In the 2021 Finance Act, a residential property tax was enacted with the primary goal of urging developers to utilise appropriate land for construction, instead of maintaining ownership for profit purposes. However, this initiative, aiming to tackle the consistent issue in the housing market of land hoarding, may face further delays beyond its originally scheduled launch date in February, marking its second postponement.
The legislation intends to impose a tax of 3% of such land’s market value, starting from next February, to stimulate land development or its sale to an interested party. Despite extensive mapping efforts by local authorities in preparation for its implementation, indications suggest a potential delay in the launch.
The delay is reportedly linked to plans to exclude agricultural land situated within residential-zoned regions from being taxed. This exemption is justifiable, yet should have been previously addressed when the tax was initially proposed. Other legislative challenges that could potentially elicit complications were raised by the Housing Commission among others, but no amendments were made. Hence, the tax will not be activated from the upcoming February as planned.
It seems the Government is wary of potential retaliation from the farming community in the impending general elections and might be striving to streamline the Finance Bill as much as feasible. This is required to facilitate a swift transition towards the electorate following the budget due on October 1st. The responsibility for modifying the plan lies with the Department of Finance, as confirmed by the Taoiseach Simon Harris.
Unused planning permissions for new homes, thought to be up to 80,000, and land hoarding are significant factors hampering the housing market, as acknowledged by several expert bodies. A more extensive land tax has been recommended by these bodies to tackle this issue. Although the residential property tax was a more restrained approach, if executed correctly, it could significantly aid in solving the problem.
The continuous inability to implement necessary changes demonstrates the snail’s pace of crucial restructuring. Whilst the Government is pouring billions into the housing sector, the passage of its planning Bill before the next general election remains doubtful. Similarly, the prospects of the residentially zoned land tax being established are slim. Absent such adjustments, the colossal investments in housing will fail to yield optimal returns. The primary challenges in tackling the housing crisis are the failure to harmonise such policy transformations, along with a reluctance to encroach upon established interests.