Landowners and developers could end up forking out more than 50% of the increase in the value of land rezoned for housing thanks to new legislation targeted at clamping down on property speculation.

The new charge could apply to as much as 75,000 hectares of zoned residential land nationally and a further 21,000 hectares of land zoned mixed-use that also permits residential development, according to the Irish Times.

It is expected to net local authorities up to €270M annually.

The government Thursday approved the new Land Value Sharing and Urban Development Zones Bill, which allows for a charge of 30% on the difference between existing use value and the market value on land rezoned for housing.

Landowners who benefit financially will be required to submit self-assessments of the mark-up from next year and would then pay the charge as a condition of granting planning permission. The levy will be used to fund infrastructure and other services on those sites.

When combined with traditional development levies and Part V obligations requiring developers to set aside part of their schemes for social and affordable housing, this could see more than 50% of the original uplift in land value from a rezoning bolster the state coffers, the Department of Housing said.

The new charge is ostensibly designed to counteract land speculation, considered a major factor in the high cost of housing in Ireland, while delivery has been severely hampered by the appeals process, with up to 70,000 homes currently delayed or stuck in planning.

“Land value sharing will influence land transactions with the aim of limiting the speculation that affects land prices, and by extension, the cost of housing,” Minister for Housing Darragh O’Brien said.

A map showing lands in scope for value sharing will be published by each local authority in March next year.

The Department of Housing said owners of “substantially undeveloped” land identified as falling inside this new charge will require self-assessments of the existing use value and market value by July 2024.

This charge will be applied to housing planning applications lodged from December 2024 on land bought and sold since December 2021.

An additional one-year lead-in has been put forward in respect of lands transacted prior to this, while commercial and industrial zonings will fall into the scope of the charge from 2026, the Department said.