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Councils to secure proportion of any land value increase arising from residential zoning decisions

Land value increases when planning decisions are made to zone land, with the uplift going to the landowners or developers, but not to the State.

LOCAL AUTHORITIES WILL be able to secure a proportion of any land value increase arising from planning and development decisions on newly zoned sites for housing.  

Under plans approved by Cabinet yesterday, the State will be able to reap 30% of the value uplift.

Minister Darragh O’Brien got Cabinet approval yesterday for an updated General Scheme of the Land Value Sharing and Urban Development Zones Bill.

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

Currently, there is often an uplift in land values arising from planning decisions to zone land or invest in infrastructure, where the uplift goes to landowners or developers, but not to the State.  

The provision of infrastructure and facilities to a development site is generally the responsibility of the State, and the State is also responsible for the provision of facilities to support those living and working in a new development. 

Zoning benefit 

Despite the investment by the State, the majority of the zoning benefit goes to the original landowner, who may sell on the lands for a higher price following planning consent. 

This can lead to competition for land and ‘speculation’ in the market, which fuels land price inflation and results in higher costs for home buyers. 

Land Value Sharing (LVS) is where a proportion of the value uplift associated with the decision to zone land for development purposes, is shared with the State in the interest of the common good.

The uplift is based on the difference between the existing use value of the land without the benefit of zoning and the market value of the land with the benefit of zoning.

30% proportion

Under the Revised General Scheme of the Land Value Sharing and Urban Development Zones Bill this is set at 30%.

It is believed this will facilitate an increase in the supply of housing by assisting the local authority with the funding of necessary social and physical infrastructure to support development in the area.

Government also believes it will give greater certainty from the point of zoning in respect of the obligations that are placed on landowners and developers to contribute towards the infrastructure required – and it’s expected that this will exert downward pressure on the price of residential development land.

These issues were first flagged in the Kenny Report in 1973, and more recently by others including the National Economic and Social Council, who advocate for a ‘whole of system’ approach to housing, urban development and land management.  

The Government committed to tackling this issue in the programme for Government.

New scheme applies to existing zoned land

The updated General Scheme bill therefore will apply to all existing residential development zonings as well as to all commercial and industrial zonings, in order to ensure fairness and consistency, with appropriate exemptions and transitional mechanisms in place. 

Landowners will be required to submit self-assessed valuations to the local authority to be entered onto an LVS register. The local authority can audit the valuations at any time, with an appeal provision in the event of disagreement.

The LVS contribution can be paid at any time but must be paid no later than further to a condition of planning permission, which will fund or provide for the necessary infrastructure to support the development of sustainable communities.

The LVS condition of planning permission may also allow for a financial contribution or land transfer or the undertaking of infrastructural works by the developer.

There will be certain exemptions to the obligation to pay LVS contributions, notably the provision of social and affordable housing and small-scale developments.

The measure will apply to owners of residential development lands held since December 2021, when the original General Scheme was published, and will be liable for Land Value Sharing on applications lodged after 1 December 2024.

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