Land bank

As part of a Government policy to build 620,000 houses by 2019, Cabinet has approved the establishment of the country’s first Land Bank by a Special Task Unit (STU), which is aimed at managing the limited resource of land more efficiently.  

According to the meagre information available in the public domain, it appears the STU is to be established as a limited liability company under the General Treasury as per a Cabinet proposal approved last year. The unit, after consultations with the Prime Minister, President and the Finance Minister, has presented a plan to establish a land bank allocated for housing projects under the program. 

The lands allocated will be identified following consultation with relevant ministries, local government bodies and district and divisional secretaries. The bank will function under the supervision of representatives nominated by the President, Prime Minister and Finance Minister and will be approved by the Cabinet.  

Land banks are not financial institutions. They are public or community-owned entities created for a single purpose: to acquire, manage, maintain, and repurpose vacant, abandoned, and foreclosed properties – the worst abandoned houses, forgotten buildings, and empty lots. At least that is their task in other countries.  

The public –for good reason – is often suspicious of any Government role in the real estate market. In the case of abandoned properties on State land the Government can reclaim ownership. Still, it is critical that the operation of a land bank be fair and predictable. To build public confidence in a Land Bank, the adoption of well-considered policies and priorities that govern to whom –and for what purpose – properties are sold or transferred. Terms and pricing policy must be clear and uniform, as well.

The land held by Land Banks is typically scattered among neighbourhoods throughout the community, or in this case possibly the country. So, the Land Bank has neighbours, sometimes thousands of them. The most successful Land Banks engage those neighbours on the policies and practices that determine the outcomes for those neighbourhoods. Public acceptance of the hard choices that will inevitably need to be made regarding property held by a Land Bank is much more likely when those neighbours have a voice – a formal voice – in policy and operations. By formalising that process, through regular neighbourhood meetings, and in some cases with the formation of a Community Advisory Council, Land Banks get public input on terms that make that input more meaningful than if that input comes in the form of uninvited anger or frustration with land use decisions.

The best land banks do not work alone, but rather develop strategic partnerships with non-profits, community organisations, lenders, and local governments – all in an effort to leverage the resources available to deal with the most distressed land in the community. 

Land banks can wary significantly in staff size, inventory, budgets and programs. Since the Government is planning large-scale house construction for middle class and lower middle class segments as already outlined in Budget 2017, they will need to find viable property and spearhead owner-driven housing programs. In an environment where funding is scarce, land could be valuable collateral. At its inception the Land Bank would have to keep clear policies and targets to genuinely serve its people.