The Government is moving forward with plans to introduce a 'land value sharing' levy. The levy will enable the State to capture some of the value increase when land is re-zoned for development. The levy, tied to planning permission, could impact developers significantly. Read the full article, written by our Planning & Environment team, to understand how this proposed levy could affect your projects.
The Government has published its long-awaited Bill, the Land (Zoning Value Sharing) Bill 2024 (the Bill), aimed at introducing a ‘land value sharing’ levy (the Levy). The Levy will enable the State to receive some of the uplift in value of lands re-zoned for certain types of development. The payment of the Levy will crystallise by way of a condition attached to a grant of planning permission for certain types of development of the land.
Work on the Levy has been ongoing for several years. The Government published an initial General Scheme in December 2021 followed by a further General Scheme in April 2023. We reviewed those proposals in previous articles: Land Value Sharing and Urban Development Zones and Update on Progress of Housing Initiatives.
The Government has now published a new Bill titled Land (Zoning Value Sharing) Bill 2024. We consider some provisions of the new Bill regarding:
- Criteria for land that is subject to the Levy (relevant land)
- Calculating the zoning value of relevant land
- Exemptions from the Levy, and
- Criminal offences
Criteria for relevant land
The Levy will apply to land that is deemed to be ‘relevant land’. This means land that is zoned by a local authority in a County Development Plan (CDP) or Local Area Plan (LAP) as being:
- Solely or primarily for residential use
- For a mixture of uses, including residential use
- For commercial or industrial uses and not residential use, or
- Within a strategic development zone
The Bill provides that local authorities will have to prepare a map of its functional area identifying land that was relevant land on 1 September 2025. Local authorities will also have to identify land that qualified for residential zoned land tax (RZLT) on 1 September 2025. If the Bill is enacted, the first edition of these maps will have to be published by no later than 1 October 2025. When a map has been prepared, the local authority will have to publish notice of it on its website and in at least one local newspaper. The Bill does not provide a mechanism for appealing a decision to include lands on a map.
These maps will have to be updated following any:
- Amendments to CDPs or LAPs
- Adoption of new CDPs and LAPs
- Publication of new RZLT maps, or
- At the direction of the Minister for Housing, Local Government and Heritage
Calculating the Levy
The amount of the Levy will be 25% of the zoning value of the land in question. This is a reduction from the 30% originally proposed in the General Scheme in 2023. The Levy will have to be paid before a commencement notice is submitted for a development. Any unpaid Levy will automatically become a charge on the land in question. The charge will be recoverable by a planning authority as a simple contract debt.
The zoning value is calculated by deducting the ‘Zoning date market value’ (ZDMV) from the ‘Zoning date use value’ (ZDUV). These values are calculated by reference to the ‘zoning date’. This is the most recent date on which the relevant land was either zoned or re-zoned in a CDP or LAP. It may also refer to when the land was declared part of a strategic development zone (SDZ) or made subject of a planning scheme.
Broadly speaking, the ZDUV is the value of the land based on its established lawful use on the date it is re-zoned to relevant land. For example, land might be in agricultural use on the date it is zoned for residential use in a CDP. The ZDUV, therefore, will be the value of the land having agricultural use. The ZDMV, on the other hand, will be the estimated market value of the land as zoned for one of the uses that fits the criteria for relevant land, without taking into account any live planning permission.
Submitting the valuation figures
For all relevant land included on a map, the landowner will be required to provide the planning authority with an assessment of the ZDUV and ZDMV of the land. This assessment must be submitted within six months of the publication of notice of the map by the local authority. For any land that is mapped for RZLT and which either has residential property on it or has had the Levy paid, the landowner will not have to submit an assessment.
The values for ZDUV and ZDMV provided by a landowner to a local authority may be verified by the appointment of an authorised person to assess the land in question. This assessment may be appealed by a landowner to the Valuation Tribunal. The values will be recorded on a local authority register, together with other details such as ownership of the land.
Submitting a planning application for relevant land
If a developer of relevant land submits a planning application for either:
- Residential development of more than four housing units, or
- A commercial development of 500 or more square metres gross floor space,
the local authority will attach a planning condition to the planning permission, if granted. The condition will require payment of the Levy before commencing development. To calculate the amount of the Levy, the authority will use the ZDUV and ZDMV values on the register. However, if these have not been entered on the register, the planning application will have to be accompanied by an assessment of the ZDUV and ZDMV for the land in question. If such an application is not accompanied by this assessment, the planning authority will be obliged to refuse planning permission.
Potential repayments
The Minister will be empowered to make Regulations under the Bill allowing for the repayment of part or all of the Levy for any relevant land that is developed for social housing as follows:
- Cost rental dwellings, within the meaning of Part 3 of the Affordable Housing Act 2021
- Housing for eligible applicants within the meaning of Part 2 of the Affordable Housing Act 2021 used by them for their own occupation
- Houses provided by a body standing approved for the purposes of section 6 of the Housing (Miscellaneous Provisions) Act 1992, or
- Where such houses are to be made available for letting or sale, houses required for households assessed under section 20 of the Housing (Miscellaneous Provisions) Act 2009 as being qualified for social housing support
Exemptions from the Levy
The Levy will not be payable for planning permissions granted for residential development of less than 5 housing units, or commercial development of less than 500 square metres gross floor space. However, planning applications for these types of development will have to include a declaration from the applicant. The declaration must state the identity of the persons who have or had any legal or beneficial interest in the relevant land during the preceding five year period. The declaration will also have to provide details of any other person collaborating with the applicant in making the application. This is to prevent developers from splitting development projects for the purpose of avoiding the Levy.
A planning authority may refuse planning permission if it believes a planning application is made for the purpose of avoiding the Levy. For example, if it believes that the proposed sub-threshold development is part of a larger development taking into account development on other lands in the vicinity of the subject land.
Criminal Offence
Providing false or misleading information to a planning authority concerning matters related to the Levy will be an offence. An offence will be punishable by a fine of up to €500,000 and/or imprisonment for up to five years.
Conclusion
The Bill reduces the rate of the Levy from the originally proposed 30% down to 25%. Nevertheless, the Levy has the potential to be a further significant cost for developers. The Levy will be payable in addition to existing planning levies, such as Part V agreements and section 48 development contributions under the Planning and Development Act 2000, as amended.
The Minister may, however, make Regulations allowing for the repayment of the Levy for certain types of social housing. Subject to the Bill being enacted, developers should factor this into the cost of developing land for residential, mixed, commercial, or industrial use, or land within a strategic development zone.
The mapping procedure in the Bill appears to be a revised scheme for establishing relevant land than what was originally proposed. The mapping procedure does not appear to allow for any phasing of identifying relevant land, such as has been done for RZLT. Instead, the Levy will be applied as a planning condition for all relevant land. This will be done by reference to the ‘zoning date’ being the most recent date on which land was either zoned or re-zoned in a CDP or LAP, declared part of a SDZ, or made subject of a planning scheme.
For more information and expert advice, contact a member of our Planning & Environment team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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