Residential Zoned Land Tax (RZLT) is a new tax introduced as part of the Government’s “Housing for All” plan, which will become payable from 1 February 2024. However, owners of land zoned for residential use should be aware that 1 January 2023 is the deadline for filing an appeal against inclusion of lands on the local authority RZLT maps which are detailed in this post.

What is RZLT?

It is an annual tax calculated at 3% of the market value of land within scope, which will apply from 2024 onwards and will be administered by Revenue. It replaces the Vacant Site Levy which was not deemed a success.

The Government states that the tax is aimed

at increasing housing supply by activating zoned, serviced residential development lands (including mixed-use lands) for housing [and] to incentivise landowners to use existing planning permissions for housing.

What land is impacted?

RZLT will apply to land that is, on or after 1 January 2022, both zoned for residential use and serviced (even where the current use of the land is not residential). Land is considered to be serviced where it has sufficient access to the necessary public infrastructure and facilities required for residential development.

Certain exclusions apply, for example:

• Residential property subject to LPT which includes garden/yards under 1 acre. (Residential property with gardens/yards over 1 acre falls in scope and the owner must register for RZLT, although no RZLT is payable by such owners).
• Land zoned for residential use but used by a business to provide services to residents of adjacent residential areas e.g. a corner shop.
• Mixed zoned land that includes residential use where it is reasonable to consider the land is integral to the operation of a business carried out on or beside it.
• Land that is required or occupied for certain social, community or governmental infrastructure purposes.
• Land subject to the Derelict Sites Levy that is payable in accordance with the Derelict Sites Act 1990.
• Land that is affected by considerations which might prevent development e.g. contamination or where historic or archaeological artefacts are present.

How will I know if my land is affected?

Each local authority is required to prepare and publish a map identifying land within the scope of RZLT, which maps will be updated annually to reflect changes in zoning and servicing status. The first draft maps, which were published on 1 November 2022, are currently subject to review as follows:

• Parties whose properties are designated as subject to RZLT by virtue of this mapping exercise may make a submission to the local authority have their lands excluded if they do not believe that such land meets the criteria for inclusion. This submission must be made no later than 1 January 2023.
• In the case of such a submission, the local authority will notify the owner of its determination, not later than 1 April 2023;
• The local authority, before making its determination, may request additional information from the owner, or other third party, within 21 days of receipt of the submission;
• The owner, or other third party, has 21 days, from the request being made, to provide the information requested to the local authority;
• A landowner who wishes to appeal the local authority determination to An Bord Pleanála (ABP) may do so not later than 1 May 2023; and
• ABP will notify the owner of its determination not later than 16 weeks from the date of the notice of appeal.

The final map, which will reflect the outcome of the submission and appeals process, will be published on 1 December 2023. Land included on the local authority’s final map which is no residential property is known as a “relevant site” and is subject to RZLT.

Who is liable?

The legislation requires payment by “owners”. This term is broadly defined as the registered owner, the person entitled to receive any rack rent payable in respect of the land (or who would be so entitled if that land was let) and “any other person whose interest in the land entitles them to develop the land”. This arguably includes developers with contractual rights to develop the land.

When and how is it paid?

RZLT will first be charged on 1 February 2024 with a requirement to file a return and pay any RZLT due for 2024 by 23 May 2024. This is in respect of land which was zoned as suitable for residential development and serviced prior to 1 January 2022 and on which development has not commenced prior to 1 February 2024. Land zoned for residential use and serviced after 1 January 2022 will become liable for RZLT 3 years after the year in which it comes within the scope of the tax.

RZLT operates on a self-assessment basis and owners of lands liable for the tax must register from late 2023. An annual return must be submitted to Revenue with a liability date of 23 May in each year, beginning in 2024.

What do I need to do now?

If you own services land that is zoned residential (whether or not the current use of the land is residential), you should check whether it has been included in the relevant local authority RZLT maps. If you wish to contest that designation, you will need to prepare and submit an appeal against the designation on or prior to 1 January 2023.

Revenue’s very helpful guidance document on RZLT can be found here.

For further information on this topic, please contact Aoife Smyth, Knowledge Lawyer, Alan Roberts, Partner,  or any member of A&L Goodbody’s Real Estate or Environmental and Planning team.