condition that the development would pay to the Local Authority
the total cost of the work which will have to be carried out by the latter and which
facilitate the proposed development
The reasoning behind this option was to charge the developer for the total cost of works
provided by the L.A. for servicing the site. The committee decided that although this
method would capture the planning gain it would not stabilise the land prices and
rejected it. Twenty four years later a modification of this proposal was implemented

through the Planning and Development act with the introduction of the development
contribution schemes. (See section 2.10.4)
H. A high rate of stamp duty payable by the vendor on the transfer or lease of land
suitable for building
This model basically proposes increasing the stamp duty
3
on the sale of the
development land to retain the betterment. However since the stamp duty is paid by the
purchaser of the land, inevitably it will be passed onto the public, the purchasers of the
developed buildings. This method was rejected by the committee.

I. The imposition of a new tax levied annually at the progressive rate on the site
value of lands suitable for building for which planning permission had been
granted. The site value would not be the present rateable valuation but a modern
assessment of the letting value
This method aims not only to stabilise land values by increasing supply but also
prevent land hoarding or banking (see section 2.6.3). A special tax would be levied
annually on the market rental value. This way the failure to develop the land would
incur heavy penalties. The flaw is tax would only apply to the lands suitable for
building. Thus the lands must already be serviced and that would greatly minimise the
amount of land taxable. The committee established that this method would not
significantly affect the amount of land becoming available. This scheme was never

3
Stamp duty is a tax on the transfer of documents used in a property transaction. The amount is paid to the
Government and is determined by the cost of the property. (Scully, 2008)


implemented but in 2008 T.D. John Gormley called for a modification of this scheme in
a new proposed use it or lose it provision (Connolly, 2008)
J. A scheme under which land use would be zoned by the planning authority for
different uses and the compensation paid to the owners on compulsory acquisition
would be related to the specified use
This system proposes the L.A. rezone the future use of each piece of land with greater
detail and specifies the lands particular purpose for the future. The L.A.s right to
compulsory purchase land within these areas would subsequently be activated. The
particular purpose would also act as a scale of the compensation payable to the land
owner. For example if the particular purpose of the land was low cost housing the
compensation would be lower than that if its purpose was high cost housing.
The Acquisition of Lands Act, 1919, which relates to compulsory purchase, would have
to be amended to allow the arbitrator use the scale method when determining the
compensation.
4
The committee rejected the proposal agreeing that setting up of a scale
of compensation would be very difficult for a number of reasons. The main downfall
being that if land is zoned for high cost housing it does not necessarily mean it is worth
more on the open market and would need to be frequently revised due to inflation

4
Refer to Appendix D for the Acquisition of Lands Act, 1919 rules

3.4 The Pre-Emption Scheme Recommendation (Minority
Decision)

K. A scheme under which pre-emption would be combined with a special levy
payable by the vendor on all sales of land in areas designated by the local
authority. We propose to refer to this as the pre-emption and levy scheme

3.4.1 Background
The right to pre-emption can also be referred to as the right of first refusal and it means
the vendor must refrain from selling the land to a third party without first giving the
holder of the right the option to purchase. (Megarry, 1982).This method proposes the
state has the right to pre-emption over all lands within a designated area. If the owners
wish to sell/lease the land they must first offer it to the L.A. at the full market value to
be arrived at by an official arbitrator .The ideology behind this method is the L.A. will
always have a supply of land to release to the market thus stabilising land prices. The
second benefit is that the authorities will be able to acquire key areas without the
slower compulsory purchase option.
3.4.2 How it works
This scheme is basically a combination of a pre-emption scheme (recommendation F)
and a special stamp duty (recommendation H). For this scheme to work there is five
guidelines that would have to be considered;
i. The L.A. would have the power to rezone lands for urban expansion
when drawing up the development plans therefore activating the right to
pre-emption in that region.

ii. The final decision on what lands are to be designated would be that of
the L.A. preformed by the County Manager and his verdict cannot be
appealed.
iii. Any owner of land within the pre-emption area that had the intention to
sell/lease their land would be obliged by law to offer it to the L.A. first.
If this offer was accepted it would be treated as a compulsory purchase
and the Acquisition of Lands Act, 1919 rules would apply (see full list of
rules in appendix D)
iv. There would be a special stamp duty paid on sale of land within the pre-
emption area which would be returned to that regions L.A. to cover costs
of providing services to the area.
v. The development contribution would be withdrawn, however failure to
pay the stamp duty would result in a special development levy.

The L.A.s aim would be to acquire all the lands within the ten year frame except those
already containing structures. If the L.A. did not succeed in acquiring all the lands they
could extend this timeframe. The L.A. would be empowered to at any time to apply for
the designation of an area. This would allow the L.A. to apply for designated areas post
development plan rezoning. Consequently, designating the areas likely to increase in
value due to the rezoning.
(To help the understanding of the process involved in this scheme see figure 3.2.)



Landowner
Decides to sell his/her land
within the designated urban
expansion area.
Local Authority
The local authority can service the land
then hold onto the land to control
supply, develop for public infrastructure
or release to a developer either by selling
or letting.
County Manager
Determines which areas are to be
zoned for urban expansion hence
activating the right to pre-
emption on these lands.
Purchaser/Developer
The developer will develop the site
with respect to the restrictions set by
the local authorities.
Public
The public purchase the new
buildings on the site.
The land is sold to the local authority
at open market value to be decided
by official arbitrator after which a
levy is paid.
(ii) The revenue received
through the betterment
levy is then reinvested in
the area servicing the land
and developing public
infrastructure.
The land is either sold or leased to a
developer at market value. This agreement
can be subject to covenants to type of
development allowed.
(i) The betterment is
recouped by means of a
special levy paid by the
vendor.
Figure 3.2 Explanatory
Diagram of Pre-Emption
Scheme

3.5 The Designated-Area Scheme Recommendation (Majority
Decision)
A. A scheme under which lands which had been increased in price by local
authority works and which are in areas designated by the High Court could be
acquired by L.A.s and the owners compensated by reference to the existing use
value. We propose to refer to this as the designated area scheme
3.5.1 Background
The designated area scheme is the proposal that has attracted the most attention by
professionals and the media as a possible answer to Irelands fluctuating development
land prices. The committee researched many different levies and taxes possible to
recoup the betterment. They determined each recommendation would inevitably result
in higher land prices and a lack of supply. Hughes (2010) reiterated this point stating
that if landowners are discouraged from bringing land onto the market then the market
will collapse until such time as a heavy taxation sanction or whatever else is removed
With this method the committee tried a different approach, recouping the betterment
indirectly through state intervention. This method proposes the local authorities acquire
the land at existing use value, service it and release it to developers at a full market
value.

2.5.2 How it works
This scheme requires a High Court Judge assisted by a planning and valuation
professionals, assign a designated area that is likely to be used for future development.
As these lands are suitable for future development they are likely to witness an increase
in value due to the L.A. providing services to that area .i.e. betterment. The main

provision of this scheme would empower the L.A. to acquire these lands at existing use
value plus twenty-five percent of that value. When the L.A. feels an increase in
demand for housing they will sell on the land to a developer at full development value.
Thus, the L.A has recouped the betterment through the difference in existing value and
full development value.
If no agreement can be reached between the parties the existing use value then the
High Court Judge and his assessors will determine the value. Until the L.A. decides to
purchase the land within the designated area the landowners may act as normal selling
or letting the land.
(For an illustrated example of how this scheme works refer to figure 3.3)

3.5.3 Planning Issues
It is highly important that a correct balance is found between the designated area
scheme and the planning legislation for both to function correctly. As the planning
authority could not possibly acquire all the lands immediately it is important that
development continues in these areas. Planning applications would continue to be
granted within the area where appropriate. If this was not the case delayed development
would affect supply, in turn increasing the prices of houses on the market. However, if
the L.A. could not refuse these applications most of the lands they were hoping to
acquire over the ten year period would be developed. Hence, for the scheme to work
effectively a balance must be found.
Section 26 (2) in the Local Government (Planning and Development) Act, 1963 which
was amended in section 34 (2) of the Planning and Development Act, 2000. (See

appendix B). To overcome the confliction between the planning legislation and the
scheme the committee recommended the legislation should be amended to include an
extra provision allowing the L.A. the power to on appeal refuse to grant planning
permission for any development of lands in a designated area on the ground that the
land to which the application relates is in a designated area and that the local authority
intends to acquire the lands within the ten year period.



6. Public
The public purchase the new
buildings on the site.
1. High Court
The high court judge with assistance from
two professional assessors will decide on
the location of the designated areas
2. The Designated-Area
The designated area is an area likely to be used for
development within the next ten years. As these areas are
suitable for development years therefore would witness an
increase in value due to the L.A. providing services to that
area .i.e. betterment.
4. The Landowner
The landowner will receive
existing use value
(usually agricultural) plus
25% for their land.
Step 2: Sell/lease at
Development
Value/Full Market
Rental Value
3. The Local
Authority
The local authorities
begin acquiring the
land within the
designated area by
agreement or
compulsive
purchase.
(i) The betterment is
recouped indirectly
through the
difference in price
the L.A. acquires and
sells the land at.
(ii) The revenue received through the
betterment levy is then reinvested in the
area servicing the land and developing public
infrastructure
5. Purchaser/Developer
The developer will purchase
the site at full development
value and develop the site.
Step 1: Acquire at
Existing Use
Value
Figure 3.3 Explanatory Diagram of
Designated Area Scheme

3.6 Arguments For and Against the Schemes
Set out below are the augments for and the main recommend schemes, the pre-emption
scheme (chart 3.1) and the designated area scheme (chart 3.2) that arose in 1974. This
section aims to give clear indication of the pros and cons involved with each scheme.
The Pre-Emption Scheme
Arguments For Arguments Against
The scheme would be linked to the development
plan as when areas are rezoned for urban
expansion the County Manager can then apply to
have these areas designated.
It is undesirable the County Manager will solely
decide which land is to be designated. Thus
deciding which landowners in the county will have
to endure the levy and which land owners wont.
Therefore giving the planning authority access to
introduce more attractive land uses and policies.
It is a tax on development which may prevent
sustained development.
Method protects the open market value system
allowing the market control the prices therefore
landowner gets full value.
Un-constitutional; taxes are by general rules
relevant to all who are a resident in the state and
not to be solely decided by an official.
Powers allow the L.A. to intervene when demand
increases by releasing a supply of land much
quicker than a compulsory purchase method.
The L.A. will have to pay full market price
therefore the landowner may increase the prices of
his land to pass on levy to the purchaser attempt to
diminish the levy.
Under current system the full development value is
paid on land with development value.
Possibility of a rise in building prices due to the
increased land prices.


Levy would recoup most of the betterment realised
by landowner.
Probability of landowners avoiding the tax would
be high therefore complex legislation would have
to be introduced and amended frequently to
attempt to prevent this.
The Designated-Area scheme
Arguments For Arguments against
Indirectly recoups and returns most of the betterment
gain to the L.A.
The schemes provisions may be unconstitutional
under article 43 of the constitution. (See section
3.4.1)
Unlikely anybody will buy development lands within
the designated areas for more than existing use value
plus 25%, as they will be aware the L.A. could
acquire that land from them at a later stage therefore
bringing the cost of development land down.
The scheme would entail two different codes of
law on compulsory purchase on land, one
applying to land within the designated area and
a different code applying to the rest of the land
in the state.
The L.A. can control the price of housing to an
extent by making land available relatively cheap by
just covering costs or releasing land to a developer at
full development value to make a larger return.
The scheme does not normally apply to the
already established urban areas where large
profits are being made. These lands are already
been serviced by the community therefore it
would be deemed unconstitutional to introduce
legislation to allow compulsory purchase of
these lands.
Table 3.1 Arguments for & against pre emption scheme



1
A guideline or strategic plan outlining the L.A.s intentions to acquire lands depending on the lands development
importance and finances available.
L.A will have the power to impose restrictions on the
developer so as to control the type of structure
allowed on the site and its final sale/letting price
It would be unjust to acquire at existing use
value plus twenty-five percent as it deprives the
developer of a substantial amount of his profit.
Overall increase of revenue for the L.A. due to the
recoupment of the betterment gain for investment in
schools, post offices, hospitals ect.
Process of acquiring the lands may be slow and
cumbersome if not regulated correctly
Provision for a ten year timeframe therefore allowing
incorporation of an acquisition program
1
therefore
incorporating strategic planning in the process.
This scheme would require a large new
administrative organisation working efficiently
in dealing with the acquisitions and sales.
Table 3.2 Arguments for & against designated-area scheme


3.6 Relevant Issues
The following section contains issues of relevance that must be kept in mind when
considering either scheme.

3.6.1 The Irish Constitution
As seen in tables 3.1 and 3.2, one of the main arguments against implementing the
schemes is the belief it would be deemed un-constitutional. The Irish constitution was
passed by Dil ireann on the 14
th
June 1937. The constitutions provisions were
published by the state entitled Bunreacht Na hireann and covered private property
matters under Article 40.3.2 and Article 43. Both provisions inform each other
therefore both have to be taken into account when considering property rights and the
Kenny Report recommendations. (Kelly, 1978).

In Bunreacht Na hireann Article 40.3.2 states the State must vindicate... property
rights of every person. Article 43.1 states that the State acknowledges every human
have the right to private ownership of external goods and will not pass any law
attempting to abolish the right of private ownership. However Article 43.2
contradicts both Article 40.3.2 and 43.1 as it states these provisions must be regulated
by the principals of social justice and may be delimited as the State must consider
exigencies of the common good. (Irish Government, 1937).
Several commentators have expressed views on the contrast between Article 43.1 and
43.2 with Wheare (1966) describing it as a classic example of giving a right on the one
hand and taking it back on the other. This conflict has left the provisions open to

judicial appraisal for implementation of suggestions such as the designated area or pre-
emption schemes. (Relevant section of the Constitution can be seen in full in Appendix C)

3.6.2 Report to the Joint Oireachtas Committee on Building Land,
1985

In 1985 Liam Kavanagh, the Minister for Environment at the time stated that he was
satisfied that this proposal of the Kenny Report would have little chance of surviving a
constitutional challenge in the courts based on the argument that it would amount to an
unjust attack on the landowners property rights. He supported his opinion with
reference to a decision of the Supreme Court in a recent case
2
. (Kelly, 1984)

3.6.3 Ninth Progress Report on Private Property, 2004

On the 29
th
February 2000, Taoiseach at the time Bertie Ahern wrote to Brian Lenihan
TD asking for the committee to examine the private property rights of the constitution.
During the examination of the constitution the committee focused on establishing a
balance between the rights of the individual and the exigencies of the common good
while examining changes to legislation which would either control or otherwise
regulate the price of building land while seeking to ensure the speedy roll-out of
major infrastructural projects. (Irish Government, 2004).
An examination of the possibility of legislation which would regulate the price of
building land began. The committee traversed the history of the Kenny Report and
observed its recommendations in relation to private property rights. When published,

2
Blake v. Attorney General (1982) which deemed the Rent Restrictions Acts 1946-1967 were unconstitutional.

the committee concluded that the Kenny Report recommendation that the L.A. acquire
land at agricultural land prices plus 25% could be introduced by legislation. The
committee had decided that under modern case-law
3
it would not be un-constitutional.
(Irish Government, 2004).
3.6.4 Evolution of the Compulsory Purchase Code
The designated area scheme proposes compulsorily acquiring the land at existing use
value. As Prendergast (2010) outlined for the designated-area recommendation to
function there would have to be a greater acceptance of compulsory purchase, at the
moment compulsory purchase is seen as a last resort.
The introduction of the Land Clauses Consolidation Act, 1845, ensured compensation to
those whose lands were compulsorily acquired. The compensation was to be value to
owner and in addition an extra 10% was usually awarded to indicate the land was
compulsorily purchased. This system was drastically changed in 1919 with the
introduction of the Acquisition of Land (Assessment and Compensation) Act. It saw the
removal of the extra allowance and assessment was to be by a property arbitrator instead
of a juror. The 1919 act also prescribed six new rules
4
to govern the compulsory
purchase system. The compensation was thereafter to be assessed on the open market
value instead of value to owner. (Mc Dowell, 1999)

3
Sinn Fin Funds and Central Dublin Development, 1947.
4
Six new rules in the 1919 Act can be seen in Appendix D, 10 more rules introduced in 1963 Planning Act however
do not pose relevance to this paper.

3.7 The British Experience Scott Report 1919 & Uthwatt Report
1942

Ireland was not the first country to attempt to recoup betterment and control land values.
In fact the Kenny Report itself was heavily based on a prior attempt by the English
Parliament resulting from the Uthwatt Report. As the Irish planning system is heavily
based on the British system the Kenny Committee understandably looked at the British
attempts to answer the problems they had realised existed. Thus when assessing what
may have happened if the Kenny Report was implemented it is imperative to review the
British experience to date.

3.7.1 The Scott Report 1919
In 1919 the Scott Report
5
was published and its committee members were the first to
investigate the recoupment of gains in Britain. They however decided it was not an
option and agreed it would be undesirable that the L.A.s would be expected to engage
in what they described as land speculation. They felt that the only means for
recovering betterment could be done directly by a direct charge. The committee
concluded by stating that acceptance of the principle of recoupment was pointless and a
direct fixed charge was sufficient. (Great Britain Parliament, 1942)

3.7.2 The Uthwatt Report 1942
However the opinion towards recoupment and price control seemed to have changed
over the next twenty years as the next British report on the topic, the Uthwatt Report
6

5
The Acquisition and Valuation of the Land Commission of the Ministry of Reconstruction, 1919.
6
Expert Committee on Compensation and Betterment Final Report, 1942. This report is known as the Uthwatt
Report because it is named after the committees chairman Augustus Uthwatt.

stated that purchase for recoupment is a sound principle and the most effective of the
existing methods by which a public authority may secure increases in value of property
which their activities have created. (Great Britain Parliament, 1942)

During the early 1940s many betterment recoupment schemes had been recommended
through submissions to the Barlow Commission
7
. As a result in 1941 a committee was
established to investigate the situation, under the chairmanship of Mr. Justice Uthwatt.
After three years the committees work was published in the Uthwatt Report. (Tichelar,
2003)

The main objective of the Uthwatt Report was to make an objective analysis on the
subject of the payment of compensation and recovery of betterment in respect of public
control of the use of land, possible means of stabilising the value of land required for
development or redevelopment and any extension of modification of powers to enable
such land to be acquired for the public on an equitable basis. (Great Britain
Parliament, 1942)

Like the Kenny Report the Uthwatt Report contained an in-depth examination of the
betterment and land price control topics. The main suggestions recommended by the
committee was nationalising development lands and recouping betterment through a
windfall tax. In 1947 through the Town and County Planning Act the British
Government introduced legislation nationalising all development land. However due to
a lack of incentive for the landowners to bring the land to the market the supply of
development land was severely weakened. The legislation was abolished in 1954 only 7

7
Commission on the Distribution of Industrial Population

years after implementation. The second legislation resulting from the Uthwatt Report
was a new tax aiming to capture the windfall profits witnessed on development land.
This legislation was implemented through the UK Finance Act of 1965; however it only
lasted 4 years before it was repealed in 1971. (Tichelar, 2003)
3.8 The French Experience Pre-emption scheme
The pre-emption is a method which I have seen in action and I think there is a lot to be
said for it. It allows the local authorities to step in and purchase the land. It has its
advantages primarily being it doesnt eliminate the market it runs parallel with the
market
(Nowlan, 2010)

There is a long history of the existence of a pre-emption scheme in France similar to the
scheme recommended in the Kenny Report. To improve the shortage of housing due to
damage and economic growth prior the Second World War, the French government
introduced their first pre-emption provision. The scheme was introduced through the
introduction of Priority Development Zones
8
. Within these zones the municipals (local
authorities) had the priority in purchasing land up for sale. Even with strong
government intervention within the zones, the procedure was ineffective in avoiding
land speculation. As a result inflation in development land values spread to
neighbouring fields. This rise generated a land price boom between 1958 and 1963.
(Aveline, 1997)

8
Priority Development Zones or Zones Urbaniser en Priorit (ZUPs) within the zones the L.A would acquire land
then develop land, provide services public facilities, and sell developed land on to developers


In 1962 in an attempt to suppress the land speculation situation and control the land-use
the municipals were empowered with a more thorough pre-emption power. The new
provisions allowed them define areas as future urban zones
9
within city suburbs.
Regardless, the revised provisions came too late and as the French post war boom
(second largest in the world) was coming to an end.
After providing enough housing in the suburbs the French authorities refocused on
regenerating decayed areas around town centres. (Comby and Renard, 1996)

In 1975 the regeneration process led way to the third French variation to the pre-
emption prevision introduced with the passing of the Galley Act. This provision allowed
land intervention zones to be designated by the authorities, however it was financially
dependent and the funds never came as the housing marked dried-up so it was replaced
in1982. This seen the introduction of the subsequent method, empowering the
municipals to exercise an urban pre-emption right within future urban zones.
(Aveline, 1997)

9
The future urban zones were called Deferred Development Zones or Zones d'Amnagement Diffr (ZADs)
Image 3.5 Priority Development Zones in Brichambeau, France, 1958
(Grand Nancy Urban Regeneration Project)


However the municipals didnt use it for acquiring land and real estate for future
development as proposed. Statistics show only 1% of sale announcements in France are
followed with a local authority purchase. Instead the authorities used the power to
survey the land markets in their region, as in Ireland data on land transactions are hard
to gather. The authorities also wrongfully filtered perspective purchasers to avoid
certain projects e.g. housing for immigrants. (Aveline, 1997)

France hit a period of decentralisation in the 1980s and as suburban projects came to an
end the urban pre-emption never really made progress. There was little co-operation
between the municipals which made planning the pre-emption scheme impossible. The
French State had decided to stop financing the municipals and without funds they could
Figure 3.2 France Experience Pre-emption Timeline
(Source: Comby and Renard, 1996/ Aveline, 1997, Altes 2009)


not use the pre-emption provision. Overall the French experience of the pre-emption
method was unsuccessful as it firstly caused land speculation, its next attempt was
halted by economic downturn and the later attempt was wrongly employed and couldnt
survive without adequate finances. (Aveline, 1997)

3.9 The Dutch Experience The Designated-area Scheme

Many commentators have regarded the Netherlands as a planners paradise when it
comes to urban planning controls and supplying of developable land. The supply of
developable land was managed so successfully that little value rise occurred in the
transition between agricultural land and urban development land. (Altes, 2009) .It is
important to take into account the external factors affecting the Netherlands
development land market when comparing to Ireland;
Agricultural land is highly priced due to strong agricultural sector.
Land is often under sea level and in a peat form referred to as solid water
therefore servicing land is extremely expensive as and has to be pumped dry
first. (Altes, 2009)
Dutch planning system had finances to supply plots on tap and highly
encouraged development on these sites. (Premous and Louw, 2002)
The local government policy was geared towards supply that is producing homes
to meet the needs of the public. (Faludi and Van der Valk, 1994) See figure 3.3



Keeping the factors discussed above in mind, the Dutch planning system functions
relatively similar to that of the designated area scheme recommendation. As the Dutch
planning system is a detailed complex system this paper will only discuss the main
objectives. It is important to take into account that the Netherlands is a very different
society and there is a wide spread acceptance of planning, as a result the Netherlands
has always had a strong planning system. (Prendergast, 2010) The local land-use plan
(Besermmingsplan) guides urban development and sets out the goals for the
municipalities (local authorities) when acquiring land. When the plan is made the
municipalities can then use compulsory purchase lands within the area.

Figure 3.3 House building in the Netherlands; Proportion of Social Housing
(Source: CBS, 2000)

Social Sector
Premium
Private Sector
%

o
f

H
o
u
s
i
n
g

i
n

E
a
c
h

S
e
c
t
o
r

Netherlands Proportion of Housing Sectors


Compulsory purchase is to be in the interest of physical planning and housing as
stated in Article 77 of the Compulsory Purchase Act 1981. The compensation in the
Netherlands is at least existing use plus disruption as opposed to market value in
Ireland. Although the municipalities may resort to compulsory purchase it rarely
happens. They usually pay a bonus above the existing use value to avoid the slow
compulsory purchase process. Of the total area acquired by the municipalities between
1979 and 1982 only 0.06% was compulsorily purchased. (Neeham, 1992)

Up to the 1990s the municipalities acquire land for each proposed development
separately. The municipalities become the temporary owner of the development land,
service the land and finally dispose of it to private developers. The municipalities were
dependable suppliers of land. As a result developers did not need to service land or
build up land banks. The developer makes their profit on of the sale of the houses not
the land. The municipalities acted as a supplier of a public utility when distributing
development land. They supplied land so that there was never a scarcity therefore the
land prices were reasonable. Like the designated area scheme proposes the municipals
sell the land at full development value. The development gain was recouped and
reinvested in public infrastructure. (Needham, Kruit, Koenders, 1992)

The municipalities have the power to incorporate restrictive covenants on the resale of
lands. An example of such a clause would be an anti-speculation provision preventing
developers selling the lands in the future. These covenants are called chain agreements.
The development process worked effectively. The landowner got compensation in

access of existing use and the municipals serviced the land while capturing the gain.
Finally the developers could then make their profits off the resulting house sales.

However in the 1990s the Netherlands housing policy transformed to a market led one.
The developers gained a stronger existence in the development land market. They
started to buy land and generate strategic land banks. As a result profits to be made from
housing developments increased considerably. The municipalities could not contest
with the high prices the developers were offering development land at. The
municipalities were forced to negotiate with the developers to come to agreement. The
developers agreed to sell the land to the municipalities at reduced friendly prices to
be serviced. The conditions of the sales were such that the developers were guaranteed
allowance to develop the lands. (Verhage, 2002)

This seen the start of new forms of municipaldeveloper partnerships emerging and
controlling planning and land development practice .The land supply began to slow up
wit municipalities unable to meet the new shifts in demand. As a result a price gap
between agricultural land and development land grew. In this respect the success story
of the Dutch planners paradise has come to an end. (Altes, 2006:236)


3.10 Conclusion
This chapter explained the effects of each of the recommendations in the Kenny Report.
The recommendations were narrowed down to two main recommendations. Then
similar experiences abroad were examined to help determine the outcome of an Irish
pre-emption or designated area scheme.

Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented? Interviews


Chapter 4
Interviews



4.1 Introduction
The previous chapters are based on the authors interpretation of various facts,
statements, figures, policies, legislation and publications. In order to further enhance the
authors theory of controlling development land values and recouping betterment in the
G.D.A. through the schemes of the Kenny Report, various significant individuals with
knowledge on the various aspects involved. To avoid bias, maximise opinions and give a
rounded view of the topic a variety of professionals were interviewed. It was important
that professionals with knowledge, interest and understanding of the study area and the
purpose of the authors hypothesis be interviewed in order to maximise the practical
significance of this paper. The interviews were analysed both separately and collectively
to adequately investigate all viewpoints. (See appendix E)
4.1 The Interviewees
1. William K Nowlan, FRICS, FSCS, Dip Strategic Studies. Chartered Surveyor/Town
Planner/ Journalist

2. Terry Prendergast, BSc, MPhil, MSc, MIPI. Planner D.I.T.

3. Brian Hughes, Dip. Env. Econs., FSCS, FRICS. Chartered Surveyor/Economist

4. James Meagher, FIAVI, Development Land Director.

5. Dan Boyle, Green Party Senator

6. Noel Ahern, Fianna Fil T.D.



4.2 William K Nowlan; Chartered Surveyor & Town Planner
William believed that the development land values in the G.D.A. rose due to factors such
as economic growth, availability of funding and demographic changes. However he felt
less obvious influences such as greed of speculators and the defective mechanism of
releasing land to the market also increased values. He agreed the designated area scheme
could have prevented this but feared the incompetence of the L.A. to manage the land
redistribution. William also added that the L.A. is disconnected with the market when it
comes to planning and zoning. For this reason he feels the L.A. would be too unskilled to
deal with the undertaking of the designated-area scheme. William showed admiration for
the pre-emption scheme and he strongly expressed that Ireland needs a project
management focused planning system as in the Netherlands. See cognitive map 1.
Key Issues
Need for effective land release mechanism.
Lack of coherent structure in Kenny Report recommendations.
Incompetence of the L.A. to carry out the required tasks in either of the proposed schemes.
Inadequate land serviced during the boom period to meet the demand for land.
Pre-emption method avoids market interference; allows the scheme to run parallel with the
market.
Need for project management focused system in which a planner takes control.

Table 4.1 William Nowlan Key Issues
Cognitive Map 1 - William Nowlan Inteview
cCOc s1CC *OCCC vOCOCC OcC LOC1 CCO1OO Cc1O
Driver
Goal Strategic Option
1 Demographics
2 Economy
3 Availability of
money
4 Demand for
accommodation
5 Price of buildings
rise
6 Land prices rise
7 New buildings
8 Old buildings
9 Residual
10 Construction
costs
11 Profit
12 Greed
13 Speculation
14 Demand for land
15 Rejected planning
permission
16 Inadequate
serviced land
17 Under-supply of
land
18 Offered to
required market
19 Mechanism to
release land
20 Irish planning
system
21 Disconnect with
market
22 Insufficient
output of land
23 Based on output
of land
24 Abuse of system
25 Corruption
26 Focused on end
user
27 Project
management focused
28 Specific proposed
purpose
29 Connected with
market
30 Prevention of
corruption
31 Landowner
32 Unfair
profits/gains
33 Refuse to quit
profits
34 Valuation
35 Construction
36 Finance of
project
37 Planner takes
control of various
stages
38 Local Authorities
39 Poor market
skills
40 Designated area
scheme
41 Competent local
authority
42 Revised
administrative
system
43 Pre-emption
scheme
44 Healthier
property market
45 Ability to manage
land redistribution
46 Runs parallel
with market
47 Supply of land
48 Control of
develpment land
prices
49 Express CPO
50 Stricter controls
on finance


David Cassidy BSc. (Hons) Property Studies 2009/10 |76

4.3 James Meagher - Development Land Director, HTMOR
James indicated the main reason land values in the G.D.A. rose was due to the
inefficiency of the L.A. to service adequate land to meet demand and the anticipation of
further density and house price increases. He argued the fact hoarding took place in the
G.D.A. and explained that if land was held onto it was for logical business reasons.
James also showed uncertainty in the states capability in dealing with land and is against
the Kenny Report recommendations as they interfere with property rights, cap
compensation receivable and may provoke corruption. He feels the huge profits were fair
as risks were taken to achieve them. See cognitive map 2.

Key Issues
Kenny Report assumes perfect market; doesnt account for disputes over land, imperfect title ect.
Hoarding didnt exist in the G.D.A. if land was held onto it was for logical business reasons.
Feels it is unfair to cap the compensation paid to the landowner under the designated area scheme.
Competition between different L.A., dont plan as a unit, would encounter too much social
pressures if owned land which may lead to corruption as in the past.
Believed the L.A. couldnt manage land acquired under either scheme as cant manage land they
already own.

Table 4.2 James Meagher Key Issues
Cognitive Map 2 - James Meagher Inteview
Driver
1 Local Athorities
2 Delays
3 Inefficacy in
organisation
4 Sluggish provision
of services
5 Expensive planning
conditions
6 Actively refusing
planning permission
7 Planning gain
8 Developers
9 Anticipation
10 Holding onto land
11 Disputes
12 Lack of land
13 Imperfect title
14 Higher house
prices
15 Higher densities
16 Stabilised land
vales
17 Sufficient supply
18 State
intervention
19 Competent local
authorities
20 Kenny Report
21 Changing
Densities
23 Corruption
24 Councillors 25 Excessive
lobbying
26 Competing
authorities
27 No
inter-authority
communication
28 State ownership
of land
29 More logical
planning
30 Recoup betterment
31 Uncapped
compensation
32 Market value
33 Pre-empton
35 Balance between
planners and
commercial reality
36 Better managment
of land
37 Long term plans
38 Unity of local
authorities
39 Society benifits
40 Express provision
of services
41 Improved
infastructure



4.4 Terry Prendergast Planner
Terry believes the rise in development land values in the G.D.A. is due to the economy
but also the lack of a mechanism to supply land to a market that severely lacked it. Terry
acknowledged that the huge gains received by landowners are unfair and it is one of the
major failures of the planning system. Terry is of the opinion that the designated area
scheme would have controlled the development land values witnessed. However she
feels this would have only been possible if adequate resources, organisation and extra
administrative skills were available in the L.A. Finally Terry emphasised the need to
recoup the increase in value as well as the cost and favours the designated-area scheme to
do this. See cognitive map 3.
Key Issues Raised
Favours the designated area scheme but recognises needs competent L.A. to achieve goals.
Unjust that currently the L.A. can only the cost of providing the services not the increase in value.
Requirement for mechanism to release land into market efficiently.
Need for greater acceptance of the planning system and compulsive purchase order.
Financial constraints prevented the L.A. servicing adequate land.

Table 4.3 Terry Prendergast Key Issues
Cognitive Map 3 - Terry Prendergast Interview
Driver
1 Economic Boom
2 Land Shortages
3 Lack of Systematic
Approach
6 Valuation aspect
ignored by planners
8 Planning System
recognizing the
market
9 Works parrallel to
market
11 Meet Demand
12 Failure of
Previous Legislation
13 Failure to recoup
betterment
14 Development of a
New System
15 Implementation of
Kenny Report
16 Designated Area
Scheme
17 Pre-emption
Scheme
18 Recoup Additional
Value
19 Demand
20 Fiancial
Constraints
21 Indiscriminatary
Land Re-zoning
22 LA Inability to
Service Land
23 Sufficient
Financial Resources
24 Conrol Land
Values
25 Competent LA
26 Organisational
Structure
27 Skills
28 Pro-active
Approach
29 Flexible Planning
System
30 Society
31 Culture
32 Acceptance of
Planning System
33 Plan Lead System
35 More ingrained
planning system
36 Unfavourable with
landowners
37 Greater
Acceptance of C P O
38 Perception of
land
39 Attittitude
towards compulsory
purchase
40 Rise in land
values



4.5 Brian Hughes Chartered Surveyor & Economist
Brian determined that a combination of easily accessible credit, continuing expectation,
population growth and fewer people occupying houses inflated development land prices.
In relation to the Kenny Report Brian felt the designated area scheme would prevent the
freeing up of land and wouldnt work efficiently. He made the point that the profits
encourage the land owners to bring land to the market and if we take those profits away
the land wont come to the market. Brian thinks the pre-emption scheme would be a
better option with reference to continental success of the scheme. Brian pointed out the
need for a development land transaction database to provide clarity in the market but also
coincides with the authors difficulties tracking past values. See cognitive map 4.
Key Issues Raised
Important that in-use demand and location theory used in designating areas for development.
In favour of pre-emption scheme as allowed recoupment without affecting supply.
Feels the designated area scheme will not allow sufficient land to come to market as profit
removed.
Requirement for mechanism to release land into market efficiently.
Opposed to councillors highly influential powers in rezoning.
Requirement for national land transaction database to provide clarity and a healthier property
market.

Table 4.4 Brian Hughes Key Issues
Cognitive Map 4 - Brian Hughes Inteview
Driver
1 In-migration
2 Continuing
expectation
3 Demographics
4 Fewer people
occupying houses
5 Rising land values
6 Ready supply of
credit
7 Cheap credit
8 Perception risk
-v- reward
9 Residual valuation
10 Interest roll-up
11 Oscillatory
effect
12 Fluctuation in
land values
13 Need realistic
valuations
14 Landowners hold
land
15 Need to free up
land
16 Failure of
previous legislation
17 Discouragement
18 Radical proposals
19 Uthwatt report
20 Kenny Report
21 Meet demand
22 Gradual
implementation
23 Effective system
24 Suffcent supply
of land
26 Foreign
experiences
27 Valuer assistance
28 Healthier
property market
29 Disclosure of
prices
30 Transactions
publicly displayed
31 Clarity
32 Avoidance of
corruption
33 Competent LA
35 Zoning
36 Fairness
37 Improvements
38 Provision of
services
39 Local authorities
40 Increase in value
41 Recognition of
increased value
42 Development of a
system
43 Drastic rezoning
44 Over supply
45 Realistic Zoning
46 Location Theory
48 Ecourage
landowner to sell
49 Society can
benifit
50 Recoup betterment
51 Inaccurate
Comparative evidence
52 Councillor's high
influential powers
53 Delimit
councillor's powers
54 Better knowledge
55 In-use demand
56 Major influences
on value
57 Elapse of time
58 Constitution
tested
59 More precedent
case law
60 Flexible property
rights
61 Robust
constitution
62 Pre-emption
63 Control land
values



4.6 Dan Boyle Green Party Senator
In Dans view not only did population increase development land values but so did the
fact there was a younger structure to the population. He feels that hoarding of land
occurred in the G.D.A. and artificially increased values along with the availability of
credit which made the transactions possible. Dans judgement is that the designated area
scheme would have prevented unnecessary increases in values while recouping the
betterment for the L.A. As Dan feels the recommendations should have been
implemented, he recognises that the Kenny Reports inconsistency is a major flaw. Dan
expressed concern over the unnecessary development and zoning that took place and
realises there is a need for a scheme to rectify this. See cognitive map 5.
Key Issues
In favour of the designated area scheme and believes it could have prevented increased land
values.
Recognised lack of consistency in Kenny Report which prevents its implementation.
Kenny Report may need a revised structure.
Feels all lands should be zoned.
Disconnect between L.A. and market activity.

Table 4.5 Dan Boyle Key Issues
Cognitive Map 5 - Dan Boyle Inteview
Driver
1 GDA
2 Population growth
3 Younger population
structure
4 Increased demand
for land
5 Availability cheap
funding
6 Land hoarding
7 Unnecessarily
increased prices
8 Kenny report
9 Discouragement
10 Private property
11 Mixed opinions
12 Un-constitutional
13 Diminish
unnecessary increase
14 Revised structure
15 Implementation
16 Lack of
consistency
17 Flawed in concept
18 Local Authorities
19 Zoning
20 Development
charges
21 Disconnection
22 Inconsistencies
23 Zone all lands
24 Unnecessary
development/zoning
25 Price control
26 Sustained economy
27 Recoup bettermet



4.7 Noel Ahern Fianna Fail T.D.
When it came to the influences on development land rising in the G.D.A. Noel felt it was
a number of factors. He stated similar factors the other interviewees raised but also added
that Irish peoples expectations had changed. People didnt want to live above shops they
wanted new spacious housing which placed a demand on development land. He also
expressed concern that the over-lending of financial institutions meant the public could
act on this expectation through compulsive buying. He stated that agricultural plus 25%
was insufficient compensation and maybe three times agricultural value would be more
upright. Noel also suggested dividing land to allow the L.A. recoup costs from one part
whilst allowing the landowner speculate profits from the remainder. See cognitive map 6.
Key Issues
Financial institutes over lending had large role in rise of the G.D.As development land values.
The fact the Kenny Report was only agreed on a vote of four to two made it hard to implement.
Against the designated area scheme
Governments had fear of wasting time trying to implement Kenny Report and drafting
legislation
The serviced land in the G.D.A. between 1996 and 2006 was not necessarily where people wanted
to live.
Disconnect between L.A. and market activity

Table 4.6 Noel Ahern Key Issues
Cognitive Map 6 - Noel Ahern Inteview
Driver
1 Control
development land
prices
2 Increase supply
3 High development
land values
4 High house prices
5 Boom period
6 Economic growth
7 More housing units
8 Low emigration
9 Smaller average
family size
10 High immigration
12 Demographics
13 People's
expectations
14 100% mortgages
15 Financial
institutes
17 Impulsive buying
18 All at once
19 Kenny Report
20 Voted 2-4
21 Private property
22 Constitution
23 Applies to
everyone who owns
land
24 Applies to select
landowners
25 Part V
26 Designated area
scheme
27 Modify to apply
to everybody
29 Every 2 acres of
10 acres sold at
agricultural value
to LA
30 Public suffer
31 Not fair
32 Zoning
33 Huge profits made
by landowners
34 State recoup
revenue
35 Landowner still
makes profit
37 Betterment
recovered
38 Creation of a
fair balanced scheme
39 Healthier
property market
40 Unfair gains
41 Kenny's
recommendations
42 Unfair
compensation
43 Fair compensation
44 X2 or X3 times
agricultural value
45 Good mix of
planners and valuers
46 Lack of
professional input
47 Enough serviced
land in right areas
48 In right areas
49 In totality
50 Lack of serviced
land


4.8 Overall Issues
Using the cognitive maps for assistance the author was able to determine the main issues
that arose throughout the interviews. As discussed earlier the questions were broad and
unstructured and the following chart contains the interviewees assumptions and
perceptions on each of the topics that arose.

Bill
Nowlan
James
Meagher
Terry
Prendergast
Brian
Hughes
Dan
Boyle
Noel
Ahern
In Favour of
designated area
scheme

In Favour of pre-
emption scheme

Inconsistency in the
Kenny Report

L.A. not capable of
carrying out duties
required by
designated-area
scheme

It is wrong that huge
profits are received
by landowners

Hoarding of land
took place affecting
development land
values

Lack of zoned,
serviced lands in the
G.D.A.

Zoned lands not in
areas people wanted
to live/ disconnect
with market

Corruption within
L.A./Indiscriminate
land-rezoning

Competing L.A.
within G.D.A.
region

Lack of finance
within the L.A.

Table 5.7 Indication of viewpoints on main issues.
Table 4.8 Legend for Indication of viewpoints table on main issues.


4.9 Overall Summary

The following summary was determined from analysing the interview results with help
from the cognitive mapping and table 5.1. The interviewees showed a variety of opinion
in relation to the designated-area scheme. However more of those interviewed believed
the scheme would not successfully prevented development land values rising, mainly due
to the L.A.s incapability. There was a conflict of opinion between both political parties
on the designated-area scheme. When the participants were asked about the pre-emption
scheme 67% of the interviewees believed it could successfully have controlled
development land values.

Figure 5.1 Interview indications for designated-area scheme


Another interesting outcome was the lack of clarity in determining if hoarding took place
in the G.D.A. artificially increasing land values. When asked there was a general
agreement that there was a lack of zoned land, discriminate rezoning, corruption and lack
of unity within the L.A. This evidently accumulated to pose a large doubt on the
capabilities of the L.A. carrying out either scheme successfully.
4.10 Conclusion
From interviewing appropriate professionals and individuals, with different viewpoints
on development land values and the Kenny Report, this chapter has helped the author
gain an understanding of all the issues involved. The interviews provided the author with
an understanding of the likely out comes had the designated-area and pre-emption
schemes been implemented. They also gave indication the risks attached, the L.A.s
competencies and the characteristics of the public, professionals, elected members and
the State needed to fully and successfully carry out either of the two schemes. As a result
the interviews have given the author a broader knowledge of the topic and partially
helped the author come to a conclusion on the topic.
Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented? Case Study


Chapter 5
Case Study


5.1 Introduction
The following chapter firstly explains the details of the hypothetical development
proposed. This will explain the key issues about the site being chosen. The second half of
the chapter will then display the case study findings and analysis.

5.2 The Proposed Development
The hypothetical development is to take place on lands located in Streamstown,
Malahide, Co. Dublin. The site is 4.9 Ha (12.2 acres) in size and located on the edge of
the suburban town, approximately 16km from Dublin. The site was specifically chosen in
Malahide as it is a recognised commuter town within the GDA. Malahide also has
extensive residential areas and green field sites, therefore would be very compatible for
either scheme.
The proposed housing estate is to consist of a total of 36 units, including 3, 4 and 5 bed
semi-dethatched and detached dwellings. The houses will be of standard fit out and range
in size from 100-150 square meters. It is assumed the site is privately owned and sold
onto a developer who will have no issues receiving planning permission
1
.

1
For full list of assumptions refer to Appendix F.


Image 5.1 Streamstown Lane Site and Surrounding Malahide Area (Source: DTZ Brochure,
edited)
Figure 5.1 Proposed Development Location Map (Source: DTZ Brochure)

5.3 Zoning
Under the Fingal County Council Development Plan 2005 2011 the property is located
within the development boundary for the Malahide area. However half of the site is
governed by a local area plan but this will not affect the proposed development.
Approximately 6.2 acres is zoned under objective RS, To provide for residential
development and to protect and improve residential amenity. The remainder of the site
(6.3 acres) falls under objective RS1 To provide for new residential communities in
accordance with approved local area plans and subject to the provision of the necessary
social and physical infrastructure. (Fingal Co. Co., 2005)

Figure 5.2 Zoning Map (Site Outlined) (Source: DTZ Brochure)

5.4 Summary of Proposed Development Information
Core Data
Location Streamstown Lane,
Malahide,
Co. Dublin
Size 4.9 Ha. (12.2 acres)
Zoning (See Figure 5.3) 6.2 acres zoned under Objective RS, 6 acres zoned under
Objective RS1, Zoned Residential
(Fingal Co. Co.)
Number of Dwellings 36
Time Period of Development 12 Months
Ownership Private Landowner
Purchased By Developer (Current Irish Structure)
Local Authority (Pre-Emption and Designated Area Schemes)
Pricing
Situation Amount Source
Agricultural Value
of Site
551,440
(North Dublin Agricultural Average 2006:
45,200 X 12.2 Acres)
Farmers Journal Agricultural Price
Survey
(http://www.farmersjournal.ie/2007/011
3/farmbusiness/business/property.shtml)
Development Site
Full Market Value
16,090,000 Residual Valuation
Cost of servicing
lands
610,000
(50,000 per acre x 12.2 acres)
Obtained quotation of proposed
development form Sinead Fowley, Mott
MacDonald Engineering Consultants.
Assumptions
It is assumed the price offered by the L.A. (agricultural value plus 25%) is the new development value. This
is because it is unlikely anyone would pay more than this knowing the L.A. could acquire it off them in the
future at a lower price
Pre-Emption Scheme
L.A. offer on land up for sale was reduced by 20%, not stipulated in legislation however is the common
procedure in international schemes
The exact rate of the special levy was left undecided in the Kenny report. For this case study it has been
assumed the levy would be fairly drastic as many of the recommended taxes were. Therefore a levy of 70%
was used for the case study.

Table 5.1 Summary of Proposed Development Information

5.5 Case Study Findings
The table below sets out the main findings of the case study. To achieve these results
firstly a hypothetical residual valuation
2
was carried out on the Streamstown site. Then
using the valuation figures and the available and assumed particulars of each scheme the
financial outcomes were drawn upon and represented in the table below. A detailed
methodology explaining the calculations of the below figures can be seen in appendix F.

Current Development
Process
Designated-
Area Scheme
Pre-Emption
Scheme
Development Site Price Paid By L.A.
(New Development Site Value)
16,090,000 690,425 12,872,000
Profit Landowner Receives
(Betterment)
11,482,095 138,165 3,861,600
Price Paid by Developer
(Full Market Value)
16,090,000 16,090,000 16,090,000
Amount Recouped by the L.A. 636,250 14,789,575 9,010,400
Factor by which land value increases
when permission to develop granted
29 1.25 23
Landowners profit as % of full
market value
71% 0.9% 24%
Surplus for Investment in local
Infrastructure after provision of
services
26,250 13,883,784 8,400,400

2
Refer to appendix F for full residual valuation and accompanying notes
Table 5.2 Case Study Findings


Figure 5.3 displays the profit made by the landowner and the amount of revenue that is
returned to the L.A. under each scheme. It exposes the extremities of the designated area
scheme recouping large finances and the landowner making little profit. It also shows the
similar problem with the current situation only in opposite and the medium reached
under the pre-emption scheme. Figure 5.4 displays the differences in land values in each
step of the development process under each scheme.

0
5000
10000
15000
Current
Situation
Designated
Area Scheme
Pre-Emption
Scheme
Landowner Profit
Recouped to L.A.
0
20
40
60
80
100
120
140
160
180
Zoned Agricultural Zoned Residental Planning Permission
Granted
Site Sold/Developed
Current Situation Designated Area Scheme Pre-Emption Scheme
Increase in Land Values
Landowners Profits & Recoupment to L.A.
Figure 5.3 Landowners Profits and Recoupment to L.A. Information
Figure 5.4 Increase in land values under each situation


The above pie charts display the monetary returns to each party involved in the land
transaction, under each of the different situations.
Landowners
Profit
Returned
To L.A.
Developer
Current Situation
Landowners
Profit
Returned To
L.A.
Developer
Pre Emption Scheme
Landowners
Profit
Returned To
L.A.
Developer
Figure 5.5 Monetary returns under each situation

5.6 Current Situation in Ireland ~ Analysis
As table 5.3 shows under the current Irish development process the profits made by
landowners are huge. Of the total site value 71% returns to the landowner. In the
hypothetical development, of the 16,090,000 site transaction only 636,250 (4%)
returns to the L.A. To conclude the current situation shows no method of controlling
development land values and the finance recouped barely covers the servicing costs of
the site. The alarming figure of 26,250 remaining for investment in infrastructure
highlights the lack of financial return occurring from development land transactions. The
value of the land increases 29 times under the current situation after the land is zoned.

5.7 The Designated-Area Scheme ~ Analysis
Under the designated area scheme the profits accruing to landowner are minute as
opposed to the current situation and the pre-emption scheme. Only 138,165 of a profit
is witnessed by the land owner, which in context is only 0.9% of the resale price to the
developer. The land value only increased of 1.25 times in value when zoned, this is
compared to the 29 times increase under the current process. As figure 5.6 shows there is
a large scope for the L.A. to control the land levels through the resale to the developer.
The L.A. could sell the development site for full market value of 16,090,000 or lower
the resale price to just 850,000, covering purchase and servicing costs.



5.8 The Pre-Emption Scheme
Of the three scenarios the pre-emption scheme showed a medium in results. The pre-
emption did succeed in recouping betterment through the 70% levy which recouped over
9 million. However, the L.A. would be fairly restricted on price control under this
scheme. After purchase and servicing of the site the most the L.A. could resell the site to
the developer was at a 16% reduction. (See figure5.7) This is because the original offer
by the L.A. has to be in the region of the full market value. Finally in this method the
landowners profit is 24% of the full market value, not excessive or insufficient as seen in
the other services. The pre-emption scheme also produced a healthy reinvestment
amount of over 8.4 million.

Figure 5.6 Designated Area Scheme Land Values v-Betterment


5.9 Conclusion
The residual valuation gave a platform for the hypothesis testing. The resulting figures
gave the author a broader knowledge of the financial effects of each scheme on the
landowner, the L.A. and the developer. It clearly showed the recouping and price control
power or lack of, with each scheme. Finally the case study helped put a practical side to
the investigation and help the author come to a conclusion.

Figure 5.7 Pre-Emption Scheme Land Values v-Betterment
Could the Rise of Development Land Values in the Greater Dublin Area Have Been Prevented?
Conclusions &
Recommendations


Chapter 6
Conclusions &
Recommendations

Conclusions &
Recommendations


6.1 Introduction
The previous chapters provided a detailed insight into the development land trends within
the G.D.A and possibilities of controlling and recouping gains from them. In the
following chapter concludes both primary and secondary research into the possibilities of
controlling development land and recouping betterment. From these conclusions the
author will suggest recommendations to improve the future of the development land
market within the GDA Finally the author will close the chapter by suggesting future
avenues for research.

6.2 Hypothesis
In relation to the hypothesis of this dissertation, Could the increase of development land
values within the Greater Dublin Area have been prevented?, two possible schemes
recommended by the Kenny Report had to be considered to fully determine the answer.
The author thoroughly investigated both schemes and arrived to the conclusion set out
below.

6.2.1 The Designated Area Scheme
The author believes the designated area scheme in theory is a perfect solution as it
recoups significant finance and has huge leverage to control development land prices.
However in relation to the hypothesis, the author feels it would not have prevented the
increase in development land values, mainly due to the lack of resources and skills within
the L.A. The author is of the opinion the L.A. would not have had the capabilities to
manage the land purchase and redistribution process. The L.A. would have needed a
large department to deal with the purchase and resale and more importantly the servicing
Conclusions &
Recommendations


of the land. As there were issues with serviced land coming to the market before such a
scheme requiring purchase and resale, the author feels the L.A. just could not have dealt
with the work load.

The author emphasises due to the lack of profits the landowners would not bring the land
to the market. This would mean that most if not all of the land compulsorily acquired
(unlike the Netherlands), which would be very slow causing further supply problems and
possibly making the situation worse than it was. After investigating a similar scheme in
the Netherlands the author discovered the scheme had worked successfully. However the
difference was that the Netherlands had a very strong and more publicly accepted
planning system and even with it being such a strong system, lost control to the
developers in the end. The author feels this is not the case in Ireland which has a
planning system similar to that in the U.K. Thus, as a similar scheme was attempted and
failed in the U.K., this would also have been the fate for the designated area scheme.

6.2.3 The Pre-Emption Scheme
The author is of the opinion that the pre-emption scheme had the potential to have
successfully prevented the rise in development land values. The main reason for this is
that unlike the designated area scheme all development within the region did not have to
pass through the L.A. In other words the scheme does not directly intervene in the market
it runs parallel with it. Therefore the administrative and financial burden on the L.A.
would have been much less. This method would have allowed the L.A. to waive their
right to pre-emption therefore development of the land could continue and sufficient
supply would not have been affected. However the author stresses if the scheme was to
Conclusions &
Recommendations


successfully work the main issue is the participation of the L.A. and that means acquiring
land. This is where the French version failed.

However, the author is of strong belief that the L.A. would have participated as there was
no instant pressure to purchase lands and no immediate work load, as was the case with
the designated area scheme. The L.A. would have had time to build up their resources as
time went on. The L.A. could have used the right to pre-emption on lands within their
budget. Then they could use the recouped betterment for re-purchasing, servicing
previously purchased lands and investment in infrastructure. The L.A. could build up a
land bank that could be released into the market when demand and land values increased.
Therefore lands would have continued to come to the market.

6.3 Development land values
The author critically analysed the past development land trends and investigated the main
reasons for these increases.
6.3.1 Market Influences
To fully investigate if land values could be controlled, firstly the author had to develop
an understanding of the basic principles of land and what caused the inflation of these
values. Through the literature reviewed and the interviews the author was able to expose
the main influences. It was discovered land values within the GDA valued at 2 million
an acre in 2006 would be worth just over 220,000 in 2009. The boom period was
witnessed in particular by the GDA, with it accounting for 49% of the total GVA
produced by the state, signifying the prosperity of the region. This prosperity created a
Conclusions &
Recommendations


high in-migration rate, transforming the GDA into the highest densest population of 20-
44 years in the state as people in-migrated seeking employment.

The author also recognised three other market interventions that artificially increased
land values. It was determined that land hoarding may have occurred with one
commentator suggested 25 individuals owned over half of the land within the Fingal
constituency. Therefore curtailing land supply and as a result increasing development
land values and prolonging their high level.

It was also discovered that there was a lack of regulation of the financial institutions that
led to over-lending to property developers. This uncontrolled over-lending resulted in
61% of the National debt becoming property related. The narrowness of the Irish
property marked and excessive mortgage lending also contributed to the increasing
development land prices.

The author recognised the Governments previous attempt to control house prices through
tax incentives actually resulted in an increase of development land values. This is a major
factor that has to be considered when determining the success of government intervention
in the market, as was recommended in the designated area scheme. The fiscal incentives
worked in theory and so did the Kenny report recommendations. However the fiscal
incentives had a negative effect on the market.

Conclusions &
Recommendations


6.3.2 Planning Influences
It was determined that market influences were no the single cause of the increases
witnessed with development lands. The planning system has a large role to play in the
increase of development land. When a development plan is passed it concentrated
development to the zoned land, thus increasing the value of those lands. This gifts huge
profit to the land owner therefore it has been branded to be unfair. However it was
revealed that without these profits the lands would not come to the market making the
development land situation worse.

The zoned lands then have to be serviced by the L.A. which is barely covered by the
development contribution scheme as proved by the cases study. This is not all that had to
be provided due to a new development. The public infrastructure such as schools,
crches, medical facilities and transport has to be upgraded to facilitate the new people
brought to the area. As these infrastructures are required by the development it makes
sense that some of the profit made from that development contributed to financing the
provision of these infrastructures.

6.4 Landowners Profits
Throughout the literature reviewed the topic of the profits witnessed by landowner and
the dispute whether theses gains should be recouped arose time after time. The case study
helped to verify the extent of the increase in value and betterment gain that accrues to the
landowner. The author feels that the extent, and emphasises the word extent, of the profit
received by the landowner is unfair.
Conclusions &
Recommendations


The author is of the opinion that landowners and more so speculators take risks in
purchasing land and should receive profits to reflect these risks. However the magnitude
of these profits is disproportionate. The current development process allows massive
profits with only a fragment returning to the L.A.
Five out of the six interviewees agreed the profits made by the landowners were unfair
and stated it would be equitable to recoup some of the profits. The case study depicted
exactly how equitable the proposed schemes are, recouping up to 25 times more that the
current procedure.
6.5 Recommendations
1. The author believes the designated area scheme would have failed due to its lack of
profit discouraging the landowner from bringing his land to the market. However, if
the government is adamant to implement a designated area scheme in future the
author recommends the scheme is revised with the intention of increasing the
compensation (agricultural value of 25%). The author recommends the designated
area scheme compensation only applies to 60% of the land and the remainder is
purchased by the L.A. at full market value. This would allow the landowner to make
profits of the remainder, hence encourage them to bring land to the market. This
method would still allow sufficient control on land prices whilst recouping
substantial finances. The compulsorily purchase method would be avoided due to
increased profits or a sufficient supply of land would lower prices. However the
author specifies the necessity for adequate financial and administrative resources to
be made available to the L.A. if they are to successfully carry out the duties involved.

Conclusions &
Recommendations


2. The author is of the opinion that the pre-emption scheme poses positive possibilities
for Irelands development land in the future. The author believes considering
Irelands current financial situation this scheme would allow gradual incorporation.
The L.A. would have the time to grow their resources to begin acquiring land in the
future. Unlike the designated area scheme the pre-emption would not need to take
any immediate action. The market would still exist and the special levy proposed
is already in place with the new 80% windfall tax. The author expresses the need for
a review of the pre-emption scheme as it is too vague in the Kenny report document.
The author finally emphasises the importance of skilled staffing and adequate
financial resources made available to the L.A. if this scheme is be successful.

3. On implementation of either scheme, the author recommends the government set up
a community development fund (figure 2.10). This would outline the intended
distribution of the recouped finances into each sector of the community i.e. medical,
educational and transportation etc. The fund details should then be publicly
displayed in addition to each development land transaction on a national database.

4. It has come to the attention of the author that there is a requirement for a higher level
of openness with development land transactions. The author recommends an
introduction of legislation permitting a copy of development land transaction
documents be forwarded to the L.A. for that region. The results could then be
amalgamated on a national database that could be accessed online or at the L.A.
offices. This would make it easy to track development land trends, provide a
healthier property market and finally help prevent wrongful use of pre-emption
scheme.
Conclusions &
Recommendations


5. As shown in Chapter 2 development lands are highly volatile and can decrease in
price rapidly. Therefore the author recommends tighter regulation on the lending of
financial institutions particularly when the loans are for property related investments.
The author would advise the Government to ensure a regulatory body is in place to
ensure development land is thoroughly assessed before loans are granted.

6.6 Avenues for further study
The following issues were not initially investigated however arose during the research
process and the author feels they would merit further study.

The future of development land control within the GDA a pre-emption scheme in
Ireland.
Further investigation into pre-emption schemes abroad particularly the U.S. and
Denmark
An investigation into hoarding and land banking within the GDA between 1996
and 2006.
The affects of tax incentives on development land values within the GDA

Appendix A
References and
Bibliography

References
Ackermann, F., Eden, C. and Copper, S. (1997)
Getting started with Cognitive Mapping,
Imprint: University of Warwick 1992

Altes, Willem K. Korthals
Taxing land for urban containment: Reflections on a Dutch debate
Imprint: Delft University of Technology, OTB Research Institute for Housing, Urban and
Mobility Studies.

APOCC, (2004)
The All Party Oireachtas Committee on the Constitution Ninth Progress Report Private
Property,
Imprint: Dublin, Government Publications Office.

Aveline, Natcha (1997)
Urban Land Markets and Land Policy in France: Comprehensive Urban Studies, 1997
Imprint: Tokyo Metropolitan University (1997)

Brady, Shipman, Martin (1999)
Strategic planning guidelines for greater Dublin area: executive summary
Department of the Environment
Imprint Dublin: Dept. of the Environment

CBS, 2000.
Statistics of the Building Industry, CBS,
Imprint: Voorburg/Heerlen.

Central Bank and Financial Services Authority of Ireland 2007
Annual Report 2006
Imprint: Central Bank & Financial Services Authority of Ireland

COMBY, Joseph, RENARD, Vincent (1996)
The Land Policies, PUF Collection, What Do I Know?
Imprinted: Paris (1996)

C.S.O. Census, 2006
European Spatial Planning Observation Network, Study on Urban Functions Report, 2007
Imprint: Building I

Denscombe, M (2003)
The Good Researcher GUIDE,
IMPRINT: OPEN UNIVERSITY PRESS, MAIDENHEAD

Dunne, Tom (2000)
Windfall profits, Capital gains tax, Development levies and planning.
Plan, The Business of building.
January 2000, pp. 20-21
Imprint Dublin: PML

Dunne, Tom, (2004)
Submission to the All Party Oireachtas Committee on the Constitution contained in The All Party
Oireachtas Committee on the Constitution Ninth Progress
Imprint: Report Private Property, Dublin: Government Publications Office.

Eccles, Tim (1999)
Property and construction economics
Imprint London NewYork; Burlington, VT, Ashgate (2003)

Faludi, A., Van der Valk, A.J., 1994.
Rule and Order: Dutch Planning Doctrine in the Twentieth Century.
Imprint: Kluwer Academic Publishers, Dordrecht.

Fingal Co. Co., (2005)
Fingal Development Plan 2005 2011
Imprint Dublin

Flannery, Michael (1980)
Building land prices.
Imprint Birr: Tribune (1980)

Gore-Grimes, John (2002)
Key issues in planning and environmental law/by John Gore-Grimes.
Imprint Dublin: Butterworths, (2002)

Great Britain Parliament, 1942
Expert Committee on Compensation and Betterment Final Report, 1942.
Imprint: Great Britain Parliament, 1942

Grist, Berna (1983)
Twenty years of planning: review of the system since 1963
Imprint: Dublin, Foras Forbahta

IAVI, 2003
Imprint: Report Private Property, Dublin: Government Publications Office. 2004

Ireland. Committee on the Price of Building Land (1974)
Report to the minister for local government/chaired by Mr. Justice J Kenny
Imprint Dublin Stationary Office(1974)

Irish Government (1974)
Committee on the Price of Building Land, Report to the Minister for Local Government Robert
Molloy, Chairman Mr. Justice John Kenny
Imprint: Dublin: 1974

Joint Committee on Building Land (1985),
Report of the Joint Oireachtas Committee on Building Land,
Imprint: Dublin: Government Publications Office.

Jones, Gareth., Ward, Peter M., Peter , Matthew (1994)
Methodology for land and housing analysis / edited by Gareth Jones and Peter M. Ward
UCL Press(1994)

K.C. Wheare (1966)
Modern constitutions
Imprint: Britain

Kelly, J.M. 1949 ed. Gerard Hogan and Gerry Whyte
The Irish Constitution
Imprint: Dublin; London: Butterworths 1994

Megarry, Robert, Sir (1910)
Megarrys manual of the law of real property
Imprint: London: Stevens 1982

Naom, S.G. (2008)
Dissertation research and writing for construction students (2
nd
Edition)
Imprint: Butterworth-Heinemann Elsevier, Oxford.

Needham, Barrie., Kruijt, B., Koenders, P., Patrick (1993)
Urban land and property markets in the Netherlands/D.B. Needham, B. Kruijt, P. Koenders
London: UCL Press,

Newell, M (1974)
An Introduction to Land Use Economics,
Estates Gazette, London

Priemus, H., Louw, E., 2002.
Recovery of land costs: a land policy instrument missingin the Netherlands?
Imprint: Eur. J. Housing Policy 2

Ratcliffe, John, Stubbs, Michael, Keeping, Miles - 2009
Urban Planning and Real Estate Development
Imprint London (2009)

Scully, Emmet (2008)
The law and practice of Irish stamp duty
Imprint: Dublin Irish Taxation Institute (2008)

Strategic Planning Guidelines Office (2010)
REGIONAL PLANNING GUIDELINES FOR THE
GREATER DUBLIN AREA 2010-2022 (Draft)
Imprint: Strategic Planning Guidelines Office, (2010)

Tichelar , Michael 2003
Twentieth Century British History
Imprint Oxford University Press (2003)

Treshold, 2003
Imprint: Report Private Property, Dublin: Government Publications Office.

Turner, D. M. (1977)
An approach to land values
Imprint Berkhamsted: Geographical Publications (1977)

Williams, Brendan., Shiels, Patrick., & Hughes, Brian. (2003)
Access to housing: The Role of Housing Supply and Urban Development Polices in the Greater
Dublin Area.
Journal Of Irish Urban Studies,
Volume 2, Issue 1, 2003. pp.

Websites
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http://economix.blogs.nytimes.com/2010/03/18/will-the-u-s-become-the-next-ireland/. Last
accessed 21 March 2010
Harrison, Fred, (2003) Transcript of a talk given by Fred Harrison at the October 2003
conferenceon Land, the Claim of the Community, organised by Feasta and the HenryGeorge
Foundation. Available:www.feasta.org/events/landconf/harrison.pdf. Last Accessed 10 March
2010
Kelly, Morgan. (2008). The Irish Property Bubble: Causes and Consequence. Available:
http://www.irisheconomy.ie/Crisis/KellyCrisis.pdf . Last accessed 15 March 2010.

Kelly, Morgan. (2009). Bailout inept and potentially dangerous. Available:
http://www.irishtimes.com/newspaper/opinion/2008/1002/1222815457103.html . Last accessed
23 March 2010.

SULLIVAN, CONOR . (2010). THE IMPACT OF LENDING ACTIVITY AND MONETARY
POLICY IN THE IRISH HOUSING MARKET . Available:
http://www.tcd.ie/Economics/SER/sql/download.php?key=305. Last accessed 11 March 2010.
Walsh, Dick . (1980). Labour Bill on Development aims to stop profiteering. Available:
http://www.irishtimes.com/newspaper/archive/1980/0516/Pg008.html#Ar00800 . Last accessed 1
April 2010.

Bibliography

APOCC, (2004)
The All Party Oireachtas Committee on the Constitution Ninth Progress Report Private
Property,
Imprint: Dublin, Government Publications Office.

Joint Committee on Building Land (1985),
Report of the Joint Oireachtas Committee on Building Land,
Imprint: Dublin: Government Publications Office.

Paul N. Balchin, Gregory H. Bull, Jeffrey L. Kieve (1989)
Urban land economics and public policy
Imprint: Ashford

Flannery, Michael (1980)
Building land prices.
Imprint Birr: Tribune (1980)

Scully, Emmet (2008)
The law and practice of Irish stamp duty
Imprint: Dublin Irish Taxation Institute (2008)

Appendix B
Related Planning
Sections

Related Planning Sections

Local Government (Planning and Development) Act, 1963
26.(1) Where The authority may decide to grant the permission or approval
subject to or without conditions or to refuse it; and in dealing with any
such application the planning authority shall be restricted to considering
the proper planning and development of the area of the authority
(including the preservation and improvement of the amenities thereof),
regard being had to the provisions of the development plan, the provisions
of any special amenity area order relating to the said area and the matters
referred to in subsection (2) of this section.

Planning and Development Act, 2000
3.(1) In this Act, development means, except where the context otherwise
requires, the carrying out of any works on, in, over or under land or the making of any
material change in the use of any structures or other land.

34. the authority may decide to grant the permission subject to or without conditions, or
to refuse it.
(2) (a) When making its decision in relation to an application under this section, the
planning authority shall be restricted to considering the proper planning and sustainable
development of the area, regard being had to
(i) the provisions of the development plan,
(ii) the provisions of any special amenity area order relating to the area,
(iii) any European site or other area prescribed for the purposes of section 10 (2)(c),
(iv) where relevant, the policy of the Government, the Minister or any other Minister of
the Government,
(v) the matters referred to in subsection (4), and
(vi) any other relevant provision or requirement of this Act, and any regulations made
thereunder.
, business or profession carried out on the land.accordance with the Second Schedule, and

Development Contribution Scheme
Special Development Contributions

A special development contribution may be imposed under section 48 where exceptional
costs not covered by the general contribution scheme are incurred by a local authority in
the provision of a specific public infrastructure or facility. The particular works should be
specified in the condition. Only developments that will benefit from the public
infrastructure or facility in question should be liable to pay the levy.

48.(1) A planning authority may, when granting a permission under section 34 ,
include conditions for requiring the payment of a contribution in respect of public
infrastructure and facilities benefiting development in the area of the planning authority
and that is provided, or that it is intended will be provided, by or on behalf of a local
authority (regardless of other sources of funding for the infrastructure and facilities).

Supplementary Development Contributions Scheme
Section 49 of the Act provides for the drawing up of a supplementary development
contribution scheme in order to facilitate a particular public infrastructure service or
project which is provided by a local authority or a private developer on behalf of and
pursuant to an agreement with a local authority (e.g. through Public Private Partnership),
and which will directly benefit the development on which the levy is imposed.

49.(1) A planning authority may, when granting a permission under section 34 ,
include conditions requiring the payment of a contribution in respect of any public
infrastructure service or project
(a) specified in a scheme made by the planning authority (hereafter in this section
referred to as a supplementary development contribution scheme),
(b) provided or carried out, as may be appropriate, by a planning authority or,
pursuant to an agreement entered into by a local authority, any other person,
and
(c) that will benefit the development to which the permission relates when carried
out.
(Source: http://www.irishstatutebook.ie)

Appendix C
The Constitution
Private Property

Related Constitution Articles Right to Private Property

Article 40.3

40.3 1 The State guarantees in its laws to respect, and, so far as
practicable, by its laws to defend and vindicate the personal
rights of the citizen.

2 The State shall, in particular, by its laws protect as best
it may from unjust attack and, in the case of injustice done,
vindicate the life, person, good name and property rights of
every citizen.

Article 43

43.1 1 The State acknowledges that man, in virtue of his
rational being, has the natural right, antecedent to positive
law, to the private ownership of external goods.

2 The State accordingly guarantees to pass no law
attempting to abolish the right of private ownership or the
general right to transfer, bequeath, and inherit property.

43.2 1 The State recognises, however, that the exercise of the
rights mentioned in the foregoing provisions of this Article
ought, in civil society, to be regulated by the principles of
social justice.
2 The State, accordingly, may as occasion requires delimit
by law the exercise of the said rights with a view to
reconciling their exercise with the exigencies of the
common good.

Appendix D
The Compulsorily
Purchase Rules

Acquisition of Land (Assessment and Compensation) Act 1919
Rules
Rule 1
No allowance shall be made on account of the acquisition being compulsory

Rule 2
The value of land shall, subject as here and after provided, be taken to be the amount
which the land, if sold in the open market by a willing seller, might be expected to
realise; provided always that the arbitrator shall be entitled to consider all returns on
assessment of capital value for taxation made or acquiesced in by the claimant.

Rule 3
The special suitability or adaptability of the land for any purpose, shall not be taken into
account if that purpose is a purpose to which it could be applied only in pursuance of
statutory powers, or for which there is no market apart from the special needs of a
particular purchaser or the requirements of any government department or any local or
public authority

Rule 4
Where the value of the land is increased by reasonable use thereof or of any premises
thereon in a manner which could be restrained by any court, or is contrary to law, or is
detrimental to the health of the inmates of the premises, the amount of that increase shall
not be taken into account.

Rule 5
Where the land is, and but for the compulsory acquisition would continue to be, devoted
to a purpose of such a nature that there is no general demand or market for land for that
purpose, the compensation may, if an official arbitrator is satisfied that reinstatement in
some other place is bona fide intended, be assessed on the basis of the reasonable costs of
equivalent re-instatement.

Rule 6
The provisions of Rule 2 shall not affect the assessment of compensation for
disturbance or any other matter not directly based on the value of land

Appendix E
Interviews

Interview 1 William K Nowlan FRICS, FSCS, Dip Strategic
Studies
Time: 11:00am
Date: 23th March 2010
Location: Merchants Hall, 25-26 Merchants Quay, Dublin 8

William K Nowlan, FRICS, FSCS, Dip Strategic Studies. William is a Chartered
Surveyor and Town Planner and made a submission to the All-Party Oireachtas
Committee on the Constitution in relation to the Kenny Report and wrote extensively
about the topic in his media publications.

Professionally he participated actively in the RICS and was President of the European
Institute of Chartered Surveyors for many years. Academically Bill has lectured
extensively at the School of Town Planning, UCD and was Visiting Lecturer at
University of Ulster.

Development Land Values
Residential development land values in the Dublin/GDA rose by an average of 137%
between 1996 and 2006 according to IAVI surveys taking 1996 as the base year.
1

1. Why in your opinion why did development land values escalate to such high prices
in the GDA and what were the major influences on this rise?
As the demand for new accommodation is met out of old buildings and new buildings the
price of buildings rises to the market level and as a consequence of that land value rises
at they are calculated by residual method. In Ireland we have seen development land
values move from being three times construction costs to being less than constriction
costs. Land values go up and down like a lavatory seat, when the economy is doing well
land values rise and when the economy is doing bad land values fall. The process started
self sustaining as when people seen the price increase they got greedy and started
speculating. Thats why when people get their timing right the make an awful lot of
money and when they get their timing wrong they can lose a lot of money.

1
Introductory passage given before every section of questions for each interviewee, however only displayed for first interview.
The reason for the increase is primarily the economic growth, the availability of money
and demographics. There was also an inability of the development industry in a totality
to provide the serviced sites. When you fly over Dublin there is no shortage of land, the
mechanisms bring that land forward have been defective for many reasons. The primary
reason being services driven and the E.U. requirements for discharge. I have clients who
have large amounts of land in key Dublin areas ready for development but they cannot
get services. So services have been the main constraint in terms of the supply and
demand of land. The building materials have always been there, blocks will always be
made and there will always be people to lay them, there is no shortage of the hardware
element of construction what has been missing is land that is serviced land with planning
permission. In one line it was a mixture of emotional, economic and greed that seen
prices rise.

Zoning
When land is zoned in Ireland the transition between existing use(agricultural value) and
new use(development value) can see land value jump by a multiple of 20-50 times.

2. Do you believe the land use zoning system in Ireland has worked effectively during
the past decade?
Our whole planning system is based on the output of land for development, servicing
being the main part of that and the servicing has been what has being missing. There
has also being abuses of the zoning system both for political and corrupt reasons. It is
an effective system, however it isnt a project management focused system, and
where by the objective of zoning is to make site available for its proposed purpose
this hasnt happened in many cases. There is a disconnect between what the market
wants and what is zoned which is a problem that more intense planning is need. The
fundamental problem is that the land supply which is controlled by the planners and
the serviced engineers is not connected to the market and the only place that I know
that it is connected to the market is in the Netherlands where land is acquired by the
local authorities and then planned giving it a project management approach. The
project management approach is taking land, building, planning and services all
focused on the end user. It is vital that we have a need focused zoning system not one
which zonings happen because the councillor may know the developer.

3. Do you think there should be more professional input from valuers and planners in
the zoning process along with the elected members?
Yes, once it is on a project management approach whereby the planner takes it as his
responsibility to take land and bring it through the various stages so it is offered to a
market that actually needs it. There are various actors in that process, those actors range
from the original landowner through to the valuation process on to the builders and
finally the financing of the finished houses. What has happened is planners say they have
done their job and zoned the land the servicing engineers are saying that they have
serviced as many sites as possible but the reality is the zoned and serviced sites may not
connect with where people want to live. Its very easy for a planner to say there is a
demand for 40,000 houses and there are 40,000 sites available but the demand might not
be where these sites are located. So there is often a disconnect with the supply
mechanism of land and what people actually want.

4. Do you think it is fair that huge gains are made by the landowner of which none is
returned to the Local Authority or the community?
No it is not fair, but how do you find a process by where a landowner will give up the
opportunity to make these profits. I have worked with landowners through the process
and an example would be in a midlands town and the land was worth 20,000 an acre
and when he sold it with planning permission it was worth 500,000 an acre he had 50
acres so he walked away with 25 million as opposed to 500,000 at agricultural value.
Now if you bring that into your study area the GDA, the increase would be even greater.
There I have a client that had land valued 50,000 per acre, he got the land rezoned and
sold at 4 million an acre, he had 40 acres selling at 160 million whereas the land was
worth 2 million before it was rezoned. Now of coarse these profits are crazy but how do
you capture them? I agree the landowners shouldnt get the bulk of the betterment but if
we take away the profit motive of bringing the land forward then how do we get the land.
We have to C.P.O. the land but this process takes years.
The Kenny Report
The Kenny Report was published in 1974 and although it was never implemented its
recommendations have been called on over the years as a solution to development land
values and the betterment issue.
5. Do you think the Kenny Reports aims could have worked if it was originally
implemented therefore preventing the high development land values?
My principal concern about the designated area approach is the absence of any coherent
administrative structure and the capacity of the local authorities to do the job. There are
large chunks of land which are owned by the local authorities and which they have
owned for 10 years and they are still sitting looking at them, in my opinion government
agencies are very bad at managing market situations especially market situations that are
competitive. If you look at the English Land Commission which was set up by the labour
party and put all the legislation in place and after 3 years they had bought only one acre
of land. They basically were not able to actually manage the process. Yes, the
recommendation of Kenny might have worked but to be honest I think if the Kenny
Report was implemented the situation would be worse because the local authorities
would not be able to manage the land redistribution process. So youre left with a present
system that works in spite of bad administration at local authorities or give the land to the
local authorities who will do nothing with it. It would rely on C.P.O. process the land but
this process takes years and would not meet supply like the current system does.
Currently the land supply system take 6 10 years but I feel if you put the local
authorities in charge it will take 10 20 years because the local authorities just do not
have the skills.

6. In France a similar pre- emption scheme as recommended in the Kenny Report is
in place do you think such a scheme would function in Ireland.
The pre-emption is a method which I have seen in the US and I think there is a lot to be
said for it. It allows the local authorities to step in and purchase the land. It has its
advantages primarily being it doesnt eliminate the market it runs parallel with the
market.

7. In the Netherlands a similar scheme to the designated area scheme is in place
where the municipals(L.A.) purchase, service then release the land to developers.
Do you think such a system could function in Ireland?
Yes certainly there is a lot to learn but you have fundamental conflicts to overcome; the
politicians only think to the next election, the administrators only think of how to keep
the file right but the market still prevails.

Local Authorities
8. It has been argued that although enough land was zoned the local authorities in
the GDA didnt service land adequately to meet the demand required. What do you
think were the main reasons behind this?
Lack of finances is the problem. If you have a properly working tax system the money is
collected and then is given back to where it is needed but in Ireland, one of our problems
is capital gains taxes go straight back to the Revenue and none goes back to the local
authorities. The development contribution scheme takes some of that money and allows
the local authorities hold on to it.

Interview 2 James Meagher FIAVI
Time: 3:00pm
Location: 20-21 Upper Pembroke Street, Dublin 2.

James Meagher, FIAVI is co-founder of HT Meagher OReilly and director of the
companys development land division. He has an inclusive knowledge of development
land in the G.D.A. area and the Kenny Report recommendations.
Why in your opinion why did development land values escalate to such high prices in
the GDA and what were the major influences on this rise?
This was a multi-sourced process, firstly the demographic demand really kicked in
during this period. But what probably happened more so was the Local Authorities were
hugely inefficient in dealing with planning permissions and servicing of sites and
therefore there was huge lack of supply. A bigger problem that arose (1998 - 2004) was
the Local Authorities were directed to go for high densities since residential land was a
scarce resource. Therefore the local authorities actively refused anyone that came in
looking for planning permission at a normal density. Taking Sandyford as an example the
plot ratio went from 0.75 to 5 in 2005/2006 therefore pushing land in this area up to
22m per acre compared to the 80s where land in that area was selling at 80,000 an
acre. So the development land increase in the GDA was also due to the anticipation of
density and increase in house prices as well. Overall I feel the inefficiency local
authorities were the cause of the spike of land values over the past ten years.
On saying that, there is not much hoarding. The media has driven this issue that there
was hoarding. The reality is when the changing densitys occurred that delayed the whole
process, because there were inefficient local authorities. There might have been strategic
reasons or logic reasons for holding onto the land. If youve got a good land bank you
wouldnt sell it all in one go and you wouldnt put two developers in the one land bank
because they would devalue it competing against each other.

1. How significantly did the rise in house prices contribute to the rise in development
land values?
Demand drove both. House prices had more of an effect on development land values than
development land had on house prices. But the Kenny Report assumes a perfect market,
there is no such thing as a perfect market. You might be sitting on land thats zoned
residentially today, in theory that should be available for development but it mightnt be.
There mightnt be any drains for it, you might have imperfect title, and you could have a
dispute with a previous owner or sibling. There are many reasons why land doesnt come
to the market. Therefore a small portion of what you think is available ever is available.
The big delay in my view in land price inflation was the inefficiency of the local
authorities in providing services and dealing adequately with the planning permissions.
They then increased the capital cost of construction enormously because what they
wanted was a planning gain; you either had to provide massive social infrastructure,
external facades to buildings that were very expensive. You take the likes of Ashtown in
North city, the external faade treatment there was hugely more expensive than anyone
would have envisaged, however they got a density to pay for it. There were kickbacks in
all of these issues. Therefore, the inefficiency of the local authorities is the prime reason
that started that whole spike of land. Now Im talking about the last 10years.

The Kenny Report
No I dont think the state is efficient in anything it has done from my view. Every time
the state has interfered with the property market be it Section 23, be it C.G.T., change to
land drawing up land prices pretty widely, Every time the state has interfered in the
market it has distorted the market and it takes a long time to get back to its norm. The
concept of state-ownership of land and delivering it out I think has too much political and
social pressures. The less well off will get the best and vice versa. If you have a
socialistic mind it might be the perfect world but not in my mind. I also must express my
concern over the previous corruption within the local authorities and therefore feel
allowing them to have such power in land would only tempt further corruption which is
not beneficial to Ireland in any way.

3. What do you think would be the main flaws in these schemes that wasnt realised
as a problem back in 1974?
What if you didnt want to sell your land? I dont think someone should be able to decide
I want to buy Mr. A farm instead of Mr. B farm and give him 25%, its interference with
the market.
Take CPO for roads, it has always being about what the correct value is, not limited or
capped. Its unfair to cap someones value by a state act. It should be based on value.
Why should it not be what the market is prepared to pay for it? What about the guy who
has to pay tax on it. Back in the Kenny Report CGT was very high. There would have
being 60% of every pound going back to the exchequer. All its doing is trying to make it
cheap for the local authorities to buy and they cant manage the land banks they have
already. During my life, the local authorities bought land in West Dublin (hundreds of
acres) held it for years and just at the start of the boom in the early 90s they sold it off at
3000-5000 per site when it ended up being worth 200,000 - 300,000 per site in 2 or
3 years. They had no long term plan, it was all about getting quick cash so why should
they get them cheap and is able to hold onto them for long periods of time when they
cannot manage it as proved in the past.

in place do you think such a scheme would function in Ireland.
Hard to say, but again it is controlling what someone can do with their property which I
wouldnt agree with.

Land Zoning
the past decade?
Its true they received huge profits but land adjoining an urban area has already a built in
hope value at some point. It doesnt go straight from agricultural land use to development
land use. Theres kind of a grey area in the middle as it gets closer. Is the profits right or
wrong - I havent seen a better system. There is too much political decision and lobbying
that goes on and maybe there should be more logical planning. They would be better off
having an area of land which has a development zone where you pay for the services,
whether agricultural or not when you become zoned you have to contribute. That might
be a more logical way. There is no doubt development land should pay for its own
services. There should be proper town planning like Netherlands. There is no proper
town planning in Ireland. Looking at the greater Dublin area, Fingal, South Dublin, Dun
Laoghaire Rathdown etc they are not even planning in one unit which they should be.
There is a lack of communication between the local authorities.

Market demand should have a say in it, which is probably not relevant now. Youve got a
lot of schemes where youve got high rise residential with linear retail underneath
which is going to be empty for a very long time with the rejuvenation that happened in
the city centre back when Zoe was doing all the stuff. Entire street buildings hoarded up
because nobody wanted the retail on them. The local authorities would say that these
were rates free buildings for starters but they havent done all the joys thinking and just
want retail work and nice street scape which doesnt happen when its all hoarded up.
Planners dont reflect commercial reality, and perhaps commercial reality is too greedy to
planners. There should be a balance between them.

Not capable, they gathered up enormous amount of levies from development yet they
havent provided enough services. They have gathered up millions but havent spent
them on the infrastructure. Also another reason is in Dublin there is competing Local
Authorities in the same urban area which caused and is still causing huge problems.
Dublin city and Dun-Laoirge Rathdown might meet a borer but Dublin city are only
interested up to that line.

8. Do you personally have any alternative recommendations to control development
land values and prevent the price fluctuations that happened over the past decade?
Good believer of the free market. You can buy development land at the moment cheaper
than its ever being and the local authorities can buy all the land they want but they dont
have the money to do it. Social Housing issue when the density kick started they should
have brought social hoarding in. They only did at the top of the market. They started
buying their own units back then, they should have being saying that if were giving you
a planning gain for a plot ratio for 1:2 we want 20% of that for free. There shouldnt
havent being any calculation, should have just billed it at 20% of that space for free.
Social Affordable property will probably disappear in the long term, therefore they
havent thought long term plan. Land prices at the moment dont much matter at the
moment because they cant afford it.

Interview 4 Brian Hughes Dip. Env. Econs., FSCS, FRICS
Date: 23th March at 4:30pm
Location: Zhivargo Building, Bolton Street, Dublin 1
1. Brian Hughes, Dip. Env. Econs., FSCS, FRICS, previously studied the Kenny
Report recommendations and has a great knowledge of the topic. Brian was Irish Life
Assurance plc's Portfolio and Valuation Surveyor in their Property Investment
Division, 1972-1995. Since then, Brian has been with DIT, as Manager of the
Consultancy and Research Unit for the Built Environment and now lectures in the
areas of Urban Economics, Property Development and Demography in the Schools of
Real Estate and Construction Economics and the School of Spatial Planning.

1. Why in your opinion why did development land values escalate to such high
prices in the GDA....... and what were the major influences on this rise?
Well I think first of all that the ready supply of funding for development and indeed for
buying land would have been a major issue. Another subsidiary issue would have being
with rising values there was a continuing expectation that things would continue and of
course the values did continue for most of the period between 1993 to 2006.
Well major influences. First of all on the demand side was the unprecedented growth of
population, growing by 17% between 1996 and 2006 much of that of course for first time
of course including non-indigenous migration so clearly the normal demand which might
be for say 40-45,000 units a year was augmented by the demographic effect and
particularly from in-migrants so another factor is that as time goes by and as I state in my
2010 study that I published recently with Brendan Williams with Redmond that as time
go by fewer people occupy a housing unit so that the measure is roughly a reduction of
about 0.2 every 5years and that means that because of changes in family circumstances,
divorce, old people living on their own, that we would need more housing units anyway
even if the population wasnt growing but the fact the Irish population was growing at
that unprecedented rate meant that you have this huge demand for development land.

2. How much of a relationship is between the price of land and the cost of the
building on it and do you think a reduction in development land values would
decrease house prices?
Well traditionally, and I suppose conventionally the price of building land would
represent a residual, the money left over after costs have being met and presumably also
building in a profitability and that itself is an interesting one because its driven by the
perceptions of risk verses rewards. So quite clearly if the residual is positive in that
values are still ahead of all the costs included interest roll up which is very significant for
a large development well then quite clearly that will determine that your land values will
be much higher in good times and much lower in bad times because of the oscillatory
effect; the fact that residual valuations tend of oscillate plus or minus much more so than
other values.

The Kenny Report
Im not sure because ultimately the means sanction that a landowner could use would be
not to bring the land to the market. The Kenny report assumed that there would be a
freeing up of land all the time with a normal supply obviously following from what
happened with the Uthwatt Report in the United Kingdom and the prospect that labour
government was going to be as it was replaced by a conservative government meant that
the radical proposals of the Uthwatt report which were sort of mirrored to some extent in
the Kenny report meant that it was always doomed to failure, and even as a student here
in Bolton Street in the 1960s studying the Uthwatt report but prior to the Kenny Report
we were always told if landowners are discouraged from bringing land onto the market
then the market will collapse until such time as a heavy taxation sanction or whatever
else is removed, and that happened in the case of Uthwatt and it was one of the main
reasons discouraging the implantation of the Kenny Report after 1974.

4. What would be your view on the designated-area boundaries being decided by a
high court judge with assistance from a planner and valuer?
Yes, this was one of the suggestions that came out of Kenny. Its fine in theory; Im not
so sure how well it would tend to work in practice. Quite clearly and in those days they
were talking about perhaps the assistance of valuers in the process, but funny enough
now that we have a much more intensive panel all the valuation input that is going into
the NAMA exercise, that this is probably helping to produce a far greater openness and
of course at the same time the government are setting that they do intend to bring in a
system whereby all transactions will be publicly known about. Look at the United States
for example all values are posted up in the town hall. Its similar in most places in
Europe. So there really isnt a civilised country in the world apart from Ireland that
doesnt have full openness with the release of transactions and after all if the state collect
stamp duty, in theory, its supposed to know what the value is and anyway if everything
is opened and transferred the risk of two tier system opening up whereby part of the
price is paid up to the counter and therefore avoiding stamp duty, or partially avoiding
stamp duty , so certainly the feeling is that we are going to be entering a period of far
greater openness and this is only good for a market that hasnt now being based upon
privileged information and commercial advantage information that is known to a few
rather than to all and as a medium replacement property will be a lot healthier in terms
having full disclosure of prices.
A national database of land values and transactions is definitely needed for the health of
the market, and of course I think now is the ideal time to bring it in. Values are low and
the market prospects going forward at the moment are quite poor and likewise also the
timing if it was decided to bring in a Kenny Report type taxation system, development
levy or something like that now would also would be an ideal time for that when values
are as low as they are.

5. Would you be in favour of the pre- emption scheme?
Despite having doubts over Kennys main recommendation I would think that based on
some continentally examples particularly in France and Holland, pre-emption is a very
interesting possibility for Ireland but it would have to mean that in the first instance all
development would be carried out on the basis that the local authority already owns the
land or having the option to buy the land. This is the case in Denmark so that the
planners dont actually zone the land in Denmark, as far as I know, unless or until the
land is already secured in other words so is to enable society or indeed the council itself
and ultimately the public sector to be able to benefit from the gain in the increased value
attributable to that zoning. So the zoning doesnt take place until the ownership of the
land is secured.

Zoning
6. Do you think it is fair that huge gains are made by the landowner of which
none is returned to the Local Authority or the community?
Quite simply not because much of the increase in value that comes from zoning is
attributable to improvements or the prospect of improvements, say services or
infrastructure, so there has to be fairness here so society can benefit. Clearly in the case
of the Luas extension of Sandyford out to Cherrywood all houses built within 500 meters
would pay a levy which would help fund that Luas line extension, that itself is an
example of a recognition of increased land value of a particular house or any house that
is likely to benefit from the proximity of the Luas line, and of course it again reflects the
whole idea of location and distance and the provision of services right expressed of
coarse by Alonso, so definitely society ought to benefit. The issue is to what extent the
landowner who is selling can make a profit that would encourage him to sell on the one
hand and at that same time allows the benefit of most of the large capital to be captured
by the state and society.
In relation to Kennys recondition 25% of nothing is nothing on the one hand. In your
opening statement there is was the extent that to which perhaps a multiple of 20-50 times
say agricultural value can be the result of rezoning and quite clearly a number of things
in the recent times, which help to clarify the position, Use it or lose it is a very
interesting concept and the zoning is only good for the currency of the existing
development land or the planning permission and in other words the slate for zoning
should be wiped clean every time there is a development plan. And the examination, the
research behind the new development plan would have the opportunity to see if there is a
realistic or fear possibility of that land being developed and if not well then perhaps it
shouldnt be rezoned and of course the problem is that we have some examples of drastic
rezoning in Ireland, for instance at the moment it has being said although I havent
checked it out, that the town of Ennis has enough land of around 4,500 acres to provide
enough housing for a city of 110,000 population. In comparison the population of
Limerick is 20,000 at the present time. Quite clearly there is something wrong there, if
the over zoning is to that extent that a demand for say the next 100 years rather than the
demand that might fairly be expected for the next development plan period and maybe
even beyond it but certainly not for 100 years.

7. Do you think there should be more professional input from valuers and
planners in the zoning process along with the elected members?
Yes, but to some extent I blame the valuers as well because the valuations up to now
have been based upon comparisons rather than on other major influencers of value, for
example location theory, or in-use demand, by in use demand really Im saying thats a
proxy for valuers having a very good knowledge of demography. So with better
understanding of urban economics and specifically location theory and in-use
demand/demography valuers would be in a much better position as not having to rely so
much on past comparisons that really have no relevant to the present or indeed the future.
The only thing Id say is that Im not so sure as to whether following the anticipated
publication of the Kenny/Mahon Report the local representatives, county councillors etc
should continue to have their existing level of power to rezone. I think that some of the
alleged corruption and indeed Ministery Burke spending time in jail, Taoiseach Bertie
Aherne not being able to account in examination and resigning shortly thereafter, and
together with several other examples that we know of all suggest that perhaps the issue of
corruption associated with land zoning is indeed the big issue and obviously is one for
which the general public and tax payer has had to pick up the bill at the end of the day.
Now quite clearly it is interesting to see the very type strictures that are now being used
in examples such as Jackson Way at Carrickmines. Highlighted examples like that are
perhaps going to show that from now on the general public are not going to except, and I
think that the Mahon Flood Tribunal may well be the cause of measures being taken to
reduce the powers of the county councillors, at least the variety powers that they now
seem to have at the moment.

8. Do you personally have any alternative recommendations to control
development l and values and prevent the price fluctuations that happened over the
past decade?
No I think that we are much braver now about the possibility of interfering with the
market, for a number of reasons the elapse of time since 1974, and in the intervening
nearly four decades now, further elements of the constitution have being actually tested
and have found to be quite robust and for instance we have a lot more definitions with
regard to all personal rights including property rights in the early sections 40 in the
constitution. So there is a lot more precedent, case law or indeed constitutionally
clarification that would have existed back in 1974.

Interview Questions Terry Prendergast
Time: 12:00am
Location: D.I.T. Head Office, Rathmines, Dublin 8
2. Terry Prendergast, BSc, MPhil, MSc, MIPI, is a well renowned planer located in
D.I.T. She assisted Tom Dunne in making a submission to the the All-Party
Oireachtas Committee on the Constitution in relation to the Kenny Report.

Zoning
the past decade? flexible
No, it worked effectively until we hit a period of economic boom. When we hit the
period of the economic boom land did not come quickly enough to the market. There was
no mechanism in place to ensure that land came quickly enough to the market. Therefore
we had a situation where a small number of landowners had a lot of development land
and because of a number of constraints land did not come quickly enough to the market
at the time.
the zoning process along with the elected members as recommended in the Kenny
Report?
Absolutely, until very recently the whole valuation side of planning was ignored by
planners and probably the first plan to take valuation into account was the Dublin
Docklands Master plan in 1997. This was the first time there was recognition that the
whole planning system has to take into account the market and if the planning system
tries to work against the market it is a recipe for disaster. So since the late 90s there has
been an increased awareness that the planning system has to work with the market

3. Do you think it is fair that a landowner can make huge gains of which none is
Very unfair, and our planning system has failed to address that and that has been one of
the biggest failures of the planning system. Even now with the development contribution
system which was introduced in 2000 to allow the planning authorities recoup the cost,
but only the cost. The authorities cannot recoup the additional value that accrues to the
land due to development led infrastructure.

Local Authorities
The financial constraints were the main reason local authorities didnt service land
adequately to meet the demand required. This is one of real the issues with the Kenny
Report as it would need sufficient financial recourses made available to the Local
Authorities to properly implement its scheme. There is another issue where in the past
when the elected representatives were making the development plans indiscriminate land
rezoning took place. This put an owness on the planning authorities to service land of
which some of that did not follow an orderly path of development. This in turn imposed
additional costs on the local authorities in terms of servicing adequate supplies of land.
Currently it is established in legislation that local authorities can only recoup the costs of
providing the services. The local authorities cant recoup the increase in values and it
would be equitable if some of that increase in value. And when capital gains tax although
used as a method of taxation it can also be used to allow planning authorities to recoup
the value of the services they deliver.

The Kenny Report
Yes, if implemented correctly the Kenny Report could have stabilised development land
values. If adequate resources, organisation and administration skills were available
within the Local Authorities it would have worked. However if inadequate resources
were made available the planning authorities didnt work together to adopt a more pro-
active approach towards development then it could have had a negative impact.

6. In the Netherlands a similar scheme to the designated area scheme is in place
where the municipals (L.A.) purchase, service then releases the land to developers.
Do you think such a system could function in Ireland?
It is important to take into account that the Netherlands has a very different society to
Ireland, and there is a wide spread acceptance of planning. Probably because of its
history as the Netherlands has always been liable to flooding therefore needing constant
land reclamation. As a result the Netherlands has always had a strong planning system.
The Netherlands have a different system than in Ireland and the U.K. Our system is a
discretionary system where in the Netherlands and the rest of Europe they have plan led
systems. These systems are fundamentally very different in their philosophies. Defiantly
we could have learned from the Netherlands but we have to remember that we are
dealing with two very different cultures.

7. Why do you think the designated area scheme, the majority proposal of the Kenny
Report was never implemented and were any of the other recommendations
implemented?
Politically it was unacceptable. Politically to offer people existing use value plus 25%
wouldnt wash with landowners. You have to remember that in the U.K. at the same time
that they tried to implement a similar scheme as the designated area scheme. However
they have a greater acceptance of their similar planning system which is more ingrained
and has been so for a longer period of time yet they did not succeed in implementing
their designated area version.

8. Is C.P.O. a realistic solution for recouping betterment?
For the designated area recommendation to function there would have to be a greater
acceptance of compulsory purchase, at the moment compulsory purchase is seen as a last
resort. This boils back to the whole acceptance of the planning system and what the
planning system is trying to achieve is for the greater good. So currently there is not an
acceptance of compulsory purchase in Ireland and this is due to our attitude towards land
and property and perception that C.P.O. should always be used as a last resort.

9. Do you have any alternative recommendations to control development land values
and prevent the price fluctuations that happened over the past decade?
As the Kenny Report recognised there is a need for a system that would allow the
planning authorities to recoup the value of the services they provide not only the costs.
This would make an absolutely huge difference.

Interview 5 Dan Boyle Green Party Senator
Time: 5:30pm
Location: Interview was carried out via telephone
3. Dan Boyle, Green Party Senator, participated in Dail debates in relation to the Kenny
Report and requested the implementation of the Kenny Report recommendations

in the GDA....... and what were the major influences on this rise?
I think there are a couple of factors. Some demographic factors such as there were a huge
increase in population. There was a younger structure to the Greater Dublin Area
population. As regards to the Greater Dublin Area there was also the hoarding of land
artificially increased the land prices and then you have availability of capital at cheap
rates which I think those four factors combined brought the high property prices in
Dublin.

The Kenny Report
I think it was a discouragement. They took something as being succeeding Attorney
Generals since 1974 have believed it to be unconstitutional, typically with emphasis on
property rights in the constitution. But thats almost a matter of mixed opinion and our
belief is that it would have provided a suitable break on an unnecessary increase in
property prices. So, yes I think the Kenny Reports recommendation of the designated
area scheme would have worked stabilising land values in the GDA while recouping the
betterment. I myself and my colleagues in the Green Party dont feel it is unconstitutional
as we feel I would be vital to peoples interests.

3. Would you be in favour of the pre- emption or designated area scheme? Why?
Yes indeed.
Im not as familiar with it but it would fit in with much of what we are trying to achieve
with the social clause in NAMA.

4. What do you think would be the main flaws in these schemes that wasnt realised
as a problem back in 1974?
I think there are a lot of alternatives to it, there are special development laws and
planning acts that took ideas form it but the main recommendation was never
implemented. It almost seemed to be a good idea, just flawed in concept. The lack of
consistency hasnt helped it being implemented either. By this I mean that there is
defiantly a lack of exact information in the recommendations of how the scheme is to be
administrated correctly.

in place do you think such a scheme would function in Ireland?
Yes I think this a very good idea and it has been mirrored in recent social limiting clause
N.A.M.A legislation. So yes I feel this too is a very valid option.

Zoning
the past decade?
I think there has being inconsistencies again from local authority to local authority and I
think one of the major flaws in its application across the country has been in zoning part
of the land for particular purposes and leaving much of the land un-zoned, you create a
situation where that inconsistency becomes natural. So if youre zoning you should really
zone all land.

I think again it depends on the part of the country, depends on the quality of the local
public representative, it depends on the willingness of planners to engage with public
representatives and a degree which there is a partnership approach to it and willingness to
engage collectively and together. Thats where you see best practice in the country,
where there is an attempt to impose the views of one, either in a professional sector or the
elective sector on top of each other thats where the difficulties arise.

Well obviously not, and as part of the NAMA Legislation weve introduced the measure
of the 80% windfall tax. But in relation to the Kenny report this is one of the main
reasons we would be in favour of its implementation as it would recoup some of this
gain. If it had been implemented before the period of economic boom the economic
growth could probably have been sustained as the revenue created for the local
authorities to develop communities to meet the demand would have been far greater than
the development contribution scheme.

Local Authorities
I wouldnt be a big fan of development charges in the sense that I thought they created an
incentive to rezone and develop unnecessarily. We need better other mechanisms than
that, probably taxation itself. And again in relation to the Kenny Report this is where its
recommendations we believe it could achieve this.

Interview 6 Noel Ahern Fianna Fil.F. T.D.
Time: 4:00pm
Date: 19
th
March 2010
Location: Interview carried out via telephone.
Noel Ahern, Fianna Fil T.D., also participated in Dail debates in relation to the
Kenny Report and related topics where he defended the non-implementation of the
recommendations

in the GDA and what were the major influences on this rise?
The economy growing at such a rapid rate along with a number of other factors hit
Ireland at the one time that had hit other countries over a period of time. The
demographics were changing, people who in the 80s were emigrating they were staying
at home wanting homes here and to set up their own businesses. That average family size
was dropping therefore a need for more housing units and land to build them on. Peoples
expectations were changing and people werent prepared to live over the shop with three
to a room they wanted big more spacious homes. The large immigration caused further
demand for new housing. These influences on houses may have hit other countries over
different years but they hit Ireland all at once causing the boom. All this extra demand on
housing increased the house prices and in turn the values of development land. This was
increased as there was a stampede of young people applying and getting approved for up
to 100% mortgages which contrasts with the developer who was availing of huge credit
to build the houses. The financial institutions were lashing out money had a large part to
play and I remember walking down Grafton Street and people handing out leaflets and
your expecting it to say get yourself a free drink with your pizza, but it actually said get
yourself a 100% mortgage, this lead to impulsive buying.
As my term as minister for housing and the departments policy was supply, supply,
supply because house prices were rocketing and people who needed them couldnt buy
them and our theory was only by increasing supply could you control the prices.
The Kenny Report
Firstly its recommended were only voted four to two so the whole committee didnt
agree on its outcome and it didnt have the support of the government on the day which
was the Local Government at the time. Also although it was recommended by a
committee there was always huge doubt that its recommendations are in accordance with
the constitution. It was agreed that it was a lovely solution if they could make it happen
but we have a right to private property in the constitution and that has to be abided by
therefore people felt it wouldnt get through the supreme court. Since 1974 many
governments have looked at the Kenny Report yet didnt run with it due to the fear they
wouldnt get it into legislation and would just waste time. So governments tried to come
around it in other ways and the part v planning and development act was seen as a way of
partially bringing it into legislation. Now that went to the supreme court by the
developers of land and the court agreed that you could declare 20% of land for social and
affordable housing as it was applied to everybody who owned land. With the Kenny
Report two landowners could for instance have two fields next to each other but the local
authority may only take one and not the other, this begins the argument that its policies
are discriminatory under the right to private property. While Part V used careful wording
in legislation such as proportionate, non-discriminatory and towards a stated aim of the
common good therefore preventing the L.A.s selling the land on the open market to
make money.

Zoning
the past decade?
No it is not fair, as the land is zoned the values of the land rise and the State have to pay
theses inflated values to purchase lands for provision of schools or other vital
infrastructure. Maybe it should when zoning there is a condition put on the land that say
1 acre of every 10 acre on a site is sold to the state at agricultural value for the
communities required infrastructure this would mirror Kennys recommendations but
make more realistic. Therefore the landowner makes his profits from his speculative
section and the State recoup revenue from the remainder. Whereas Part V covered
housing this type of provision would cover the costs infrastructure. It seems only fair if a
site is developer with 150 houses the developer or landowner should contribute to the
infrastructure that the development has caused a demand for.
Certainly there are different skills and qualities that professional valuers and planners
bring but there is the need for a mix of both professionals and elected members. I agree
that you need professional opinions but there needs to be a proper mix, there are different
strengths and qualities that people need to pull together. You need development people,
valuers, planners and elected members to work together.
No it certainly is not fair and the profits made on land have been obscene and excessive.
But they were not always excessive but were in recent years with the economy coming to
a head and a shortage of zoned serviced land. It should be returned to the community but
its the case of how you arrive at the medium and agricultural value alone would not be
enough and I am uncertain 25% extra is sufficient either. Maybe double or treble
agricultural value would be a fair compensation yet allowing the L.A. capture the gain.
The profits that were made defiantly were ridiculous but how do you match up that view
with the constitution which states we have right to private property.
Local Authorities
Planners used to argue that there was enough zoned and serviced land in the GDA and
maybe there was but it might not necessarily have been where people wanted to live. For
example if say Im born and reared on the north side of Dublin, I want to live there and
there is no point telling me there is zoned serviced land on the outskirts of south Dublin.
Now while the planner might be saying there is enough land zoned for the next seven
years the problem is it might not be where people want to live. Within the GDA there are
seven authorities who have little inter-communication and there was without doubt a
severe lack of zoned and serviced land especially where people wanted it most. Servicing
the land is a very expensive process and there was probably a lack of funds as the speed
and the scale at which the land had to be serviced wasnt met by the local authorities.

Appendix F
The Case Study

Streamstown Lane Hypothetical Residual Valuation

Number of Proposed Dwellings and Gross Area

*Residential:
36 Semi/Detached Houses

12 x 2-Bed @
100 sq.m 1200 sq.m

12 x 3-Bed @
125 sq.m 1500 sq.m

12 x 5-Bed @
150 sq.m 1800 sq.m

4,500 sq.m
Gross Development Value (GDV)

Residential

Total: 20% Social & Affordable: Private:
3-bed 12
1,200
2
200
10 1,000
4-Bed 12
1,500
2
250
10 1,250
5-Bed 12
1,800
2
300
10 1,500
36
4,500
6
750
30 3,750

Total:
12 x 3-Bed x 850,000 = 10,200,000
12 x 4-Bed x 1,050,000 = 12,600,000
12 x 5-Bed x 1,350,000 = 16,200,000
39,000,000
Less VAT @ 13.5% 34,361,233

Less Social & Affordable:
2 x 3-Bed x 850,000 = 1,700,000
2 x 4-Bed x 1,050,000 = 2,100,000
2 x 5-Bed x 1,350,000 = 2,700,000
6,500,000
Less VAT @ 13.5% 5,726,872
28,634,361

Add back claimable costs for Social & Affordable:
Construction Costs (20% of total construction
costs)
1,440,000
Solicitors Fees (20% of solicitor sale fees) 80,749
15% for profit 228,112
1,748,861
30,383,222
Gross Development Value:

30,383,222
Gross Development Cost (GDC)

Construction Costs

Gross Area Residential (sq.m) 4,500 sq.m
Building Cost (per sq.m gross
area)
1,600 7,200,000
(Bruce Shaw 2006 Average, note 7)

7,200,000

Professional Fees @ 8.00% 576,000
+ VAT @
0.21
120,960 696,960
(of building costs, note 8)

Contingency
@
5.00% 360,000 360,000
(of building costs, note 9)

Other development costs - Say 60,000

(note 10)
60,000
8,316,960

Sale, Letting & Disposal
Costs

Agent Sale
Fees @
1.00% 286,344
(Note 14)
+ VAT @
0.21
60,132 346,476

Solicitors Fees on Sale @ 1.00% 343,612
(Note 14)
+ VAT @
0.21
60,132 403,744

Advertising / Promotions Costs
(Note 15)
- Say 100,000 850,220

Fees & Development Levies

Development Levies
Residential
143

(143per sq.m, FCo.Co., note17)

3,750
536,250

Planning Application Fee 65
(65 per unit, FCo.Co., note 17)
3750 243,750

Fire
Certificate
2.90
(2.90 per sq.m
gross area)
3,750 sq m 10,875

Road
Contributions
100,000 100,000
(Assumed, note
18)

890,875

Finance
Costs

Building
Period

12 months

Finance @ 8.50% p.a.
Finance on
costs
0.04325975
(Note 13)
10,058,055

435,109

Developers Profit

15% of Costs

1,573,975
(See Note 16)

Gross Development Costs:

12,067,139

Site Value

GDV 30,383,222
Less GDC 12,067,139
Site Value 18,316,084

Deferred 24
months.
[(1+i)^ -n] 0.8784035
i = 6.5%
(see note 11)
16,088,913
Site Value Now - Say
16,090,000

Notes to Accompany Residual Valuation of
Streamstown Lane

Assumptions:
It is assumed that the developer will be selling the entire development upon completion.
To successfully complete the residual a strong property market is needed therefore pricing
has been adjusted, similar to that of 2006. I am assuming that there is a strong market for
the finished units hence there is no void periods.
The effect of VAT and tax designated areas have been omitted in order to avoid
complication.

Notes:
1. The purpose of this residual is to solve for site value. This is the basis of the residual where
by the total costs of the development as well as developers profit are subtracted from the total
capital value of the completed development, hence the residual value is the site value.

2. Acquisition costs consist of legal fees, valuation fees and costs related to land purchase.
These are currently 10%. (Aoife Brennan, Economic and Development Services, Lisney)

3. Development proposal for the land is similar to an average medium standard housing estate
development. These residential units are 3, 4 and 5 bed detached and semi detached residences. A
competitive market would suggest that the proposed houses on Streamstown lane would achieve
850k, 1.05m and 1.35m. (Aoife Brennan, Economic and Development Services, Lisney)

4. It is assumed that the developer has come to an agreement with the L.A. to provide 6 units
to social and affordable housing.

5. Car space and construction cost of car spaces are not applicable to this development
because they are incorporated in the construction costs of the houses.

6. The housing strategy for the Fingal County Council states that 20% of the 36 units are
required for social and affordable housing.

7. Building costs of 1400 per sq .m is the cost for the proposed dwellings. These costs exclude
site purchase costs but include drains, driveways, garden paths and garden walls. Site development
costs, local authority fees etc are excluded. (Bruce Shaw Average Construction Costs 2006
[http://www.bruceshaw.ie/industry_info/irish_contruction_costs/average_construction_cost_1/] )

8. Professional fees are 8% charged on construction costs. These fees consist of architects
fees, structural engineers and quantity surveyors fees etc. (Aoife Brennan, Economic and
Development Services, Lisney)

9. Contingency costs have been estimated as 5% of construction costs. These are to take
account of variations in costs. (Aoife Brennan, Economic and Development Services, Lisney)

10. Unexpected development costs were covered by including 60,000 in the construction costs.
(Aoife Brennan, Economic and Development Services, Lisney)

11. With the assumption that there is a strong market for the houses, a base rate of 2.75% and
a risk premium of 3.75% culminated in an interest rate of 6.5% for the development. (Aoife
Brennan, Lisney Economic and Development Services.)

12. The construction period for 88 detached residential units would circa 12 months. (Sinead
Fowley, Mott Mc Donald, Engineering and Development Consultancy)

13. Costs will be incurred in holding the site from the date it is acquired until the disposal of the
development. This will be taken account of by discounting the site value at the end of the
development period over 12 months. (Millington, A.F. 1996)

14. Agents & solicitors fees of 1% are charged on the sale of each house. (Aoife Brennan,
Economic and Development Services, Lisney)

15. Promotional costs consisting of advertising, promotional boards etc is estimated to be
100,000.00. (Aoife Brennan, Lisney Economic and Development Services.)

16. Developers profit of 15% is the required profit as a percentage of value of the completed
development. (Aoife Brennan, Lisney Economic and Development Services.)

17. Development levies were introduced under S48 & S49 of the Planning and development Act
2000. The fee for development contribution is 143 per sq .m. The required planning fee is 65 per
unit. (Fingal County Council Website) [http://www.fingalcoco.ie/Planning/])

18. It is assumed the developer will contribute 100,000.00 for roads, water, sewer
infrastructure and social infrastructure of the area. (Aoife Brennan, Lisney Economic and
Development Services.)

Case Study Findings Methodology

The table below explains how each figure obtained in the case study findings was obtained.

Current Situation Designated-Area
Scheme
Pre-Emption
Scheme
Development Site
Price Paid By L.A.
(Development Site
Value)
Site Full Market Value
(refer to appendix D
rule two)
Agricultural Value +
25%*
Development Site Full
Market Value 20%*
(Average reduction
abroad)
Gain Landowner
Receives
Market Value-
Agricultural Value
(Less CGT @ 25% and
Selling fee @ 1.5%)
Development Site Price
Paid By L.A. -
Agricultural value

Paid By L.A. -
agricultural value
(less 70% betterment
tax*)
Development Site
Price Paid By
Developer
Residual Valuation
(Full Market Value)
Market Value (excl. Part
V and Development
Contribution)
Market Value(incl. Part
V and Development
Contribution as market
still exists)
Amount Recouped
by the L.A.
Development
Contribution (Residual
Valuation)
Paid By L.A. -
Paid By Developer (Less
cost of servicing site @
60,000 per acre)
70% of Site Price Paid
by L.A.
Factor by which land
price increased
when permission is
given to develop
Market Value
/Agricultural Value

Paid By L.A./Agricultural
Value

Paid By
L.A./Agricultural Value

Landowners Profit
as % of full market
Value
Full Market
Value/Profit made by
landowner x 100
Full Market Value/Profit
made by landowner x
100
Full Market
Value/Profit made by
landowner x 100
Surplus for
Community
Infrastructure after
provision of services
Amount recouped
cost of provision of
services
Amount recouped cost
of provision of services
Amount recouped
cost of provision of
services

*=Assumption, see chapter 5.

Could The Increase of Development Land Values Within The Greater Dublin Area Have Been Prevented?

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Could The Increase of Development Land Values Within The Greater Dublin Area Have Been Prevented?

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