New legislation has recently been enacted and was signed into law by the President of Ireland on 28 July 2015 which is focused on addressing the housing supply related issue in Ireland. The Urban Regeneration and Housing Act 2015 (the "Act") aims to incentivise urban regeneration with a view to facilitating increased activity in the housing construction sector. The Act heralds another step of the Government’s 2020 Construction Initiative to renew and develop the construction sector and will have a significant impact on both developers and land owners.
There are two main strands to the legislation:
- The introduction of the vacant site levy;
- Revisions to planning development contribution requirements and to social housing provision.
1. Vacant Site Levy
The Act allows local authorities to impose a vacant site levy on land which has been zoned as suitable for housing and which has been left idle by as owners.
The levy will apply to land which has been sold primarily for residential purposes and land which has been designated with the objective of development and regeneration. The intention of the provisions introduced is to prevent land-hoarding.
If landowners fail to bring forward proposals for the use of the land and cannot provide good reasons for refusing to bring the land into productive use, the levy will be imposed.
What Constitutes a “Vacant Site”?
A site is situated in an area in which there is a need for housing:
- A site is suitable for the provision of housing;
- A site or the majority of the site is vacant or idle;
- For regeneration land, where the site, being vacant or idle, has adverse effects on existing amenities or reduces the amenity provided by existing public infrastructure and facilities in the area where the site is located.
A “site” is defined as any area of land exceeding 0.05 hectares but the definition doesnot include a structure that is a person’s home, a dwelling in which a person ordinarily resides.
The vacant site levy will generally be an annual charge of 3% of the market value of each site.
Vacant Sites Register
By 1 January 2017, all planning authorities are required to have established a vacant sites register. Each vacant site will be registered on a the relevant local authority's vacant sites register. This list will ensure that all vacant sites are known and will allow for the provision of a baseline for local authorities to take action in terms of levies.
A levy will be charged and levied beginning in 2018 in respect of each vacant site in which a market value has been determined and which stands entered on the register.
The levy shall be payable in arrears for each year beginning in 2019 by the land owner of the vacant site.
Where a vacant site is subject to a mortgage and the value of the security on the site is greater than the market value of this site, a zero rate of levy shall apply.
Failure to Pay
If the levy is not paid within 2 months after the day on which it becomes payable, it shall be recoverable as a simple contract debt in court.
Where the levy is due and owing for over a year, failure to pay the levy will result in a charge on the property until payment is made.
An appeal to An Bord Pleanála may be made on a number of grounds for example where:
- the site was not a vacant site in the year concerned;
- the amount of the levy has been incorrectly calculated.
Exemptions from the levy where:
- the site is situated on contaminated lands;
- no market exists for the site.
Appeals are permitted, but exemptions are not allowable purely because of a lack of financial resources, absence of planning or the lack of commercial viability of the site.
Transfer of Property
Where a vacant site changes ownership, the levy will be charged at a zero rate for both that year and the preceding year. This does not apply where the transfer is to a connected person/associated company. On the transfer of sale of the vacant site, there will be a requirement for the vendor to furnish a certificate of discharge evidencing payment of the levy for each year that the property was registered as a vacant site. Evidence must also be produced to show that the property was registered as a vacant site.
2. Revisions to Planning Development Contributions and Social Housing Provision
Part V of the Planning and Development Act 2000 (“Part V”)
The Act also makes a number of amendments to existing planning and housing legislation including a number of revisions to Part V. This will be welcomed by developers. These revisions will have the aim of enhancing the economic viability of housing developments, increasing the delivery of social housing and encouraging integrated mixed tenure developments.
Development Contributions in Lieu of Social Housing
Previously, developers were required to reserve up to 20% of land sold for residential use for social and affordable housing. Local authorities could buy this land at a discount and the relevant local authority could then choose to accept a cash payment from developers if they did not want these units.
Under the Act, this percentage requirement is halved to 10% of social housing in developments in excess of 9 units and the option for developers to make cash payments in lieu of social housing is to be discontinued.
The Act also enables developers to retain ownership of housing through “long term leasing or rental accommodation availability agreements” instead of selling the units to the local councils.
Developers now have the option of transferring completed units on land which is not the subject of a planning application, rather than the current option to enter into an agreement to build units and transfer them on completion.
This will allow social housing units to be delivered in another area if the development in question does not meet the local authority’s social housing needs.
These new Part V revisions may be applied retrospectively and will enable local authorities to implement reductions in development charges relating to existing but un-commenced planning permissions. This is only in situations where the parties consent and where such agreements are entered into prior to the lodgement of the commencement notice.
This will serve to boost housing development and ease the existing housing shortage.