A new initiative has been announced in the ‘Finance Bill 2013’ called the ‘Living City Initiative, a Pilot Project for Urban Regeneration’. Under new tax incentives in 2013, the scheme will encourage owner occupiers and business owners to renovate and restore their Georgian buildings and old historic buildings in certain targeted city areas. We look at the reason for this initiative and discuss what is hoped to be achieved.
Living City Initiative
In recent years historical city centre areas have suffered as a result of the relocation of families and businesses to the outskirts. During the ‘Celtic Tiger’ years property prices became so inflated that many young families and people who were buying property for the first time found it unaffordable to live in city centre locations. As a result, lots of families and businesses moved to more affordable areas outside the city centre. The ‘Living City Initiative’ hopes to address this problem in two ways:
- Encourage people to move back to city centre locations and live in historic buildings.
- Incentivise the regeneration of central business districts.
The commencement of this scheme is dependant upon EU state aid approval.
Ireland has a large stock of old historic property, especially Georgian buildings from the mid 18th century. There are many wonderful examples of areas which have benefited from the restoration of Georgian buildings around the country. But there are also many similar buildings in disrepair and uninhabitable in cities all over the country. The Minister of Finance and The Minister for Arts, Heritage and the Gaeltacht have been exploring ways to encourage the restoration of these properties.
The ‘Living City Initiative’ hopes to incentivise the restoration of specific Georgian buildings through offering tax breaks to the owner occupiers of these properties. To regenerate historic centres and attract families to move back into these areas, incentives will be offered to local retail business in the targeted areas.
The project will provide tax relief for works carried out in refurbishing residential and retail buildings to bring them to a habitable standard or to making improvements to properties which are already inhabited. The incentives are targeted at owner occupiers rather than developers. The phrase ‘refurbishment’ will take a broad meaning and cover a large area of work, however, a portion of the work will have to be completed before the work is eligible for the tax relief. The cost of works must be in excess of 10% of the value of the building before the works were carried out to be potentially eligable for the tax relief.
The owners can claim 10% of the relief per year for 10 years. If the property is sold within the 10 year period the balance of the tax relief cannot be claimed.
A system of certification will be performed by the relevant county council, to ensure the appropriate works have been carried out and that the necessary planning permission has been applied for. The certification system will generally include a pre-refurbishment inspection and completion inspection.
Properties which are too large for one family to live in can be divide into a number of smaller units with minimum space requirements.
Local retailers will be able to apply for relief to upgrade their premises. Accelerated Capital Allowance will be available for retailers to allow them to claim tax relief on refitting and upgrading works.
The legislation under ‘Budget 2013’ sets out the parameters for the pilot scheme. Under the legislation The Minister for Finance must designate the areas eligible for restoration grants which will be included in the scheme. The Minister would expect to consult with his colleagues before designating the areas.
Pobál, the state agency that supports local communities, has an index to measure deprivation in different areas across Ireland.
Their studies have found that Waterford City and Limerick City are two of the worst performing cities in Ireland – they have the highest unemployment rates in the country, far beyond the national average. Because of this, the decision has been made that Limerick City and Waterford City will pilot the scheme. Specific residences in Limerick have already been identified as eligible for the scheme.
We will feature a follow up article when a decision on the ‘Living City Initiative’ is made by the EU.