Representatives of the construction and housing sector have warned that plans to introduce a Land Value Sharing charge will curtail housing delivery and increase house prices.

Under a proposed bill, landowners and developers may have to pay a charge of up to 30% on the difference in the value of land before and after residential zoning.

The Oireachtas Committee on Housing is scrutinising the legislation, known as the Land Value Sharing and Urban Development Zones Bill.

The intention of the legislation is to clamp down on speculation, where developers profit off land that is zoned for housing.

Revenues accrued from this charge would then be used to fund enabling works for sites, such as water services.

However, during today's hearing, estate agent Donald MacDonald, Director of Hooke and MacDonald, warned that developers are already choosing not to proceed with large residential projects due to complex planning systems and viability concerns.

He also warned that the legislation, as currently envisaged, would add to the price of land from a developer's point of view, further reducing the incentive to build.

Mr MacDonald called for the draft legislation to be amended, so that the charge would only apply to newly zoned land.

Pat Farrell, CEO of Irish Institutional Property, told TDs and Senators that he supported the principle of applying a charge when land owners benefit from the "betterment" of land, but he warned that this current proposal would have a negative impact.

Government party representatives, such as Senator Mary Fitzpatrick and Emer Higgins TD, told witnesses that the intention of the bill was to accelerate housing delivery, not curtail it and that feedback, as part of the pre-legislative scrutiny process, was welcome.

Sinn Féin Cork TD Thomas Gould also told members that he was taking an open-minded approach to the legislation.

However, he said that that it is a fact that people have made "huge profits" through land speculation.

This was met by a contribution from Conor O'Connell, Director of Housing and Planning with the Construction Industry Federation, who argued that land speculators do not apply for planning permission as it is a time consuming and long process.

He added that by applying the charge in a retrospective way, it would add significant costs for developers which they had not factored in.

This, he believed, would add between €8,000 and €35,0000 to the price of a home.

Mr Gould contended that he was aware of cases where planning was sought, granted and sold on.

The Social Democrats Housing spokesperson Cian O'Callaghan echoed points made by previous contributors, who suggested that land should be bought by Compulsory Purchase Order, by the state, rezoned and sold onto developers with the uplift captured by the state.

Two other organisations, the Institute of Professional Auctioneers and Valuers and the Irish Institutional Property will also express similar concerns around the introduction of the Land Value Sharing measure.

Housing Department 'exhausted' all options to spend cash

The Department of Housing handed back almost a quarter of a billion euros from last year's budget, claiming that "despite best efforts" it had "exhausted" all options to spend the cash.

In total, it "surrendered to the Exchequer" €382m in funds over the last four years, said Graham Doyle, Secretary General of the Department of Housing.

He insisted that they had made "immense" efforts "to catch up".

He told the Public Accounts Committee that this was 1.8% of its total funds, and partly blamed the underspend on "large scale capital delivery which is not scheduled in one calendar year format".

The Covid-19 pandemic and Russian invasion of Ukraine are a "critical backdrop" to the department's performance, he added, and said that when such disruptions occur, it is important to ensure that the department's "funds remain available".

It rolls over, or carries forward, some funds into the following year, and these amounts are separate from the amount returned to the Exchequer.