Council wants 'Living City' tax relief to include offices
DUBLIN City Council has requested an extension of the proposed Living City tax relief initiative to include offices in its submission to the Minister for Finance on the initiative.
All six city councils including Cork, Limerick, Kilkenny, Galway and Waterford, which stand to benefit from the scheme, have submitted proposals which include the areas of their inner cities where pre-1915 buildings could qualify for the tax reliefs.
More than a year after Minister Michael Noonan originally proposed a pilot scheme, the cost benefit analysis outlining strong urban renewal arguments for it, was recently submitted to the EU Commission for its approval. This analysis also included the extension of the scheme from the original proposals, which had confined it to owner occupiers of Georgian properties, to also allow owner occupiers to recover refurbishment costs for those non-Georgian buildings built before 1915.
Dublin City Council (DCC) proposes to confine the scheme to four areas of the city between the canals. This will come as a disappointment to some who had hoped that Georgian properties in Rathmines, Ranelagh and Ballsbridge might also qualify for tax incentives.
Then again a number of properties in those areas have already been restored in recent years as the prestigious nature of some of these areas has justified refurbishment costs.
Some might argue that the prices for properties in Merrion and Fitzwilliam Squares, which have sold for up to €2m in recent times, suggest that these squares don't need tax incentives. Nevertheless DCC points out that older office properties in the area have recently been losing occupiers to modern offices in areas such as the Docklands. Consequently the council proposes that properties in the South Georgian Core should also benefit from the tax relief for refurbishment.
As deputy planning officer John O'Hara explains: "We fear that lack of use in some of these buildings may lead to deterioration and we want to boost inner city living."
He also points out that in addition to tax relief those who upgrade properties under the jobs leverage scheme could also qualify for heritage grants. Prospective buyers should check out these grants at the Department of Arts, Heritage and the Gaeltacht. However they may not apply to non-Georgian properties.
One of the most recent Merrion Square properties to go sale agreed is number 12, a four-storey over basement building extending to almost 669sqm for which Natalie Brennan of CBRE had been quoting €1.95m. It is let in small offices under 11 short-term licences and generating a combined annual rent roll of €210,555 and the sale agreed price is in excess of the quoted price.
CBRE are now guiding €2.5m for two nearby Georgian houses, 38 and 39 Lower Leeson Street, with a combined 970sqm of commercial and residential accommodation on a site extending to 0.16 acres and including two residential mews. It generates an annual rent of €270,680 suggesting a net initial yield of 10.41pc.
The area known as the north city Georgian core is also proposed and this would include Mountjoy Square, Gardiner Street and areas immediately surrounding them. Prices there are also looking up especially for multi-unit properties and Eugene Daly of GWD reckons they have risen about 17pc from their low points.
The agent recently sold 13 Mountjoy Square North, a four-storey over-basement 593sqm Georgian terraced property for around €650,000. In good condition having been completely refurbished in 1995, it was converted into nine self-contained apartments and generating an annual rent of €87,240.
The increasing values of these properties is suggested by two other Gardiner Street Georgians which Allsop Space auctioned.
In December 2012 it sold 4 Upper Gardiner Street, a Georgian building in 10 bed sits and generating €62,340 in rent, for €335,000 or a yield of 18.6pc. This year it sold 14 Upper Gardiner Street in nine residential units generating €70,200 a year for €580,000 or a yield of 12.1pc. That's a 35pc increase in values on the basis of yields within 15 months.
Other areas of the capital set to qualify are streets along key routes into the city: from the west the James Street/ Thomas Street/ Benburb Street routes; from the north the Dorset Street, Capel Street and Stoneybatter corridors and from the south Charlemont Street, Wexford Street and Aungier Street. Retail properties in the Dorset Street area are more difficult to sell unless they have a tenant. GWD is currently asking €180,000 for 54A Lower Dorset Street, a two-storey 92sqm terraced commercial / residential property which "would benefit from complete refurbishment.
Provincial cities have been less forthcoming about their proposed areas and this may be partly because there seems to be less hope about their prospects for the scheme.
Nevertheless provincial Georgians have been selling and in Limerick City two Georgian properties sold recently. Allsop Space sold Lissadell House, 8 Catherine Place, which was in eight bedsits and two office units for €200,000.
Limerick conservation surveyor Declan Gilleece says that refurbishment and upgrading is perceived to be more problematic and expensive than it may actually prove to be, if properly planned.
On the other hand Waterford estate agent Des Purcell points out that with a plentiful supply of more modern commercial and residential property in that city, it is very difficult for a purchaser to justify spending money on refurbishing an old property.
As currently proposed by the Minister for Finance, those who refurbish buildings for retail or cultural use at ground floor and residential overhead, will be allowed to recover 15pc of the refurbishment cost each year for six years with 10pc in year seven.
Estate agents in Dublin, Cork and Galway appear to be more optimistic about the prospects for the scheme than their counterparts in other cities according to a survey conducted by Indecon economic consultants.
Meanwhile prospective buyers may have to wait until the end of the year to know if the EU will give the green light for the scheme and also to ascertain what areas and conditions the Minister may approve.