Noonan casts doubt on vacant site tax

Plans to introduce a tax on vacant sites in the upcoming Planning Bill to end land-hoarding have been put in doubt by Minister for Finance Michael Noonan.

Minister for the Environment Alan Kelly two weeks ago said the Bill, to be published in this Dáil term, would contain a provision to allow local authorities to impose an annual levy of 3 per cent on the market value of a site if its owner did not develop it.

The levy would be used to stop hoarding of sites that had been zoned for development and having necessary services, such as sewerage and other infrastructure, but were being left vacant in the hope of an increase in property prices, Mr Kelly said.

Dublin City Council last year proposed the introduction of the levy, but Mr Kelly said it would be available for use in any urban centre with a population greater than 3,000, and would come into force in January.

However, Mr Noonan in his budget speech indicated that the proposal would be subject to a consultation process in the coming months and he would examine introducing tax penalties if they seemed warranted.

Consultation

“There is a view that owners of zoned and serviced land are waiting for higher prices and that is why they are not taking steps to develop their land or sell it to others who will,” Mr Noonan said. “I will launch a public consultation in the coming months on this issue and, if it turns out to be a valid point of view, I will examine what taxation measures might be taken to penalise land owners who do not develop land that is already zoned and serviced,” he said.

The Construction Industry Federation yesterday welcomed Mr Noonan's statement. "It is a positive measure that time is being taken to assess the introduction of a levy, there could be a number of justifiable reasons development is not going ahead on a site," a CIF spokesman said.

Permission

Access to finance remains a problem, he said. There were also several sites where the planning permission which had been granted was no longer appropriate.

“Apartment blocks were granted permission in parts of the country where there is now no market for apartments.” The CIF was opposed to land-hoarding, he said, but it had made it clear in advance of the budget that there were issues in relation to the introduction of the levy, including details of exemptions, which needed further examination.

A spokesman for the Department of the Environment said that there was “absolutely no doubt” the levy would be included in the Planning Bill. “The Planning Bill is in preparation and will include a vacant sites levy on urban/brownfield sites.”

The Department of Finance did not respond to queries yesterday.