Cabinet approval has been given for the drafting of legislation that would see a new land-rezoning tax of up to 30% come into effect in 2024.

A spokesperson at the Department of Housing, Local Government and Heritage told Agriland that government has approved the general scheme of a bill “to levy up to 30% of the increase in value of land that is newly zoned, or that is in a designated urban development zone”.

This will be known as the Land Value Sharing and Urban Development Zones Bill.

The tax, part of the government’s Housing for All strategy, will be used:

  • To provide necessary local infrastructure;
  • To provide social and affordable housing;
  • To support residential development;
  • For the benefit of the community.

Such a tax will impact all landowners, including farmers, whose land is: either newly zoned for housing, or for housing and a mix of other uses; or where any land zoned for housing or a mix that includes housing, is subject to an ‘urban development zone’ designation.

According to the Department of Housing, Local Government and Heritage spokesperson, “local authorities will secure, by condition of a planning permission for development on the land, a proportion of the increase between the value of land in its current use at the time of zoning or designation, and the full development value of the land when an application for development is permitted”.

In addition to paying a tax of up to 30% on the amount a landowner earns on land rezoned for housing, 20% of that land must be set aside for social and affordable housing.

The bill has yet to undergo a full economic appraisal, and other expert advisory input and engagement with key stakeholders will take place during 2022.

This will include pre-legislative scrutiny and the development of the national register of zoned land in the second half of 2022, with a view to enactment of the legislation before the end of the year.

It is intended that this new rezoning tax will operate in conjunction with the new residential zoned land tax – approved as part of the Finance Bill – which will generally apply to land zoned and serviced for housing development up to December 31, 2021.