Dublin’s new tram highlights the untapped bonanza of land values

A Luas tram crosses the Liffey. Image: C.G.P.Grey/Wikipedia.

Few, apart from the odd urban motorist, whose well of sympathy has surely run dry, would argue that Dublin’s new tram (Luas) line extension isn't both overdue and welcome.

The new crosscity Luas opens up the city in a way not seen in generations, since the previous tram line was closed in 1949. And it’s had an instant impact on the atmosphere of Dublin, and will ultimately add to the city’s confidence and identity as a European capital.

Besides the tangible benefits of ease of access to previously sequestered parts of the city – the multi-award winning Grangegorman campus springs to mind – the Luas has also had a less visible impact on the value of Dublin, in particular its land prices.

The numbers make this contribution clear: conservatively, the value of land along the new Luas line has increased by 15-20 per cent as a result of its construction. This increase in land values is typically capitalised in house prices.


To be clear, what has actually increased as a result of the Luas being built is the value of the land the house sits on, not the cost of the house itself, a detail that is often lost in the ether of the national fixation on house prices. The price of property along the line surged by 15-20 per cent during 2017 as result of Luas inspired land value uplift, while the value of the actual houses that sit on it has not increased (notwithstanding any improvements the owners have made). This is an important distinction: it disaggregates the value added by the collective (society) to the land, from the value added by the individual property owner to the building that sits on the land.

The important point is that this 15-20 per cent uplift in land value along the Luas line is an absolute cash bonanza resulting from collective public effort. And what we do with it says a lot about where we are as a society. 

As it stands, it is presented as a fait accompli that this uplift should all flow to property owners, in spite of the fact that it is created not by anything individual property owners have done. Instead, it’s created by the collective efforts of citizens: paying taxes to finance the building of the Luas, and partaking in the activities that make having access to a city valuable: working, eating, drinking, studying, playing and whatever you're into that contributes to the economy. As Churchill put it

Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still.

Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.

If we had a progressive tax on the uplift in land value that currently flows to landowners as a result of publicly funded infrastructure projects like the Luas – call it a Land Value Uplift Tax on 80-100 oper cent of the uplift – this value would flow back into the public purse. That way, it could be invested in other public infrastructure projects like, say, a public programme of local authority house building, which we are struggling to finance under the status quo.

Crucially, the idea of a Land Value Uplift Tax is not blue sky thinking. Land value uplift capture is done all over the world: Hong Kong built an entire metro and funded public housing for free using land value tax; a significant amount of London’s new Crossrail line has been funded with a land value uplift tax; and urban regeneration in the US is typically funded through a value uplift capture mechanism called tax increment financing.

There is no difference in the mechanics of how this all works between Dublin and other cities: public investment on or near a piece of land significantly increases its value wherever you are. The difference lies in our attitude to property owners. Other cities building or expanding public-transit systems to cope with population growth and urbanisation have acted swiftly to both recognise and exploit rising land values for the public good. It is time to connect the dots, and stop the long arm of property assets reaching into the pockets of citizens. 

 
 
 
 

Here’s how Henry Ford and IKEA could provide the key to solving the housing crisis

A flatpack house designed by architectural firm Rogers Stirk Harbour and Partners, on display at the Royal Academy, London, in 2013. Image: Getty.

For many people, the housing market is not a welcoming place. The rungs of the property ladder seem to get further and further out of reach. There are loud calls to build hundreds of thousands of new homes (and equally loud demands that they’re not built in anyone’s back yard).

If there was ever a time to introduce mass-produced affordable housing, surely that time is now.

The benefits of mass production have been well known since Henry Ford’s car factories made the Model T back in 1908. It was only made in one colour, black, for economic reasons. Not because it was the cheapest colour of paint, but because it was the colour that dried the quickest.

This allowed the production line to operate at faster, more cost effective, speeds. And ultimately, it meant the product could be sold at a more attractive cost to the customer.

This approach, where processes are tested to achieve increasingly efficient production costs, is yet to filter properly into the construction of houses. This makes sense in a way, as not everybody wants exactly the same type of house.

Historically, affordable mass-produced housing removed a large amount of customisations, to ensure final costs were controlled. But there is another way. Builders and architects have the ability to create housing that allows a level of flexibility and customisation, yet also achieves the goal of affordability.


Back in 2006, the “BoKlok” approach to affordable housing was launched to great acclaim in the UK. Literally translated from Swedish, the term means “live smart”. Originally created from a collaboration between flat-pack favourite IKEA and Swedish construction giant Skanska, the BoKlok housing approach was to allow for selected customisation to maximise individuality and choice for the customers. But at the same time, it ensured that larger house building components were duplicated or mass-produced, to bring down the overall costs.

Standard elements – wall panels, doors, windows – were made in large numbers to bring the elemental costs down. This approach ensured the costs were controlled from the initial sketch ideas through to the final design choices offered to the customers. The kitchens and bathrooms were designed to be flexible in terms of adding additional units. Draw and cupboard fronts interchangeable. Small options that provided flexibility, but did not impact on overall affordability.

It’s a simple approach that has worked very well. More than 10,000 BoKlok houses have now been built, mainly in Norway, Sweden and Denmark, with a small number in the UK.

But it is only part of the architectural equation. The affordable housing market is vital, but the cost of making these homes more adaptable is rarely considered.

Flexibility is key. The needs of a house’s inhabitants change. Families can grow (and shrink) and require more room, so the costs of moving house reappear. One clever response to this, in BoKlok homes, has been to allow “built in” flexibility.

Loft living

This flexibility could include a loft space that already has flooring and a built in cupboard on a lower floor which can be simply dismantled and replaced with a “flat-pack style” staircase that can be purchased and installed with minimal disruption to the existing fabric.

Weeks of builders removing walls, plastering and upheaval are replaced by a trip to the IKEA store to purchase the staircase and the booking of a subcontractor to fit it. The original design accounted for this “future option” and is built into the core of the house.

The best approach to new affordable housing should consider combinations of factors that look at design, materials and processes that have yet to be widely used in the affordable housing market.

And the construction sector needs to look over its shoulder at other market places – especially the one that Henry Ford dominated over a century ago. Today’s car manufacturers offer customised options in everything from colour to wheel size, interior gadgets to different kinds of headlamp. These options have all been accounted for in the construction and costing of each model.

The ConversationThey share a similar design “platform”, and by doing so, considerably reduce the overall cost of the base model. The benefit is quicker production with the added benefit of a cost model that allows for customisation to be included. It is a method the construction sector should adopt to produce housing where quality and affordability live happily together.

David Morton, Associate Professor in Architecture and Built Environment, Northumbria University, Newcastle.

This article was originally published on The Conversation. Read the original article.