What exactly is the ‘Land Value Sharing’ Legislation Proposing?

Given our role supporting homebuilders, we understand the intricacies and challenges faced by project owners in today’s market, and these are many, from cost inflation, and procurement challenges, right through to underlying valuation issues. Now, developers and project owners need to factor in the potential impacts of the Land Value Sharing legislation and its likely implications for the industry. 

This proposed legislation aims to address the issue of land speculation and help the State to fund crucial infrastructure projects. Under these changes, landowners and developers may be subject to charges of up to 30 percent on the difference in land value before and after residential zoning.

The primary objective of this legislation is to discourage land speculation, where developers profit from land that is zoned for housing without adequately contributing to the infrastructure required to support residential developments. By implementing a charge on the uplift in land value resulting from rezoning, the Government seeks to capture a portion of the value created and use it to fund essential enabling works such as water services and electricity infrastructure, which makes sense on paper…  While the intention behind the Land Value Sharing legislation is commendable, there appears to have been little thought given to the unintended – but very likely – consequences. Concerns have been raised within the property development sector, with the CIF warning that introducing this legislation at a time of such limited housing supply would likely reduce investment in the sector, effectively reducing delivery. The construction body has suggested that the additional charges imposed by the legislation could increase the cost of homes by an estimated €8,000 to €35,000. At the upper end of that scale, it would essentially wipe out the recent policy initiatives designed to facilitate new supply, which doesn’t make sense at all.

Other industry organisations, including IPAV and the Irish Institutional Property (IIP), have also expressed concerns regarding the potential impacts of the Land Value Sharing measure. They point out that the legislation, in its current form, may pose risks to the viability of apartment developments and may not effectively reduce housing costs.

The property sector is now calling for a phased implementation of the measure over several years to mitigate potential turmoil in the land market. The phased approach, gradually increasing the percentage of charges annually, would allow developers to adjust their strategies and minimise disruptions so that the output of new homes can continue to rise, as needed in order to achieve the Government’s own ‘Housing for All’ targets. It seems like a ridiculous time to be burdening already slow housing delivery, however, one suspects that the time is less about the marketplace and more about the next political cycle.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group