Every year zoned land on the edge of Cork, Dublin, Galway or other cities fetches prices in the millions of euro. However, there are other cases where farmland with zoning comes on the market – and fetches little, if any, premium.

It happened in 2020 when farms in Wexford and in Tipperary, part of which were zoned, were sold with no huge premium over a good agricultural price. Why was this?

The answer is that any additional value for zoned land depends on a number of factors.

These include what category of zoning has been applied, what commercial demand exists in the area for that zoning and whether there are utility services nearby.

Planning consultant David Mulcahy, who is based in Athgarvan, Newbridge, Co Kildare, deals with these matters on a daily basis.

He notes that the wide range of land zonings used by local authorities can be confusing.

“There is a core set of zonings that are most regularly used. But there are actually over 3,000 different zonings available and in use in Ireland. At one stage, the Department of Housing did attempt to streamline them, but it has not happened yet.”

Auctioneers sell land with all the different zonings and have views on their value. For example:

Auctioneers point out that the value of any of these zonings varies widely depending on location.

There are actually over 3,000 different zonings available and in use in Ireland

If the land is in an area of low commercial demand then the zoning makes little or no difference to value. So, zoning for residential development on land that is a distance outside a small rural town where it’s already difficult to sell new houses is of little immediate value.

However, a commercial-type zoning on land located near an industrial estate at the edge of a busy, expanding town could multiply the value of the land by 2.5 to three times. The value of zoning is area-specific.

Access to services is another critical factor deciding how valuable zoned land can be. Among the most important services are public sewage and water supply.

Electricity and internet are also important.

But why is there farmland outside rural towns with zoning? A lot of land was zoned by local authorities back in the mid-2000s, at the time of the economic boom and in response to huge demand for new houses.

David Mulcahy says that national planning policy has changed since then and that this is now affecting the value of some of this zoned land.

“National policy is all about trying to develop compact settlements,” he says. “Infill developments are now the preference.”

This means the preference is to develop and build on vacant sites within towns and village, making use of existing services.

“A lot of land that was zoned 10 or 15 years ago is now being dezoned, in new county plans,” he said.

“Every six years, new plans are prepared for each county. Village and town plans, in turn, come under these county plans.”

Mulcahy has farmers among his clients. These include farmers with land on the edge of towns or villages who are interested in having it zoned to boost its value.

These farmers can make a submission to their local authority to have their land zoned under a particular heading, when the county plan is next being revised (at draft stage) or a local area plan if that applies. “We put the clients’ best foot forward in terms of demonstrating compliance with planning guidelines and policy,” Mulcahy says.

Focus

“Because of the focus now on compact settlements, getting a residential zoning on land at the periphery of a town or village is more challenging. So landowners now have to look at alternatives. For example, a landowner might make a submission to have some land zoned as industrial, particularly if it is near a motorway or good road network. If land is zoned for community and education, that could allow development of a nursing home.”

Farmers who wish to familiarise themselves with county and local plans can start by looking at the myplan.ie website, he says.

It is an online map portal which provides spatial information of relevance to planning. It is operated by the Department of Housing, Local Government and Heritage and by local authorities. “The Planning Regulator’s website at opr.ie is also very useful as “it shows what plans are next being prepared and when that will take place”.

Vacant site levy

Meanwhile, another factor for landowners to keep in mind is the vacant site levy. The tax of 7% can be applied on zoned land if development is not being advanced.

Challenges by the IFA mean the levy is unlikely to be made on zoned farmland that is being actively farmed, especially if the farmer did not look for it to be zoned.

A lot of land that was zoned 10 or 15 years ago is now being dezoned, in new county plans

In addition, local authorities have generally not enforced this levy as aggressively as initially expected. There is a view that it is administratively difficult to operate and legally complex. But it remains in force, all county councils have a vacant site register and some large developers have had to pay significant sums under the levy.