Property
Dysfunctional development land systems in UK and Ireland - Part 1
By Michael Hennigan, Finfacts founder and editor
Oct 7, 2014 - 8:40 AM

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Swirling clouds of blue and green lit the Atlantic Ocean west of Ireland on June 2, 2006, when the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Aqua satellite captured this image. The ocean is normally black in true-color, photo-like satellite images such as this one, but a large phytoplankton bloom lent the water its brilliant blue and green hues. Phytoplankton are microscopic plants that grow in the sunlit surface waters of the ocean. When enough of the plants grow in one place, the bloom can be seen from space.

Dysfunctional is a polite term for the development land systems in the UK and Ireland - at least in the UK there are 64m people compared with 4.6m in the Republic of Ireland.

England & Wales had a population of 40m in 1931 and has a total of 57m in 2014 while in 2012/13 according to the Home Builders Federation, England had one of the lowest house building rates since 1923 -- there were just 108,190 completions. The federation said that affordability has plummeted - -  in the last 40 years the average house price to salary ratio has almost doubled; the price of the average home purchased is now almost 7x the average annual salary of the buyer.

In 1920, average homes usually measured 1,647 square feet and typically had four bedrooms, but today’s equivalent has three bedrooms and is 925 square feet, according to the Royal Institution of British Architects (RIBA).

The most common new three bedroom home is smaller still at 74m². At only 77% of the recommended size it is missing 22m² and therefore the space equivalent to two double bedrooms and all their contents; the average single storey one bedroom home is 46m², which is 93% (4m² short) of the recommended minimum size - - missing out on space equivalent to a single bed, a bedside table and a dressing table with a stool.

Nevertheless a high proportion of Britons still live in  semi-detached homes.

Eurostat said in 2011 that in 2009, 41.8 % of the EU-27 population lived in flats /apartments, 34.4 % in detached houses and 23.0 % in semidetached houses. The share of persons living in flats was highest in Latvia (66.2 %), Estonia (65.1 %) and Spain (64.6 %). The share of people living in detached houses peaked in Slovenia (68.7 %), Hungary (67.6 %), Romania (60.7 %) and Denmark (58.4 %); Norway also reported a high share (62.4 %) of persons living in detached houses. The highest propensity to live in semi-detached houses was reported in the Netherlands (61.4 %), the United Kingdom (60.9 %) and Ireland (57.6 %).

Population density (usual residents per square kilometres) in England is at 407, behind the Netherlands at 493, Germany 229, France 103, Denmark 129, Sweden 23, Northern Ireland 133 and the Republic of Ireland 66.

RIBA said in 2011 that through analysis of EU housing statistics in 2005, the think-tanks, Policy Exchange and Localis, found that new homes in the UK not only appeared to be shrinking, but were also the smallest in Western Europe. Consumers in Ireland could expect new homes to be 15% bigger, in the Netherlands they were 53% bigger and in Denmark, the average newly built home was 80% bigger than in the UK.

Last week the head of an Irish public housing policy agency recommended that rent-only 40 square metre apartments - - more than 27% smaller than the smallest one-bed apartment currently permitted - be built in Dublin to suit a “young mobile workforce.”

During the bubble apartments were selling for more than €400,000 in the Gas Works development near Google's South Dublin headquarters and bicycles had to be stored on balconies -- suggesting the limited facilities that were available.

So building smaller apartments is back to the future and sizes that were permitted in the 1990s.

It's crazy to be short of land in a country with so much empty space.

We wrote last May that Greater London with an area of 1,600 square kilometres had a population of 8.2m in 2011, up from 7.3m in 2001 while Greater Dublin (county) with an area of 950 square kilometres had a population of 1.27m in 2011 and 1.12m in 2002 - - while the area of County Dublin comprises 92,200 hectares, 40,200 hectares are farmed. So the urban density is higher than the 1,336 persons per sq. km suggested by the data. This compares with London's density of 5,125 persons.

In 2011 at the nadir of the recession, Dublin's population rose by 83,000 from 2006, the peak of the bubble: +19,000 in Dublin City; +33,000 in Fingal (North) and +31,000 in Dublin South.

The post-war Labour government in the UK in its Town and Country Planning Act (1947) set a target of building 300,000 new houses a year and 1.25m council houses were built between 1945 and 1951. It also defined green belt land that had to be kept rural - - which became a powerful tool for Nimbies (not in my backyard syndrome).

A bizarre impact of the protection of the green belt is that in urban areas school playing grounds could be sold off for development.

The Labour Party claims an estimated 10,000 playing fields in the UK were disposed of between 1979 and 1997 when the Conservatives were in power, but according to the BBC's More or Less programme, "no one really knows the true figure because nobody counted".

In Ireland the Local Government (Planning and Development) Act (1963) was largely based on the UK Act and it helped to make land scarce and expensive in a country that is 4% urbanised.

Since bubble times, there is an added complication in Ireland as agricultural land has remained the most expensive in the world.

Land for development is also a politically potent issue for the two leading conservative parties, Fine Gael and Fianna Fáil, with farmers being able to sell individual sites to top up their incomes and also in effect win the lottery from land rezoning.

In 2001, the Government caved in to the Irish Farmers Association (IFA) under the leadership of Tom Parlon and agreed to give farmers 23% of the national roadbuilding budget of €18.5bn as compensation for land.

It was a world class deal and compared with just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland.

In 2003, Tom Parlon then a member of the Irish Government  said that any tampering with the existing system of determining land prices for development, would be a form of Stalinism.

The wealthy farmer was a beneficiary of Europe's biggest socialist programme - - the Common Agricultural Policy.

In the former home of Charles Stewart Parnell, the late 19th century Irish parliamentarian who was one of the leaders who helped free Irish small farmers from the yoke of British landlordism, Tom Parlon said in August 2003:

I believe that weakening private property rights as a means to achieve this goal (affordable housing) would be a great mistake.

Such an approach is gift-wrapped in an ideology somewhere left of Stalin, which has no place in a modern dynamic open economy like Ireland.

Any measure giving the State the power to control the value of private assets would have major negative ramifications for thousands of property owners and would be a jump back to the dark days of the 19th century.

What if your home, your business or your farm is zoned for development? Should you be allowed reap the benefits of this? In a democracy of course you should."

In a report in The Financial Times issue of August 12th, 2006, on Irish buyers driving up farm prices in the UK, Matt Dempsey editor of The Farmer's Journal was quoted: "When you can now sell a piece of rezoned farm land on the edge of a town in Ireland for €500,000 an acre, several farmers have found themselves very rich."

Tom Parlon is now director general of the Construction Industry Federation.

Dysfunctional development land systems in UK and Ireland - Part 2


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