Sharp rise in the vacant site levy to hit land hoarders in the pocket
LANDOWNERS who hoard housing sites in the expectation of achieving windfall profits will be hit with a sharp rise in the vacant site levy.
It will rise from 3pc of the value of the site to 7pc from 2019 as part of efforts to release valuable land for new homes.
The Government has also raised commercial stamp duty from 2pc to 6pc, but the duty can be reclaimed if the housing land is developed within 30 months of the site being purchased.
The measures are designed to utilise existing zoned and serviced land banks for much-needed homes and to penalise hoarders. The Government has also allowed site owners to sell land banks within four years of buying them without being hit with a capital gains tax bill. The exemption previously applied to sites held for seven years or more.
Housing Minister Eoghan Murphy said he was confident that the increase in the vacant site tax would withstand legal challenges. A 3pc levy will be applied on January 1, 2019, rising to 7pc each year thereafter.
"We have a severe (housing) shortage," said Mr Murphy. "The 3pc levy is not seen as sufficient to get that land back into use. Property interests have ample time to sell that land or bring it into productive use."
The move was welcomed by the Respond housing body, which said it was a "clear signal" to hoarders to develop the sites.
The Government has also introduced a tax break for owners of vacant properties to bring units back into use. Relief will apply on spending up to €5,000 to the end of 2021. It will be clawed back if the unit is taken off the rental market within four years.
"Tax reliefs for work on vacant homes to encourage owners to get them back into use are the type of initiative that the Housing Agency fully supports," its chief executive John O'Connor said.
"We need to incentivise and support owners of these properties to get these vacant houses occupied again."
Well-flagged changes to commercial stamp duty, which rises from 2pc to 6pc, will affect sales of hotels, retail, offices and lands - but it can be reclaimed for residential land. The Government has also allocated €25m to provide infrastructure on local authority-owned sites as part of efforts to boost output of affordable homes.