The intent behind the Government’s Residential Zoned Land Tax, which came into effect in 2022, is on the face of it reasonable enough. The tax is essentially designed to deter so-called “land hoarding” in areas that have been zoned for residential construction in towns and cities across the country, the theory being that some property speculators will buy such land, sit on it, and wait for it to increase in value. Perhaps they would never build homes on it, in a time of a housing crisis.
The policy, then, is designed to punish those who would do that. It is targeted directly at such speculators, by making them pay an annual tax of 3% of the market value of the lands on which they are sitting. In other words, if you are a wealthy person who has bought lands to the value of €5m, and is refusing to build on them, then you’re on the hook for €150,000 per year every year until you get off your backside and start building houses.
The problem, put simply, is that the law appears to have been written in a way that a lot of people who are not speculators at all are getting caught up in it. For one example, universities:
On Monday, Dublin City University (DCU) represented by Joe Jeffers SC, obtained permission from Ms Justice Niamh Hyland to challenge the board’s decision to include two sites, one at Griffith Avenue, Glasnevin in Dublin 9 and the other at Albert College Park, close to DCU’s campus at Glasnevin.
Counsel said it is DCU’s case that the lands in question are exempt from the RZLT as the sites are to be used for educational purposes.
This is the obvious problem with the law: It was designed and conceived by politicians as a way to punish those who are not using land productively. But it’s actually targeting many bodies who are using their land productively, just not for housing. In the case of DCU, that means they’re essentially set to be forced to pay enormous taxes for providing the very service the state mandates them to provide: Education.
Another presumably unintended victim of the law are the religious orders, some of whom have been in their properties for over a century. CitizenGo is currently running a petition on their behalf, pointing out that:
Imagine that an order of nuns moved onto a plot of land in the early 20th Century, which was, at that time, well outside the confines of any city or town centre. Fastforward to 2023, and the city or town has grown up around the monastery, and now they are liable for a huge annual tax bill.
Of course, property developers may have that kind of money to spare. However, religious orders – who don’t run a money-making business – don’t have that kind of money to spare.
Nevertheless, in what appears to be a case of heavy-handed government overreach, An Bord Pleanála just rejected an appeal to be exempted from the RZLT by an enclosed order of nuns.
The last point here is key: The law passed by the Oireachtas is now being interpreted by An Bord Pleanála to mean something that it’s highly unlikely the Oireachtas intended to be the effect of its legislation. This is a common problem in all democracies: Laws, unless very tightly written, get interpreted and expanded by courts and other administrative bodies to end up meaning things that the people who wrote the laws didn’t really intend in the first place. The UK’s 1967 abortion act, for example, is a good example of that: As written, it included the requirement for two doctors to sign off on the medical necessity of a termination. This was later interpreted by the UK courts to include mental anguish, and now that requirement – intended to be restrictive – is a formality. The public might be okay with that, in the UK, but it was not what the legislators of 1967 intended.
In this case, too, it appears that An Board Pleanála is going further than politicians intended. Did they really intend to impose a massive tax bill on DCU for providing educational services? Did they really intend to tax religious orders off their land? It’s highly unlikely, in my view, given that the tax was explicitly sold to the public as a measure targeted at property speculators – not nuns or college lecturers.
There will, naturally, be a section of the population that regards the expansion of the law’s meaning as a good thing. This is why laws tend to get expanded like this – because somebody wants them to, or in this case because a section of the population might see screwing the religious orders, for example, as an added benefit. But even so, if this is what the Government intended it should say so. And if it is not what the Government intended, it should bring An Board Pleanála to heel. CitizenGo has a petition on the matter at the link above. Both their petition, and DCU’s legal challenge, are worthy of support.