The proposed Land Value Sharing (LVS) Bill, which would impose a 30% charge on the value of land zoned for residential development, has raised significant concerns among stakeholders and industry experts, including Savills Ireland. They warn that the bill could disrupt the supply of much-needed housing in the midst of a housing supply shortage in Ireland.
The LVS and Urban Development Zones Bill 2022, published on April 14th, changed the government’s approach to include a 30% charge on both existing and newly zoned land. This means that developers and landowners must now factor in a potential 30% charge on a significant portion of their land’s value. This change could result in higher development costs, which may either render construction unviable or increase housing prices, contrary to the government’s intended outcome.
John Swarbrigg, Director of Development Land at Savills Ireland, commented on the potential negative impact of the bill on supply. He noted that viability challenges already exist due to construction cost inflation and the higher cost of development finance. The introduction of new measures such as the Residential Zoned Land Tax and proposals on residential density guidelines has already created uncertainty in the market.
Swarbrigg expressed particular concern about the bill’s retrospective element, which includes existing zoned land, as it represents a significant change from the 2021 proposal. This change could impact market confidence and international capital needed to meet the government’s housing targets.
Savills Ireland acknowledges the need for a fair and equitable land value sharing tax that captures a percentage of actual financial gains. However, they argue that the current bill may cause more problems than it solves. Savills urges the Irish government to reconsider the proposed legislation and collaborate with stakeholders in the property development sector to establish a more streamlined and efficient policy framework. This revised approach should prioritize stability and certainty to promote the construction and delivery of new homes, a crucial step in addressing Ireland’s current housing shortage.