Law Society’s submission on Land Value Sharing contributions

My colleague Roisin Bennett recently provided an update in relation to the Land Value Sharing General Scheme, the draft heads of which were published earlier this year by the Department of Housing, Local Government and Heritage. As part of the Government’s Housing for All initiative, the Land Value Sharing (“LVS”) seeks to stimulate housing supply, amidst the backdrop of a housing crisis and to provide local authorities with increased income.

In summary, the LVS will be an additional financial contribution levied on the applicant of a planning permission of lands where there has been an uplift in the value of the land due to rezoning. The LVS will be charged at a rate of 30% and will be in addition to any financial contributions outlined in the grant for planning. The LVS will apply to lands zoned for residential, mixed use, commercial, industrial and also lands zoned for urban development and strategic development. The General Scheme does not distinguish between lands zoned in the hands of the housebuilder and lands previously zoned which have been acquired for market value by a housebuilder.

The Law Society have reviewed the updated General Scheme of the Land Value Sharing and Urban Development Zones Bill 2022, and have suggested the following revisions:-

• The LVS contributions should not apply to lands which were acquired for market value (prior to the publication of the General Scheme) and were already zoned, provided the lands were not rezoned during housebuilder’s ownership.
• The LVS contributions should not apply, where the landowner has already made a planning permission application (prior to the publication of the General Scheme) and prior to expiration of the transitional period and all successive planning applications. Similarly, the LVS contributions should not apply to zoned lands where a planning permission has been made prior to the expiry of the transitional period.
• The LVS contributions should not apply in the instances where it can be shown (prior to the publication of the General Scheme) that the housebuilder was informed by the local authority that a planning permission would not be granted due to infrastructure deficiencies etc.

The rationale for the proposed revisions is that the housebuilder should not carry the entirety of the financial burden of the LVS contribution on land which was purchased for market value, as these higher financial contributions could be built into the cost to consumer or could stifle housing supply. Similarly, where a development requires renewed planning permission in order to finalise construction, after the expiry of the transitional period, the housebuilder should not be penalised for subsequent planning permissions for lands which were originally not subject to the LVS contribution.

The Law Society has outlined that the proposed amendments are to ensure “that the transitional provisions are workable and will not result in the incentivisation of the supply being impacted by the measures.”

The property team in Reddy Charlton will be monitoring further developments on the passage of proposed legislation and will report on this further.

If you require any further information on the implications of the LVS please contact Roisin Bennett at rbennett@reddycharlton.ie