by Philip Corcoran October-13-2021 in Property, Construction
Budget 2022 was published yesterday, 12 October 2021, by Minister for Finance Paschal Donohoe TD. A number of measures were announced that will be of interest to all stakeholders in the Property sector, including in particular first-time buyers, landlords, landowners and developers. In this article, we outline some of these key measures.
Zoned Land Tax
The signature budget announcement from a property perspective was the announcement of the introduction of a Zoned Land Tax to assist with the target delivery of 33,000 new homes per annum by 2030. The Government has announced this tax to encourage the use of land for building homes to help them meet this target.
This tax will apply to land which is zoned suitable for residential development and is serviced but has not yet been developed for housing.
The Minister has confirmed the following key points in the plan:
- The tax will be 3% per annum of the market value of the land. This is the same rate that the vacant sites levy was, when first introduced. That rate has since been increased to 7%.
- It will target land in areas which are zoned residential or zoned for a mix of uses including residential.
- There will be no minimum size exclusion as the Minister sees the potential for the tax to incentivise the development of small sites in city centres.
- Local Authorities will prepare maps which will identify land within the scope of the tax which will be updated on an annual basis.
- The introduction of the tax is to be phased with a proposed two year lead in time for land zoned before January 2022 and a three year lead in time for land zoned after January 2022.
- There will be a number of exclusions to the tax to include dwelling houses and their gardens, amenities and infrastructure.
- The tax will replace the vacant site levy when it comes into operation.
Stakeholders will welcome the phased introduction of the tax which will give them the opportunity to voice any concern about the proposed workings of the tax with the Government, the specific detail of which is yet to be announced. The detail of the tax will become clearer with the introduction of the Finance Bill 2021.
It is significant that this tax will replace the vacant site levy which would appear to be an acknowledgement from the Government that the tax has not achieved its aims since its introduction in 2017.
Help to Buy
The existing Help to Buy scheme, which has provided tax relief of up to €30,000 to first-time buyers purchasing new build homes at a price of less than €500,000 has been extended for a further year. This extension will be welcomed by all prospective first-time buyers.
The Minister also announced that a full review of the scheme will be carried out in 2022, which indicates that there is a possibility that the scheme will be altered or come to an end at the close of 2022.
Pre letting Expenses for Landlords
Since 25 December 2017, tax relief has been available for landlords on certain expenses incurred by them in bringing a vacant residential premises back to the rental market after a period of non-occupancy. This tax relief, which is claimed by way of a deduction against rental income, was due to expire on 31 December 2021. The Minister confirmed this scheme will be extended for a further three years to encourage landlords to return empty properties to the market as quickly as possible.
Conclusion
The most significant measure announced in the Budget is the introduction of the Zoned Land Tax. Because the scheme is not due to be introduced for 2 years at the earliest, it will provide affected Landowners with time to examine the tax and related proposals carefully as more detail becomes available. Otherwise, the budget has extended measures already in place and the extension of the Help to Buy scheme will be welcomed by prospective first-time buyers.
Property stakeholders will also welcome the fact that stamp duty rates on property transactions have remained unchanged for both residential and commercial transactions.
The detail of all measures will become clear when the Finance Bill 2021 is published. We will keep you up to date on all relevant developments.
For further information on any of these issues, please contact Philip Corcoran pcorcoran@hayes-solicitors.ie at Hayes solicitors LLP.
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About the Author
Philip Corcoran
Philip is an associate solicitor in the Property team at Hayes solicitors. He has a range of experience acting for clients in varied transactions including the purchase, sale, mortgaging and refinancing of both residential and commercial premises.