Lying low since Bacon introduced anti-speculative measures, residential investors may stage a comeback through the Living over the Shop (LOTS) scheme which offers valuable section 23 relief - allowing them to set 100 per cent of costs against rental income including income from other lettings.
By tapping into that hidden stock of property lying idle and often derelict on the upper floors of 6,700 metres of streets in Dublin's city centre, investors may regain some of the foothold they had in the early to mid-1990s, when the city centre apartment building boom was at its peak.
Relaunched last year and running until December 31st 2004, the initial impact of LOTS will not be evident until next spring, according to Alan Taylor of Dublin Corporation's Economic Development Unit.
He says the scheme has been in a temporary limbo while Dublin Corporation has awaited direction on building certification from the Department of Environment and Local Government, which runs a LOTS expert advisory panel.
"Interest was pretty good when it was announced initially, but has lulled as a result of the delay. We expect it will be revived again when the marketing campaign gets underway in the coming weeks which will highlight the tax incentives."
Investors will be entitled to 100 per cent of eligible refurbishment, conversion or necessary new build costs set against Irish rental income. In the case of owner-occupiers, 100 per cent refurbishment or conversion costs are allowed at a rate of 10 per cent per annum over 20 years against income.
New build incentives are available where extra storeys are needed to restore the streetscape, where a replacement building is required in place of one that has received a dangerous building order or where extensions are needed to facilitate access to residential accommodation.
There are also allowances for commercial development which are conditional on the residential element being carried out. The building must meet certain criteria before it can be deemed acceptable under the scheme. Firstly, it must be located in one of the designated streets, which are largely in the north inner city. A list of these is available on Dublin Corporation's website, www.dublincorp.ie.
The preferred minimum floor area of residential units is 580 sq ft, although consideration will be given to smaller units.
Before applying for inclusion in the scheme, those interested should consider whether their upper floors can feasibly meet building and fire regulations and if the floor area can yield adequate financial return.
Listed buildings are not necessarily precluded but will have to meet certain conservation requirements. The city centre has been divided into five LOTS areas, each manned by a project team which is available to guide interested building owners through what is a complex process.
"It will take some time before we see any results," says Taylor. "Once applicants get the go-ahead, they have to consult architects and wait for planning permission and that is before the conversion work begins." Priority has been given to rundown buildings on streets that become virtual ghost towns after dark.
He believes that this attempt at LOTS will be more successful than the restrictive pilot version introduced in 1994, which had moderate success in Cork but was largely regarded a failure in Dublin. "The incentives are better this time around. You are now allowed allowances on new build, which wasn't the case before."
A lacklustre marketing strategy also hampered the earlier scheme. Taylor says the forthcoming campaign will seek to address the widespread "lack of knowledge" among city centre property owners in relation to the improvement packages available to them.
"They may be absentee landlords, or be elderly and have the ground floor let and the upper floors blocked and falling into disrepair. Often they are not aware they can sell off the upper floors on long leases which will improve the value of the property."
