An Analysis of the Land Value Sharing measure from the ‘Housing For All’ scheme
Introduction
‘The best time to implement the Kenny report was 1973. The second-best time is now.’[1]
The Land Value Sharing (LVS) measure of the proposed Housing for All (HFA) scheme aims to ensure that the increased value of re-zoned land is distributed amongst the community by taking a percentage of profits.[2] The constitutionality of such a proposal has been questioned, however on the balance of public necessity, the proposal is legitimate given the current housing supply shortage.
While the proposal builds upon the development contribution requirements of Part V, the scheme falls short of the radical change envisaged by the Kenny report.[3] The legislators continued reliance on the private market to fulfil the housing needs of the public will necessitate future governments to look towards alternative approaches to housing and community development.
Constitutionality of LVS
Art.40.3 and Art.43 of the Irish Constitution set out the fundamental framework upon which private property is protected. Art.40.3 can be seen as a general protection of the citizen against ‘unjust attack’ that also includes private property.[4]This is strengthened by Art.43 which aims to protect the ‘institution of private property’.[5]
This is not an absolute right, the courts on occasion may limit these rights on the ‘principles of social justice’ or where a ‘common good’ is to be achieved.[6] The development of jurisprudence in the area has allowed both Articles to be read together.[7]
Unjust Attack
Central Dublin Development Assoc. v. Attorney General sets out that when the courts assess a piece of legislation it is necessary to consider whether it is ‘necessary to reconcile their exercise with the demands of the common good’.[8] The legitimate objective of increasing development and affordable housing within the community allows LVS to be seen as a ‘just attack’ on property rights.[9]
It must also be noted that the courts will leave the legislator to determine what is the common good as elected representatives of the public.[10] This curtails a judge’s ability to impose their own views on the effectiveness of a piece of legislation. They must instead look at the necessity of the legislation to reconcile issues of the common good.[11]
Proportionality Test
In recent years the courts have adopted a proportionality test when assessing legislation, while still maintaining the importance of Art.40.3 and Art.43. As set out in Heaney v Ireland, it is necessary for the courts to consider if the proposal is ‘rationally connected to the objective’; ‘impairs property rights as little’; and in doing so has an ‘effect that is proportional to the objective.’[12]
Housing is of ‘sufficient importance’ and involves ‘pressing and substantial concerns for society’.[13] Figures from the CSO have noted a slowing of housing stock increase between 2011 – 2016.[14] This has coincided with a sharp increase in house values and rent.[15] LVS would allow profits resulting from the increase in re-zoned land value to be reinvested into the community to help tackle current housing and community development issues. The proposal is ‘rationally connected’ to the objective and cannot be seen as ‘arbitrary or unfair.’[16]
When considering the impairment of property rights, we must consult the case law. In Daly v. Revenue Commissioners, it is emphasised that the right must be impaired as little as possible.[17] However, as seen in Re Article 26 and the Planning and Development Bill 1999 the need for housing and community development justifies the significant impairment on a landowner’s property right, thereby affirming LVS.[18] The effects imposed on the rights of landowners may be significant but are proportional to the objective the legislator is trying to achieve.[19] The courts also noted that even when planning legislation is ‘novel’ or ‘radical’, so long as it is to achieve a social objective, they will allow to Oireachtas to decide the best use of ‘Planning Machinery’[20]
Addressing Dissenting Arguments
It can be argued that LVS effectively reduces the value of property. However, as stated by Costello J in Hempenstall v. The Minister of the Environment, the ‘effect of reducing property values cannot in itself amount to an infringement of constitutionally protected property rights.’[21] This was later affirmed in Dellway Investment Ltd v National Asset Management Agency where Fennelly J observed that the courts ‘do not consider the mere fact of diminution of property values would normally suffice to establish an individual right to be heard’.[22]
It has been stated that ‘restricting the property rights of one group for the benefit of another’ may be unconstitutional.[23]The case of Re Art.26 and the Employment Equality Bill 1996 is often a reference point for arguments against landowner burdens.[24] However, the principles set out cannot be applied in a general sense given the specific facts of the case.[25]If the courts were to enforce a rule whereby one group could not ‘shoulder the burden’ to achieve a common societal goal, it would be incredibly difficult to legislate.[26] When looking at LVS through the lens of fairness, the community should be entitled to a significant proportion of re-zoning profits as they fund State involvement in land re-zoning developments (Electricity lines, roads, sewerage systems) through taxation.
It should also be noted that in times of crisis, the courts will interpret the meaning of the Constitution in the context of the crisis.[27] In J & J Haire Company Ltd & Ors v Minister for Health and Children & Ors, due to the financial crisis, legislation was introduced which changed pharmacist contracts resulting in lower fees payable.[28] McMahon J felt that in the context of the crisis, this was constitutional.[29] This rationale can also be applied to emergency legislation introduced during the Covid-19 pandemic and in theory, LVS.
Critique of LVS & Alternatives
The HFA scheme and LVS fall short of the radical change envisaged by the Kenny Report. HFA and LVS do not directly tackle the need for the government to move away from their overreliance on private developers to provide for the housing needs of society. In post-crash Ireland, the narrative pushed by developers is that of a lack of financial viability in development which has led to the financialization of the government’s policies on urban planning.[30] This has resulted in a severe shortage of housing and huge inflation in the market as developers look to maximise profits at the expense of the community.
In response to the financialization of Canada’s urban development, the city of Toronto has implemented a policy of ‘Land Value Capture’ called Density Bonusing (DB).[31] The policy necessitates that when a development proposal goes beyond the zoned purpose of the land, the developer is required to contribute funds towards a community chosen development project.[32] This policy of community betterment has been seen as an overall success.[33] However, it has been noted that DB does not generate the necessary revenue to support sustained urban renewal and development.[34]
The community consultation aspect of DB is something that could be implemented into LVS to allow for the best use of collected funds.[35] DB also highlights the fact that LVS will not be enough to combat community development issues.
The inclusion of a right to housing within the Constitution would compel the government to take a more hands-on approach to housing development and would bring an end to the overreliance on private entities to service the public’s housing needs. This can be seen in the South African case of Grootboom v. Oostenberg Municipality and Ors.[36] The court found that the state had an obligation to take positive steps towards the achievement of reasonable housing for all.[37] This would circumvent any objections to urban development policy on constitutional grounds.
Conclusion
The LVS aspect of the HFA scheme operates within the confines of the Constitution. While LVS will have a positive impact as seen with DB in Toronto, there is a reluctance by legislators to implement expansive change to current planning and development policies. This is because of the government’s need to balance public and private interests while also adhering to the Constitution’s steadfast property rights. Radical change is needed and can be facilitated by the inclusion of a right to housing in the Constitution.
Bibliography
Biggar J and Siemiatycki M, ‘Addressing equity concerns in land value capture: The spatial distribution of community benefits in Toronto’s urban redevelopment’ (2020) 13 UCL Press, 191-207
Cantillon, ‘Land value sharing measure doesn’t go as far as Kenny report recommended’ The Irish Times (Dublin, 07 September 2021)
Central Statistics Office, ‘Census 2016 Profile 1 - Housing in Ireland’ (CSO, 20 April 2017) < https://www.cso.ie/en/csolatestnews/presspages/2017/census2016profile1-housinginireland/> accessed 25 September 2021
Dáil Deb 3 June 2021, vol 1008, 355
Department of the Taoiseach, ‘Government launches housing for All – a New Housing Plan for Ireland’ (Department of housing, Local Government and Heritage, 2 September 2021) <https://www.gov.ie/en/press-release/ee5a9-government-launches-housing-for-all-a-new-housing-plan-for-ireland/> accessed 25 September 2021
Hogan H and Keyes F, ‘The Housing Crisis and the Constitution’ (2021) 65(1) IJ (ns) 87
Waldron R, ‘Financialization, Urban Governance and the Planning System: Utilizing ‘Development Viability’ as a Policy Narrative for the Liberalization of Ireland's Post‐Crash Planning System’ (2019) 43(4) IJURR, 685
[1] Dáil Deb 3 June 2021, vol 1008, 355.
[2] Department of the Taoiseach, ‘Government launches housing for All – a New Housing Plan for Ireland’ (Department of housing, Local Government and Heritage, 2 September 2021) <https://www.gov.ie/en/press-release/ee5a9-government-launches-housing-for-all-a-new-housing-plan-for-ireland/> accessed 25 September 2021.
[3] Cantillon, ‘Land value sharing measure doesn’t go as far as Kenny report recommended’ The Irish Times
(Dublin, 07 September 2021).
[4] Article 40.3.1°.
[5] Hilary Hogan and Finn Keyes, ‘The Housing Crisis and the Constitution’ (2021) 65(1) IJ (ns) 87, 88.
[6] Article 43.2.1°, Article 43.2.2°.
[7] Hilary Hogan and Finn Keyes, ‘The Housing Crisis and the Constitution’ (2021) 65(1) IJ (ns) 87, 89.
[8] (1975) 109 ILTR 69 at 86.
[9] ibid 90.
[10] ibid 86.
[11] ibid.
[12] [1994] 2 ILRM 420.
[13] ibid.
[14] Central Statistics Office, ‘Census 2016 Profile 1 - Housing In Ireland’ (CSO, 20 April 2017) <https://www.cso.ie/en/csolatestnews/presspages/2017/census2016profile1-housinginireland/> accessed 25 September 2021.
[15] ibid.
[16] Heaney case (n 13).
[17] [1995] 3 IR 1.
[18] [2000] IESC 20 (28th August, 2000).
[19] Chaulk v R (1990) 3 SCR 1303.
[20] Planning and Development Bill case (n 19).
[21] [1994] 2 IR 20.
[22] [2010] IEHC 364.
[23] Hilary Hogan and Finn Keyes, ‘The Housing Crisis and the Constitution’ (2021) 65(1) IJ (ns) 87, 93.
[24] [1997] 2 I.R. 321.
[25] Hilary Hogan and Finn Keyes, ‘The Housing Crisis and the Constitution’ (2021) 65(1) IJ (ns) 87, 94.
[26] ibid.
[27] ibid 98.
[28] [2009] IEHC 562 (17 December).
[29] [2009] IEHC 562 (17 December) 67 (McMahon J).
[30] Richard Waldron, ‘Financialization, Urban Governance and the Planning System: Utilizing ‘Development Viability’ as a Policy Narrative for the Liberalization of Ireland's Post‐Crash Planning System’ (2019) 43(4) IJURR, 685.
[31] Jeff Biggar and Matti Siemiatycki, ‘Addressing equity concerns in land value capture: The spatial distribution of community benefits in Toronto’s urban redevelopment’ (2020) 13 UCL Press, 191-207.
[32] ibid 194.
[33] ibid.
[34] ibid.
[35] ibid.
[36] 2000 (3) BCLR 277 (C).
[37] ibid 295.