The Residential Zoned Land Tax (RZLT) was introduced in the Finance Act 2021. In November 2022 local authorities published draft maps earmarking lands to be subjected to RZLT. As part of the Government’s “Housing for All – a New Housing Plan for Ireland”, RZLT is intended to encourage early development of lands identified by local authorities as suitably serviced and zoned wholly or partly for residential purposes. RZLT has the potential to impact, not only developers but also charities and not-for-profit organisations which may hold lands falling within the remit of RZLT.
RZLT will apply to land that is zoned and serviced. The relevant lands will be taxed at 3% of the market value of the land. The RZLT will be administered by the Revenue Commissioners and payable from 2024 for land within the RZLT scope on 1 January 2023.
For lands identified as relevant sites after 1 January 2023, RZLT will be first due in the third year after it comes within scope.
Who, what and where?
As outlined above, RZLT will apply to zoned and serviced sites. For the purposes of RZLT, serviced sites include sites already connected or capable of being connected to the necessary public infrastructure, with facilities including road and footpath access, public lighting, foul sewer drainage, surface water drainage and water supply. This could include, for example, lands adjoining convents or monasteries.
The persons liable to pay RZLT will be the “owners” of a relevant site. “Owners” is defined broadly in the legislation and includes any person who holds an interest in or right to carry out development on or to the land.
A limited number of exclusions from the scope of RZLT are available, including:
- Existing residential properties that are liable for Local Property Tax are not subject to RZLT. However, if the garden or yard attached to the residential property is greater than 0.4047 hectares (one acre), the owner must register for RZLT;
- Land that is zoned for a mixture of residential and other uses, where it is reasonable to consider the land is integral to the operation of a business carried out on or beside it;
- Land used for certain infrastructure or facilities including utilities, transport, and facilities for social, community or recreational purposes; and
- Sites which are designated as a derelict site and subject to the Derelict Sites Levy.
The default position is that all relevant sites are subject to RZLT, however, deferral of payment is possible in limited circumstances, including:
- While there is an appeal or a judicial review pending regarding the RZLT;
- Where planning permission has already been granted and cannot proceed due to an appeal to An Bord Pleanála or a judicial review in relation to the grant of planning permission; or
- Where a commencement notice has been lodged with respect to residential development on a site. Once works commence on a site, RZLT is deferred until (i) the date when the works permanently cease, or (ii) there is a change of ownership; or (iii) the planning permission expires. If one of those three events take place before the certificate of compliance on completion is lodged with the local authority, the deferred tax or a relevant portion thereof will become due, depending on the status of the development.
Owners should be aware that planning appeals by an owner or connected party do not fall within the above exclusions. As a result, a scenario could arise where an owner appeals a grant of planning permission on the basis that it contains conditions which impact the economic viability of the proposed development and is liable for RZLT while the appeal is pending.
The deadline to make submissions in respect of the inclusion of lands on the initial draft maps published by local authorities was 1 January 2023. If an owner is not satisfied with the decision of the local authority, there is a right of appeal to An Bord Pleanála on or before 1 May 2023. Supplementary maps will be published on 1 May 2023 with an opportunity to make a submission to the local authority by 1 June 2023 and a right of appeal to An Bord Pleanála by 1 September 2023.
Final maps are due to be published on 1 December 2023 and RZLT will be payable in 2024 on any lands included on those final maps.
Whether RZLT will expedite the development of zoned land remains to be seen. What is clear is that RZLT has the potential to significantly affect all land owners, including charities and not-for-profits whose lands are designated as relevant sites.
Based on submissions lodged to date, which are available on Local Authority websites, one of the most common grounds for submissions is on the basis that land is not in fact “serviced” and therefore should not fall within the remit of RZLT. The RZLT legislation also provides an opportunity for landowners to request to have the zoning of the lands changed which will completely remove them from the scope of RZLT.
We would encourage all Charity and Not-for-Profit landowners to take a pro-active approach to engaging with local authorities in relation to draft maps. If not already done, check the website of the Local Authority within which your land is situated, to see if RZLT is relevant.
For more information regarding RZLT and how it may affect your land please contact a member of our Real Estate or Charity and Not-for-Profit teams.
The content of this article is provided for information purposes only and does not constitute legal or other advice.