Press release
Communities to benefit from increased values of zoned land in new legislation
From Department of Housing, Local Government and Heritage
Published on
Last updated on
From Department of Housing, Local Government and Heritage
Published on
Last updated on
The Minister for Housing, Local Government and Heritage, Darragh O’Brien, has today (14 April) published the updated General Scheme for the Land Value Sharing and Urban Development Zones Bill . The legislation provides for a new Land Value Sharing (LVS) charge of 30% on the difference between existing use value and the market value on land that has been zoned for housing.
LVS aims to ensure local authorities and communities benefit from a fairer share in land value increases arising from State decisions relating to the zoning of land. To ensure that communities benefit, all LVS revenue will be ring-fenced for the enabling infrastructure that is needed to support development, including housing.
Commenting on the General Scheme of the Bill, Minister O’Brien said:
“This legislation marks another important milestone towards fundamental reform of urban development, land management and housing provision in Ireland. Under this legislation, communities will get a greater benefit from State zoning decisions. Land Value Sharing will also influence land transactions with the aim of limiting the speculation that affects land prices, and by extension, the cost of housing.
“Fifty years ago, the Kenny Report identified this problem and I am pleased to finally introduce a response that will address what has been a perennial challenge in land management in Ireland and will help ensure a greater delivery of housing and related infrastructure into the future. This General Scheme of a Bill has been the culmination of nineteen months of work and I look forward to its progression through both Houses of the Oireachtas.’’
Currently, significant increases in land value arising from zoning are not shared adequately with the State. Ultimately those purchasing or renting new homes, as well as new communities where the need for infrastructure and facilities is often greatest, bear the cost. These issues were highlighted as far back as the Kenny Report in 1973, and more recently by others including the National Economic and Social Council, which stated that Ireland must bring about a fundamental change in its system of urban development, land management and housing provision. The current LVS proposals will strike an appropriate balance between the protection of individual property rights and the role of the State to act in the common good, reflecting on the aims and objectives of the Kenny Report.
The introduction of LVS is expected to result in significant increased revenues for local authorities. An economic analysis of the proposals, has found that LVS, when combined with existing planning obligations, could lead to local authorities capturing a significant portion of the total combined land value increase from zoning and planning permissions. When Part V social and affordable housing obligations and Section 48 and 49 Development Contributions are applied, this could be in excess of 50% subject to site-specific factors. The LVS obligation will be used by local authorities, acting on behalf of communities, to help to deliver the infrastructure that is needed to enable housing to be developed, and to provide the facilities and services that communities need.
The General Scheme of the Bill also provides for Urban Development Zones (UDZ), a new concept in the planning system. These will include under-utilised large-scale areas with potential for significant development for housing and other purposes, generally within or in close proximity to existing settlements.
The designation of these areas will involve a two-stage process, commencing with identification of the areas as Candidate UDZs within the local development plan by elected members following public consultation and environmental assessment. Thereafter, the local authority may seek government approval for formal UDZ designation, bringing with it certainty of funding for enabling infrastructure to ensure these areas are developed in a timely manner.
A local authority may also prepare a detailed development scheme to provide a greater degree of certainty as to the master-planning of all or part of the area. A right of appeal of the scheme to An Bord Pleanála will exist and thereafter, consents for planning applications consistent with the scheme will be fast-tracked. These zones will ensure greater plan-led development, with consultation on a master-plan at the outset, but with no recourse for appeal of each individual development application. The UDZ concept is based on the existing Strategic Development Zone model.
Commenting on the UDZ components of the legislation, the Minister of State for Local Government and Planning, Kieran O’Donnell, added:
“Urban Development Zones will lead to a more plan-led approach to development. Planning authorities and regional assemblies will play a key role in identifying potential Urban Development Zone sites – engaging and consulting with the public, including with landowners and other stakeholders to identify and prioritise potentially suitable sites for housing. This will facilitate certainty at the master-planning stage about permissible development, leading to a more streamlined planning process."
Minister of State for Heritage and Electoral Reform, Malcolm Noonan, added:
"Ultimately, this legislation, if enacted, will allow the State to provide the key infrastructure required for much needed housing, which in turn will speed up the delivery of housing. It strikes a balance between greater and fairer gain for communities when the State enables housing through the zoning or designation of land for development, and the Constitutional property rights of individuals.”
Concluding, Minister O’Brien said:
“Taken with implementation of Housing for All’s Residential Zoned Land Tax and reform of the planning system, the government is ensuring a fairer approach and that housing will get built quicker and without unnecessary speculative costs from land mismanagement."
The General Scheme of the Bill is expected to go through pre-legislative scrutiny by the Joint Oireachtas Committee on Housing, Local Government and Heritage over the coming weeks.
Link to the General Scheme of the Bill, the Explanatory Memorandum, and the Regulatory Impact Analysis can be found here: General Scheme Land Value Sharing and Urban Development Zones Bill 2022
A map showing the lands in scope for the LVS (all lands zoned for residential and mixed-use, including residential) will be published by all local authorities in March 2024.
Owners of ‘substantially undeveloped’ land (lands identified on final Residential Zoned Land Tax maps, published in December 2023) falling into scope for LVS (with the exception of owners of residential properties within those lands) will be required to submit self-assessments of the Existing Use Value and Market Value of lands. They must do so by 1 July 2024. The relevant planning authority will then enter them on the LVS Register.
The process is based on a self-assessment methodology. The planning authority may, however, undertake an assessment of the submitted self-assessed valuations at any time, and may amend the valuation accordingly. Where this occurs, the landowner may appeal the valuation of the planning authority to the Valuation Tribunal. Any decision made by the Valuation Tribunal will be binding on both parties.
The LVS obligation will generally apply over time to all landowners benefitting from an uplift in land values arising from the zoning of their land for housing (including mixed-use, including housing) and to owners of land zoned for commercial development. The charge will apply as a condition of any relevant planning permission granted for developments on relevant land. The legislation proposes an obligation of 30% of the uplift in land values (between Existing Use Value and Market Value) at the time that details of land are submitted to the LVS Register.
The legislation includes a mechanism whereby the Minister may, with the approval of the Houses of the Oireachtas, amend the LVS rate having regard to a range of rates being not lower than 20% and not higher than 30% of the difference between Existing Use Value and Market Value.
The LVS obligation will take the form of a condition attached to any relevant grant of planning permission (unless it has been paid in advance). The condition will state that it must be paid prior to commencement of development, unless otherwise agreed by the relevant planning authority.
Certain exceptions to the obligation will apply.
*Where permission is granted for social and/or affordable housing development, including development by or on behalf of a local authority, a LVS obligation will not apply to that development.
Certain other exclusions will apply to developments:
The revised approach, when compared with the 2021 proposals, retains Section 48 Development Contributions (separately linked to the grant of permission and in particular the quantum of development permitted).
The LVS measure will apply to housing development planning applications lodged from December 2024 for lands that transacted since 21 December 2021. However, an additional one year lead-in is proposed in respect of lands which transacted prior to 21 December 2021 (when the initial General Scheme of this Bill was published).
Commercial and industrial zonings will fall into scope from March 2026 and applications lodged from December 2026 will be required to make LVS contributions.
Local authorities will record the valuations and contributions on the LVS register. They will be required to report on how contributions are spent in connection with the provision of public infrastructure, services and facilities. The Minister will also monitor the effectiveness of the measure and report on it within 5 years of enactment.