Real Estate
"2023 will see in-scope funds reviewing current and planned borrowing to determine if they are within the leverage limit and, if they are over-leveraged, implementing strategies to reduce this."
REAL ESTATE
Commercial Landlord and Tenant: Green Leases
2023 will see an increased focus on the greening of property contracts, with green leases in particular being utilised by landlords and tenants to ensure the sustainable management and operation of buildings and to future proof buildings against increasing regulation of carbon emissions from the built environment. 2023 will also see further focus on retrofitting older building stock and contractual mechanisms to facilitate this.
For the past 18 months, the Arthur Cox LLP real estate group, working with colleagues in other law firms and sustainability professionals, has been leading the development of green clauses for Irish commercial leases under the umbrella of The Chancery Lane Project (TCLP), a global collaboration of lawyers and sustainability professionals working pro bono to rewire contracts to combat the climate crisis. The clauses will be published on TCLP’s website in the New Year.
Regulation of Short-Term Lettings
2023 will see the implementation of further measures to bring more homes back into the long-term rental market in rent pressure zones (RPZs). The Planning and Development, Maritime and Valuation (Amendment) Act 2022 requires that, for an initial (extendable) period of six months from 1 September 2022, properties cannot be advertised and arrangements cannot be entered into for short-term letting of properties in RPZs which do not have the requisite planning permission or which are not exempted development.
The Government also hopes to have legislation enacted by the end of March 2023 to establish a new Fáilte Ireland registration system for short-term lettings.
Housing Commission Report
The Housing Commission, established in to fulfil a commitment in the Government's Housing for All Plan to examine housing issues and bring forward proposals on a housing referendum on the constitutional right to housing, is due to submit its report to the Minister for Housing, Local Government and Heritage by the end of July 2023.
Read the Government’s press releases here and here.
2023 may bring further Government measures to deal with housing issues based on the Housing Commission’s recommendations.
Residential Zoned Land Tax
The Residential Zoned Land Tax (RZLT) (announced in Budget 2022 to replace the vacant site levy) is an annual self-assessed tax administered by Revenue calculated at 3% of the market value of land within its scope. It applies to land that, on or after 1 January 2022, is zoned as being suitable for residential development and is serviced, with certain exclusions.
Whilst the RZLT is not payable until 2024, 2023 will see landowners engaging with local authorities and An Bord Pleanála in the submission, assessment and appeals process around the designation of land as within the scope of the tax as set out in the relevant legislation.
Vacant Home Tax
This vacant homes tax is to be introduced in 2023 and will be an annual self-assessed tax administered by Revenue calculated at three times the property’s existing base LPT liability. It will apply to residential properties occupied for less than 30 days in a 12-month period, with certain exclusions set out in the relevant legislation (Part 22B of the Taxes Consolidation Act 1997 as amended by the Finance Act 2021 and the Finance Act 2022).
Irish Property Funds: Review of Tax Regimes and New CBI Leverage Measures
Review of Tax Regimes
In his Budget 2023 speech, the Minister for Finance, Paschal Donohoe TD, announced a review of institutional funding vehicles including REITs and IREFs to “consider those structures and how best they can continue to support housing policy objectives”. He also announced a review of the use of section 110 companies and the establishment of a working group to consider the taxation of funds generally. It remains to be seen how and when these reviews will be carried out in 2023.
New CBI Leverage Measures
The Central Bank announced its macroprudential policy framework for Irish property funds on 24 November 2022. A key point was the introduction of a 60% leverage limit on the ratio of property funds’ total debt to their total assets.
2023 will see in-scope funds reviewing current and planned borrowing to determine if they are within the leverage limit and, if they are over-leveraged, implementing strategies to reduce this.
Read our briefing here.
"2023 will also see further focus on retrofitting older building stock and contractual mechanisms to facilitate this."