A Living City – Living With What?

A Living City – Living with what?  

In this article, Eoghan Brunkard discusses the “Living City Initiative”, its positives, its negatives. 

Since 2012, the Government has proposed a tax incentivising scheme to rejuvenate some of the State’s city centres in the guise of the “Living City Initiative”.   In the Department of Finance’s own information note, the scheme is described as being a “targeted pilot tax incentive [with the aims of] 1. Encouraging people back to the centre of Irish cities to live in historic buildings, 2. Encouraging the regeneration of the retail heartland of central business districts”. This year the “Living City Initiative” will finally, become a reality after approval was given by EU.

The scheme wishes to readdress the dereliction of the city centres of Dublin, Kilkenny, Cork, Waterford, Limerick and Galway by providing tax relief of up to €200,000 on renovation work (though there is no limit on renovation expenditure).  It is twofold in its approach.

Firstly, the initiative has a residential component, which stipulates that the applicant for the scheme must be the owner/occupier of pre 1915 dwelling in one of the above named city centres. The cost of the refurbishment must be at least 10% of the pre-works value of the property so as to preclude minor redecoration applicants.

The owner/occupier need not own the entire building (as certain Georgian buildings are simply too large and expensive as to expect a single home owner).  In these instances, the house is sub – divided into smaller units with minimum size to ensure that an acceptable living space is provided.  They can then apply for a tax relief of up to €200,000 on renovation work, which can be spread against their income over 10 years.

Secondly, the scheme incentivises commercial redevelopment as with the above but is given in the form of accelerated capital allowances and it applies to all buildings in the regenerative zones not just pre – 1915 residential dwellings.

The Initiative has received mix responses from across the societal spectrum.  The conservation organisation “Irish Georgian Society” applauded the government’s proposal, to quote them “the IGS wishes to congratulate the government on their clear commitment to the protection and conservation of Ireland’s architectural heritage in the Living City Initiative”.

Fianna Fáil and Sinn Féin are supportive of the proposal however, both parties have recently expressed reservations in the legislation after changes made by the Minister for Finance. Initially, there was a caveat, which maintained that any commercial development planned for a pre 1915 dwelling, the applicant would also be required to refurbish the residential quarters were possible in the building. 

This article has since been rescinded by the Minister of Finance.  Pearse Doherty (and laterly, Michael Mc Grath in agreement with the Sinn Féin Deputy) took issue with this change and challenged the Minister for State Simon Harris during a Dáil debate. Deputy Doherty believed the link between the “living” aspect of the initiative is being subdued to the commercial.   The Minister responded by stating that a business may have the funds to redevelop the street level floor of such a building but may not have the funds to refurbish the entire building.  Deputy Doherty did suggest that businesses could fund such ventures by leasing the residential properties, thus bringing more properties on to the residential market.  Minister Harris pointed out the legislation was provisional and would be reviewed next year.

These were not the only concerns with the initiative. In an Irish Independent article, Donal Buckley believed that it would be difficult for many families to secure a loan from banks for either buildings in need of severe renovation or large former office space Georgian homes (particularly, now that there is a requirement of 20% deposit).  Indeed, he pointed out that commercial ventures are already beginning to return to our city centres without tax exemptions (as exemplified by the rising property prices in Dublin).  Buckley went on to argue that many landlords will not be able to claim the tax incentive (as they are not owner/occupiers) and so not afford refurbishments and sell them on to private families, consequently reducing the overall housing stock.

The Irish Left Review was also critical that the government could afford such a measure to re-inflate property market activity, while there was still a social housing crisis. Of course, the other side of the argument is that by re-inflating the property market they are creating work for tradesmen who were worst affected by the downturn, often leaving our shores. Though to be fair, they have a point regarding our current social housing shortage.  

While this could bring people back into our city centres, the rise in prices in real estate in recent years does insinuate that there is a clear danger that we could also be simply giving tax breaks to businesses that may not need it. There certainly are commendable measures in this initiative, particularly for those who do live in dilapidated Georgian buildings, but perhaps there is a case to extend this initiative to landlords and perhaps, require larger businesses to redevelop residential quarters.  In this way, we can enlarge our housing stock in the city at a time when there is huge demand.  

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