I propose to take Questions Nos. 81 and 90 together.
The Urban Regeneration and Housing Act 2015 introduced a new measure, the vacant site levy, which is aimed at incentivising the development of vacant, under-utilised sites in urban areas. Under the 2015 Act, planning authorities are required to establish a register of vacant sites in their functional areas, beginning on 1 January 2017, and to issue notices to owners of vacant sites by 1 June 2018 in respect of vacant sites listed on their respective registers on 1 January 2018, indicating that the levy will apply to those sites on 1 January 2019.
The primary purpose of the levy is to act as an incentive for the bringing forward of vacant under-used sites for development, for residential or regeneration purposes. I would hope that as many vacant sites as possible on the local authority registers will be developed for these purposes, thereby avoiding liability to the levy.
Under the provisions of the Act, planning authorities are empowered to apply an annual vacant site levy of 3% of the market value of relevant vacant sites where a site:
- exceeds 0.05 hectares in area,
- was, in the planning authority’s opinion, vacant or idle in the preceding year, and
- is in an area identified by the planning authority in its development plan or local area plan for residential or regeneration development.
Reduced or zero rates of levy may apply in specific circumstances in order to help alleviate the financial burden faced by owners of vacant sites which are subject to a site loan and where the loan is greater than the market value of the site (i.e. a negative equity situation), and also where the site loan is greater than 50% of the market value of the site.
All levies due on an individual site will remain a charge on the land concerned until all outstanding levies due are paid. Accordingly, under the vacant site levy provisions, there will be a cumulative effect associated with not activating a site for development purposes for each year that a site remains vacant or idle.
As announced in Budget 2018, it is proposed to increase the rate of levy from 3% to 7% of the market valuation of relevant sites with effect from January 2020 in respect of sites included on the local vacant site registers in 2019. Legislative provision for this increase along with amendments to other relevant provisions will be tabled by way of Seanad amendments to the Planning and Development (Amendment) Bill 2016, which is presently at Seanad Committee Stage. These amendments are currently being drafted by my Department in consultation with the Office of the Attorney General.
With regard to addressing the issue of the hoarding of residentially zoned land, a number of amendments to the provisions relating to the extension of duration of planning permissions have also been tabled in the Planning and Development (Amendment) Bill 2016. The amendments proposed are collectively aimed at tightening up the provisions in relation to the extension of duration of planning permissions and ensuring that extensions of duration, without commencing substantial development, will no longer be facilitated.
Following a commitment given in Budget 2015, a public consultation was conducted by the Department of Finance on the issue of unused zoned and serviced land with a view to examining what taxation measures might be taken to penalise land owners who do not develop such land. On considering the outcome of the public consultation and further to the enactment of the Urban Regeneration and Housing Act 2015 which introduced the vacant site levy, the Department of Finance determined that no new tax intended to encourage the development of residentially zoned and serviced land - separate to the vacant site levy - would be introduced at that time.
In relation to a land tax, in the 2012 Report of the Inter-departmental Group on the Design of a Local Property Tax (the "Thornhill Group"), the basis of assessment for the Local Property Tax (LPT) was comprehensively examined, including both the "taxable value of the property" option and a site value tax (SVT). The report favoured the use of market value of residential properties as the basis of assessment and this recommendation was accepted by the Government.
The Thornhill Group concluded that the arguments for SVT were outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e. arriving at values that were evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place. In contrast, the Group considered that, under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the characteristics and amenities of the neighbourhood. There would be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties.
Subsequently, at the request of the Minister for Finance, the operation of the LPT was reviewed in 2015 by Dr. Thornhill. A number of submissions to the review favoured changing the basis of determination of LPT liabilities to site value, floor area or variations thereof. Dr. Thornhill considered these but remained of the view that market value is the most appropriate and equitable basis on which to determine LPT liabilities.
Tax issues are a matter for the Minister for Finance and neither I nor my Department have been lobbied in relation to the possible introduction of a land tax.