A Green Light for a New Agenda on Housing and Planning

on Thursday, 24 June 2004. Posted in Issue 48 The Constitution: Private Property and the Common Good, 2004

Jerome Connolly

June 2004

Introduction

One of the most ideologically and economically sensitive elements in any state is the legal and constitutional regime governing the ownership of private property. The regulation, taxation and expropriation of property raise fundamental questions of justice, equity, the right to shelter, the balance between individual rights and the common good. All these matters are addressed in the Report on Private Property of the All-Party Oireachtas Committee on the Constitution, published in April 2004 (1)

 

Given the all-party composition of the Committee, which included the complete left-right spectrum from Sinn Fein to the
Progressive Democrats, the absence of any minority reports from members of the Committee suggests that the Report represents a substantial measure of political consensus. For this reason, it ought to be a major influence in determining the direction of public policy and legislation.(2)

Individual Rights and the Common Good

The Report is part of the on-going, long-term review of the Constitution being undertaken by successive joint committees of the Oireachtas following publication in 1996 of the Report of the Review Group on the Constitution.(3) In February 2000 the Taoiseach asked the Committee to examine the existing constitutional provisions on property rights, particularly as these relate to planning controls and infrastructural development. At the time there was, as there continues to be, intense public concern and debate about the availability and price of housing, and this was presumably also in the Taoiseach\'s mind when writing to the Committee. 
The Committee considered that its principal function was to examine the property rights provisions of the Constitution in general (albeit, as it made clear, in the light of the concrete issues raised by the Taoiseach) and to "express a view as to whether, as , commonly perceived, they are weighted too heavily in favour of the individual". (p. 17)

In essence, the Report considers whether the existing regime governing the individual right to private property in Ireland should be re-balanced to give greater recognition to the demands of the common good and the public interest.

Socio-economic Rights

As part of its examination, the Committee invited submissions on a range of related issues including private property and the common good, house prices and the right to shelter. The reference to "the right to shelter" is of particular interest, since there is no right to shelter or housing in the Constitution at present. In the event, a number of submissions were received arguing for the inclusion in the Constitution of either socio- economic rights in general, including a right to housing, or a right to shelter and/or 
housing in particular. In addition, a number of organisations which made submissions primarily on other topics also endorsed the principle of a constitutional right to shelter and/or housing incidentally to their main topic of concern.

One unexpected and welcome outcome of these submissions was to persuade the Committee that the question of constitutional recognition of socio-economic rights merited "extensive debate". It concluded that a constitutional right to shelter would be better discussed in the context of all the socio-economic rights that had been proposed, rather than in isolation. It decided to defer consideration of whether the Constitution ought to include justiciable socio-economic rights to a later report. (p. 19)

With this decision the Committee has for the first time put the question of constitutionally enforceable socio-economic rights on its agenda. Such a decision is doubly significant since it also suggests that the Committee is not accepting prima facie the recommendation of the Constitution Review Group in 1996 that "anti-poverty" (i.e. socio-economic) rights should not be accorded constitutional status.

The Committee\'s position could be interpreted negatively as postponing indefinitely consideration of socio-economic rights in the Constitution. However, it was under no particular compulsion to give a hostage to fortune by committing itself explicitly in writing to consider these rights in the future. A group of experienced politicians would surely have refrained from doing so unless they were indeed persuaded that the case for constitutional recognition in truth deserved serious examination.

Important Commitment

This commitment is potentially highly significant. If acted on, it means that we would be facing into what might well prove to be one of the most wide-ranging constitutional and human rights debates for many years. Given the scope of socio-economic rights, such a debate would engage political and ideological opinions across the political spectrum. Of course, much of the debate would not necessarily be about widely differing values but about more technical legal and constitutional aspects of how and by what means rights of differing sorts can best be vindicated in practice.

Challenge to Voluntary, Community and Church Sectors

It is certain that there will be articulate and well-organised opposition to giving constitutional status to social and economic rights on various grounds. What is not as certain is whether there will be equally articulate and well-organised groups supporting it. Herein lies the challenge for the community sector, for church groups and leaders, for those who want to redress the growing inequalities in our society, for those who campaign for social and affordable housing, disability rights, more equitable health services, children\'s rights and many more issues.

Need for Broad-based Lobby

The challenge is two-fold. The first is not to let the commitment of the Oireachtas Committee slip into oblivion, but to keep it to the forefront of public and political attention. The second is to take seriously the need for a rigorous preparation by a wide range of groups in order to argue the case for social and economic rights. In practice the two go together.

It is not at all clear if the long-term strategic importance of the commitment given in the Report has been so far appreciated by the various interests and sectors mentioned above. If the Committee were to begin to look at the issue this autumn, for example, it is likely that most potential supporters of inserting social and economic rights into the Constitution would be caught unprepared.

What is called for now is a broad-based movement or coalition of interests and individuals, whether formal or informal, to encourage and pool research, to network and provide mutual support, to lobby and campaign for the inclusion of social and economic rights in the Constitution. The research should be done, the arguments well-made and disseminated, the objections noted, pondered and countered, before the present Oireachtas Committee or its successor actually begins to consider the question.

Kenny Endorsed

In considering the two articles in the Constitution dealing with property rights, the Committee had particular regard to an important earlier text, the 30-year old Report of the Committee on the Price of Building Land (1973) (the \'Kenny Report\'). The Kenny Report\'s major recommendation was that local authorities should be empowered to cap the amount of compensation for compulsorily acquired land in designated areas at a level equal to existing use value plus 25%. However, this was never acted on because of purported uncertainty about whether any law putting it into effect might run foul of the Constitution. Subsequent governments of all hues had pointed to such doubts as justification for their unwillingness to act on the recommendation.

Following a "close analysis" of the Constitutional text and of relevant case-law, the Committee\'s Report decisively removes any remaining uncertainty. (p. 39)

The Committee notes that case law since Kenny has determined that the property rights provisions of the Constitution are far from absolute and that sometimes even far-reaching interference with such rights can be justified by reference to the common good. In effect, the Oireachtas now enjoys a wide margin of appreciation in regulating, or even restricting, constitutionally-protected property rights. In doing so, however, it is required to respect the substance of the right in question and to ensure that legislation is based on rational considerations and meets criteria which Irish courts have defined to test legislation which seeks to abridge constitutionally-protected rights. The Committee concludes that the State has a broad discretion whenever it seeks to maintain a due balance between the demands of the common good and the individual\'s rights in property matters.

In the light of the developments in contemporary Irish case-law, therefore, the Committee reasons that it would now be "very difficult" to see why the Kenny Report\'s recommendations would not stand up to constitutional scrutiny. (p. 39) Several cases have made it clear that, since there is no constitutional right to use one\'s land in a manner inconsistent with appropriate land use restrictions, the value of the land must be measured prima facie by reference to existing land use values, rather than possible or anticipated future developmental values (which, of course, are likely to be much greater). The Committee judges that the landowner should, however, receive compensation somewhat above existing use values, possibly up to the Kenny figure of 25 per cent, "if only to assist in repelling any possible constitutional challenge". (p. 40)

By coming unanimously to this conclusion, the Committee effectively sweeps away any remaining grounds for reluctance on constitutional grounds to give the Kenny recommendation the force of law.  Whether legislation will be brought forward is now clearly a question of political will rather than constitutional hindrance.

Refusal of Planning Permission

A substantial part of the Committee\'s survey of developments in case law since 1970 was an examination of whether compensation to a landowner was constitutionally required if he or she was refused planning permission to change an existing land use.

The Committee decided that the outcome of the judicial reasoning in the cases cited is that a landowner cannot claim a constitutional entitlement to compensation for refusal of permission to change an existing land use. (pp. 28-33)

Land Hoarding

The question of the hoarding of large land banks at the edge of urban areas by developers to keep prices artificially high was considered. The Committee did not come to any conclusions about the extent of this problem, but took the view that the planning system as it currently operated served to facilitate "those with the resources to buy up development land and hold on to it". (p. 86).  It concluded that any failure to act in relation to the matter was not caused by the requirements of the Constitution nor was the question resolvable by constitutional amendment. The Committee argued that the problem can be dealt with by legislation - for example, through tax changes encouraging early use of zoned land and penalising failure to use it expeditiously. (p.42)


\'Special Cases\'

A number of \'special cases\' were also looked at by the Committee. On the matter of ground rent, it took the position that while a ground landlord\'s ground rent represents a right to an income which "in principle" is constitutionally protected, the abolition of ground rent would not be unconstitutional provided adequate compensation was paid. It recommended that the government should prepare legislation to abolish ground rents on foot of adequate compensation. (p. 51)

After reviewing the question of access to the countryside, on which quite a number of submissions were received, the Committee concluded that no constitutional amendment was needed to enable the introduction of legislation that would provide a balance between the common good and the rights of individual owners. (p. 56)

The Property Market

The Report includes a comprehensive analysis of the operation of the property market. It is not possible here to do more than pick out some of the key points made in this analysis.

The Committee concludes that the \'normal\' rules of economics do not apply directly to the property market. This is due to widespread imperfections, including the fact the number of buyers and sellers in the property market, and its various sub-markets, is limited. This often means that either category may be able to unduly influence trading and prices, with the result that "the smooth operation of the market can be inhibited to a point where the normal criteria of supply and demand may not apply.” (p. 76)

Property prices are usually very high in relation to the incomes of those wishing to buy houses, with the result that a substantial and increasing number of people are precluded from owning homes. In one of the most significant admissions of the Report, the Committee acknowledges that:

“property markets will not of themselves supply everyone with a house which they can own. Where there is an overall shortage of housing, those at the bottom end of the market will be priced out because the market rations the available accommodation among competing bidders. On the other hand if property prices are low, supplying those at the bottom end of the market may not be sufficiently profitable to encourage development. It follows that direct, non-market provision of accommodation will be necessary at all stages of the cycle.” (p. 73) (Emphasis not in original)

The Committee therefore accepts that a housing economics policy "more in tune with societal requirements than pure market requirements" is needed. (p. 73)

Another salient characteristic of property and particularly house markets is their sensitivity to tax policies. Ireland is exceptional in western countries in not having local taxes on residential property to fund local government. According to the Committee, by encouraging people to keep more of their investment wealth in housing this actually keeps house prices higher in Ireland than they would otherwise be. (p.76) It fights shy, however, of overtly recommending the reintroduction of local taxes on residential property - presumably from an understandable desire to avoid political suicide.

In general, the Committee concludes that "unfortunately" policies in relation to housing, planning and taxation have taken insufficient account of the various characteristics specific to property markets, or of the interaction between planning and urban property, and this has led to "deficiencies that manifest themselves in particularly high development land prices". (p. 77)

Analysis of the Planning System

The Report also provides a detailed analysis of the operation of the planning system and its interaction with the property market. Again, only a brief indication of this analysis can be given here.

The Committee criticises the prevailing understanding of the planning system which sees problems arising from development as being amenable to basically administrative solutions working independently of market forces. Interventions based on such a misunderstanding mean that market forces are frequently frustrated or contradicted. The Committee holds that high development land prices originate in our planning system because of its effect in restricting the amount of zoned and serviced land available to the market. Equally to blame are delays in planning decisions and slow supply of infrastructure such as sewage and roads by local authorities, which hold back the start of new construction.

The Committee\'s analysis leads it to identify as critical the zoning and servicing of an adequate amount of development land, while recognising that what constitutes adequacy is a matter of judgement. (pp. 84-5) The planning system "should be designed and managed to make the market work in the interests of the common good". (p. 86)

Charges on Unused Development Land

The Committee urges that in adopting their development plans, local authorities should ensure that sufficient land is zoned to meet anticipated need. It goes on to propose a system of progressively increasing charges on development land over the duration of a development plan. The base rate for such a charge would be set with reference to the priority attributed in the plan to the urgency of developing particular lands. The charge would increase after six years to a level equal to the difference between the development land value and the agricultural land value, at which point the owner "may be presumed to have chosen to forgo the benefit of having land zoned for development". (p. 87) The local authority could then compulsorily acquire the lands in the interest of the common good.

Such a scheme would enable local authorities to secure the release of development land whose owners were neither actively pursuing its development nor releasing it on to the market. This would help to overcome one of the defects of the present planning system, which, as the Committee recognises, puts owners of development land in somewhat of a monopoly position, and gives an incentive to developers to act against the public interest by timing their disposals to maximise the gain to themselves. "This situation", says the Committee, "is not a flaw thrown up by market economics, it is the way the planning system is allowed to operate" (emphasis added). (p. 88) In saying so, the Committee puts the onus to rectify matters squarely on the public authorities.

Social and Affordable Housing

The Committee begins its discussion of what it calls the "special case" of social and affordable housing with the following words: "There are serious and difficult questions surrounding the constitutional status of rights to housing. Whatever about these questions, one thing is certain, the provision of shelter is a prerequisite of human existence". (p. 100) Many might feel that the second sentence goes a long way to establishing a prima facie case for a constitutionally protected right to housing. 
The Committee says it was impressed by the clarity with which a number of named organisations presented the level of housing need which exists, quoting for example the CORI submission, which showed that while the number of households on local authority waiting lists had grown by 76% between 1996 and 2002, the overall stock of local authority social housing had increased over the same period by less than 5%. (p. 101)

Despite its earlier warning about the danger of ignoring basic market forces, the Committee is clear that "social and affordable housing are special cases that must be treated by special interventions". (p. 104) The Committee is unequivocal that:

“at some basic level the provision of a certain amount of social housing.. should be seen as part of the basic supports of a civilised society.“(p. 103) 

Social housing should be regarded as part of the infrastructure needed for society to operate and should be provided and funded in the same way as other basic infrastructure. The Committee argues that this can be done through the simple step of amending section 48 of the Planning and Development Act, 2000 to include social housing under the definition of "public infrastructure and facilities". Such a step "would enable local authorities to include the cost of providing the planned supply of social housing in the scheme for determining the amount of development levies." (p. 103)

The Committee emphasises that in providing social and affordable housing care must be taken to ensure that this is in addition to the accommodation supplied by the market. Otherwise, it says, resources would only be shuffled around, reducing supply to the market, with the likely result of raising prices, which would be perverse. It suggests that the issue could be addressed by local authority development plans identifying lands that would be reserved for social and affordable housing. (p. 104)

There are many who might disagree with the Committee\'s observation that the fact that providing more subsidised accommodation is likely to elicit increased demand, giving the misleading impression that the problem of housing need was growing. For many years, the number of jobs increased without leading to a commensurate drop in unemployment figures, reflecting the fact that many people who had previously given up looking for work because they felt there was no work to be had. The same is as likely to be true of subsidised housing, where at present many people have simply abandoned the idea that they will ever be able to get accommodation of their own through any channel, market or social.

National Development Forum

The Committee outlines the criticisms of the planning system contained in the submissions it received - including shortages in zoned land, delays in planning decisions, failures in transparency and accountability. (p. 109) There is acknowledgement that the revelations of tribunals have shaken public confidence in the part played by politicians in the zoning and re-zoning of lands in particular. (p.122) The Committee puts forward a series of recommendations to address the concerns raised, including the interesting proposal that there should be a government-appointed national forum for the built environment "through which the best thinking and practice would be made available continuously to the whole planning system" 
(p. 123). The forum\'s membership, it is suggested, should be drawn from the planning, construction, property and environmental interests as well as the state regulatory bodies concerned with planning. Whether by accident or design, the inclusion of representatives of social housing organisations and other NGOs concerned with housing is not mentioned, despite the attention given throughout the Report to social housing needs. It is to be hoped that this omission will be rectified if such a forum is established

Conclusion

The All-Party Committee gives a decisive green light to the introduction of legislation empowering local authorities to compulsorily acquire land at existing use value plus say 25%, rather than at its potentially much higher value as development land. It blames, not the principle of a planning system, but the way the existing system is operated in practice, for failing to supply an adequate flow of serviced and affordable development land to the market. In these two crucial areas it firmly lays responsibility at the door of the legislature and public authorities to reform the current highly unsatisfactory situation. It denies government any longer the excuse that the constitutional provisions on private property represent a barrier to legislative action.

The Report is unusually significant in its unequivocal statement of the need for non- market provision of housing. The Committee makes a cogent case for using the strengths of the market to provide housing for most people, but argues strongly that social housing should be seen as part of the State\'s general infrastructural provision. In doing so, it is very clearly asserting that the market should not be allowed free rein, and that shelter is a basic human requirement which a civilised society will ensure for everyone, including those dispossessed by raw market forces.

The challenge now is to see the recommendations of the Committee translated into action. As negotiations on a new partnership agreement open, trade unions and the members of the social pillar might give serious consideration to requesting that a commitment to act on the Report be included in any new agreement.


Notes

 

1. The All-Party Oireachtas Committee on the Constitution, Ninth Progress Report: Private Property, Dublin: Stationery Office, 2004.

2. In addition to the 133-page main Report, there is an appendix of nearly 300 pages containing the texts of a "broad and representative" selection of the 140 written submissions received by the Committee. The Report aside, this offers a valuable source for anyone concerned with the various social, constitutional and legislative aspects of private property in Ireland.

Since the Report is likely to remain a reference point for a long time to come, and given its complex and interlocking subject matter, one cause for regret is that a more detailed subject index, including the appendix containing submissions to the Committee, was not included.

This would have made a document of this importance more easily consulted and referred to. Bearing in mind that modem word processing packages now enable such indexes to be quickly and easily compiled, it is to be hoped that future reports of the Oireachtas Committee, especially if they continue to be of this quality, will be provided with full subject indexes, and indeed more detailed tables of contents.

3. Constitution Review Group Report, Dublin: Stationery Office, 1996.