Active land management and social housing

The Week in Housing 07/02/25

Last week’s looked at the issue of counter-cyclicality and social housing. This week’s topic - active land management - is closely related, and draws on a recent publication by Michelle Norris.

In search of a solution the housing crisis, we have already seen a host of major policy developments in Ireland. But one area that has received relatively little attention is land management. Although we have got a shiny new Land Development Agency, from the point of view of enhancing state capacity for active land management, it is relatively toothless. And so I read with great interest my colleague Prof. Michelle Norris’ excellent recent article looking at the role of land policy in the success of social housing systems historically, in particular England, Netherlands and Austria. The article introduces a distinction between ‘active’ and ‘passive’ land management and compares how these models perform in terms of supporting social housing delivery.

Before diving into the case studies (I focus on Netherlands/England here, but it’s worth reading full paper as the Austrian example is fascinating too), it’s worth remembering why land can play an important role in social housing delivery. Norris identifies the following issues:

1. The cost of private land can be prohibitive for the State

2. Social housing is often most needed in urban areas where land prices are highest, undermining viability of delivery

3. Landowners’ concerns that social housing might effect the price of adjacent developments can discourage them from selling

4. Land is an inherently scarce asset, with fixed supply, which can encourage hoarding by owners.

Of the three countries examined in Norris’ paper, the Netherlands had the strongest active land management policies in the post-war ‘golden age’ of social housing. Dutch municipalities were able to:

· Buy almost all development land and service it for residential, usually at around twice ‘existing use’ prices – i.e. the price the land has prior to being zoned or serviced for residential development. They had compulsory purchase powers but generally didn’t need to use them, because landowners knew that if they refused to sell ‘voluntarily’ their land could be compulsory purchased anyway.

· Borrow money to buy this land, which they could repay following sale of land

· Sell land to social housing providers to recover costs, but at below market rates

· Ensure supply of land for social housing providers and reduce costs

· Cross-subsidize by selling sites for commercial use at higher rates than residential use

This model led to some of the highest level of social housing output of any country, and the Neterlands even today has the highest proportion of social housing of any European country (around a third of dwellings). Moreover it:

“[H]as been widely praised by international observers for enabling high quality and comprehensive land use planning, capturing some of the increased price that occurs when land is rezoned for development (often called ‘betterment’), ensuring sufficient supply of serviced land and contributing to relatively stable and low (by comparison with other European countries) property prices and modest regional price differences”.

The Dutch approach remained more or less the same until around 2005., and between 1995 and 2005 68% of new homes were delivered on land provided by municipalities. From the early 2000s, the focus shifted to private market housing development. Moreover, the ability of municipalities to sell land to social housing providers at below market rates was curtailed. In addition, Government intervention (as in the case of England, see below) moved to focus more on the planning system than on direct Government ownership and management of land. In 2008 the planning act was revised to: “provide more options for municipalities to recover the cost of land servicing from developers, to guide the form and content of developments more closely and also to require developers to provide public goods including social rented and low-cost home ownership housing.”

These planning style interventions were less effective because they tied social housing output to private development:

“Unlike active land management, which proactively steered the scale, pace and character of land development, the inclusionary zoning mechanisms introduced by the 2008 amendments are more reactive in nature – they rely on the private sector to take the initiative in initiating land development and then annex a part of this supply for social housing.”

The English experience in the post-war years was something of a political rollercoaster, with Labour Governments introducing some radical policies, only for them to be rolled back by subsequent Conservative Governments. This pattern continued from WWII until the 1980s. The post-war Labour Government:

“Legislated for the compulsory purchase of land at existing use value for building social housing and ‘new towns’ (on greenfield sites outside existing urban settlements) and also introduced taxes to capture the full betterment value). These measures largely decommodified residential land markets and radically reduced the cost of land for social housing”.

Interestingly, at the time these were introduced Labour were committed to nationalising two thirds of land, a commitment which remained in place until the 1960s. Although England saw some of the highest levels of social housing delivery, they were to some extent undermined by Conservative Governments, and active land management of this sort was discontinued in the ‘80s. From 1990, the main tool used is what are called Section 106 agreements which allow local government to negotiate obligatory contributions with property developers, sometimes known as ‘inclusionary zoning’. This is essentially the same model as Ireland’s Part V arrangements. Section 106 has been far less effective than the post-war approach, mainly because Section 106 is a ‘passive measure’ which depends on private developers and is therefore linked to property market cycles.

The main takeaway from this paper is that :

“The power to compulsorily purchase land at existing use value in [England] and municipalities’ procurement and servicing of almost all raw development land in [the Netherlands’] decommodified land markets, reduced the prices paid for land for social housing and thereby provided an enormous invisible subsidy to this sector.”

The fact that this approach lasted longer in Netherlands than in England partially explains why the former has sustained significantly higher levels of social housing.

The key difference between active land management and passive, often ‘planning -led’ inclusionary zoning style measures, is that the former allow the state to plan on the basis of long term housing need and to deliver accordingly, while the latter are reactive approaches that rely on private development. The decommodified nature of land under the former model ensure ample supply of below-market rate land to social housing providers, and play and can therefore play a crucial role in social housing systems. The ‘passive’ approaches are, moreover, heavily cyclical because they rely on private market development and are therefore tied to property market cycles, while the latter can play a counter-cyclical role in enabling social housing provision even in the context of a property market downturn (see Table below).

Events

The Just Housing project based in Maynooth, and funded by the EPA, has a new website with the aim of fostering dialogue between climate justice and housing justice movements. A reminder that the Housing Agency’s seminar series on Community-led development will kick off next week. PhD scholarships available at the moment in DCU Geography.

What I’m reading

This critique of cost rental over on Rundale is a must read, lots to think about here. The Housing Agency have put together this handy list of key housing publications in 2024. A new report from Davy Stockbrokers estimating housing demand.