Home ireland What is the Government’s new Land Value Sharing Bill?

What is the Government’s new Land Value Sharing Bill?

What is the Government’s new Land Value Sharing Bill?

The Government recently approved the draft publication of the Land Value Sharing and Urban Development Zones Bill 2022.

The idea behind the bill is to clamp down on land speculation, where developers profit off land that is zoned for housing.

What exactly is the bill though and what impact will it have on new housing developments? Here are the answers to some of the questions you might have around it…

What is the aim of the bill?

The Government said the aim of the scheme is for local authorities to secure a proportion of the increase in land values stemming from decisions to zone land for development including housing, or subject to an Urban Development Zone designation.

The bill also allows for the designation of Urban Development Zones which have potential for significant development for housing and other purposes.

They said the proposed measures are part of their Housing for All plans, which aim to secure a greater share of community gain from the planning and development process.

How will it work?

Under the bill, the Government plans to levy a 30 per cent tax on the value of land that is rezoned for housing.

It would see landowners and developers pay the difference in the value of land before and after residential zoning.

Instead of developers reaping the benefit of an increase in land value it would go back to the State and more specifically local authorities.

What impact would the bill have?

While the idea of the bill is to recoup the costs of development and give it back to the State, some critics say it will actually increase house prices in the long run.

The Irish Institutional Property says firstly it would be inappropriate for the State to impose this measure without phasing it in over a period of several years.

Pat Farrell, chief executive of the Irish Institutional Property, says the measure would “not reduce housing costs”.

“Only when the land can be developed without a funding gap, should any surplus funds be allocated to a wider county budget. Ultimately it will only increase the ‘tax wedge’ in housing costs,” he said.

TDs and Senators were told that to improve housing delivery, more zoned land, infrastructure and planning permissions are required.

The Government’s new Land Sharing legislation could add up to €35,000 to the price of a home.

The Construction Industry Federation called for the legislation to be paused and reviewed at the Oireachtas Committee on Housing on Thursday morning.

The CIF’s director of housing and planning, Conor O’Connell, says the proposals would only add to the cost of building houses.

“This will require international investment that require stability and certainty of taxation and cost measures of housing delivery.

“An increase in output cost which the LVS would result in would be another tax on housing output.”

“Some of our members estimate the LVS as currently worded could cost between €8,000 and €35,000 per unit,” he said.