The Irish Government recently published the general scheme, or initial outline, of the Planning and Development (Land Value Sharing and Urban Development Zones) Bill 2023 (the Bill).
The Bill is a key component of the Government’s “Housing for All” plan and proposes to introduce mechanisms for both land value sharing (LVS) and the designation of under-utilised areas with significant potential for development as “Urban Development Zones” (UDZs). This post focusses on the LVS elements of the Bill.
It should be noted from the outset that the Bill is at the very initial stages of the legislative process and is currently undergoing pre-legislative scrutiny, with it being probable that the draft legislation will change significantly over the coming months. The intention of this post is to give a flavour of the thinking behind the legislation and the Government’s initial proposals in this regard.
What is the purpose of the Bill?
The aim of the LVS element of the legislation is to introduce a mechanism to ensure that a proportion of the value uplift associated with a decision to zone land for development purposes is shared with the State, in the interest of the common good.
The net effect of this mechanism is to:
- Establish a Land Value Sharing Register (the Register) containing all lands falling within the scope of the LVS obligation; and
- Impose a statutory charge (or LVS contribution), payable to the planning authority by owners of those lands. The exact rate of the LVS contribution has not been finalised as yet, however the general scheme suggests an initial rate of 30% of the value uplift based on valuations of the existing use value (EUV) and market value (MV) of the land.
What lands will be in scope?
LVS will initially apply to all lands that are zoned for the purposes of residential use or mixed use (to include residential). It is proposed that LVS will be extended to commercial and industrial development zonings over time, on the basis that the owners of such lands also benefit from uplift in values as result of the zoning decision. Planning authorities will be required to publish a map showing the lands initially in scope for LVS in March 2024.
Land used solely for the provision of public infrastructure, public amenity facilities or open space may be excluded from liability. Exemptions are also proposed for social and affordable housing; cost rental housing; and development consisting of the conversion of an existing building to create one or more dwellings, provided that 50% of the existing external fabric is retained.
When will liability arise?
Liability for the LVS contribution will commence on 1 December 2024 in respect of planning applications lodged for permission on land that is:
- Acquired on or after 21 December 2021; and
- Zoned residential, zoned mixed use (to include residential), within an urban development zone or within a strategic development zone (the initial zoning requirements).
Lands within the initial zoning categories acquired before 21 December 2021 will come within scope on 1 December 2025.
All other lands which meet the zoning requirements prescribed in the legislation, to include commercial and industrial development zoning, will come within scope on 1 December 2026.
How will the liability be charged?
A condition requiring payment of the LVS contribution will be inserted into all planning permissions for:
- Residential developments of more than 4 housing units; or
- In due course, commercial developments of at least 500m2.
This is in addition to existing development levies and any other levies, charges or contributions which may be applied to the permission. There is generally no ground to appeal the inclusion of the LVS contribution in the planning permission.
How will the liability be calculated?
The zoning value of the land will be calculated by deducting the EUV of the land from its MV.
The charge is to be 30% of the zoning value, with provision for the Minister to adjust that percentage downwards, although the current draft of the Bill would suggest to no lower than 20% of the zoning value.
The liability arises on zoning and remains a charge on the land indefinitely until such time as it is paid in full and payment is recorded on the Register.
How will the Register operate?
Population of the Register will take place on the basis of owners’ self-assessment, with landowners required to submit EUV and MV valuations to the planning authority. However, the planning authority is empowered to undertake a review of those valuations at any time and to amend the valuations accordingly. A landowner can appeal a valuation of the planning authority to the Valuation Tribunal, whose determination will be binding on both parties.
We are tracking the Bill as it moves through the legislative process and will be providing further updates to this post.