A new improved version of the Living Over The Shop scheme (LOTS) will be available to investors and owners of city centre retail premises next month. The scheme will provide a range of tax incentives similar to those currently in operation for the Urban Renewal Scheme and will be applied to specific lengths of streets in the cities covered.
A spokesman from the Department of the Environment said that the LOTS scheme was one of the last frontiers of urban renewal and that the Department is confident of more success with the scheme this time round. Mr Pat Macken, principal officer of the Urban Renewals Section, said it was a major source of concern that swathes of upper storey space were becoming increasingly derelict at a time of very high demand in the rental sector. Local authorities in Dublin, Cork, Galway, Limerick and Waterford submitted plans for the scheme to the Department at the end of last year. These applications are currently being assessed and the final decision on the designated streets is expected in April.
Both owner-occupiers and investors/lessors will be entitled to benefit from the tax incentives. Owner-occupiers can offset 100 per cent of the cost of refurbishment and new building over 10 years against total income. Investors can offset 100 per cent of costs against rental income, including income from other lettings. There are also capital allowances for commercial development. The more restrictive 1994 pilot LOTS scheme had some success in Cork but was bogged down by non tax-related factors in Dublin. Rents were stable and city centre living was not considered such an attractive option.
Under the 1994 scheme, property owners on designated streets could refurbish overhead accommodation and write off 100 per cent of the costs against tax over 10 years. The tax breaks did not apply to building new properties or extensions and incentives for investors were not included.
This time a streamlined approach to incentives is being applied with both new building and refurbishments carrying the same allowance. There will also be relief for expenditure incurred on construction of associated commercial property.
EU approval has been obtained for the scheme and it will be available to retail outlets on the designated streets, with the exclusion of mail order businesses. Dublin Corporation will build two demonstration projects on Capel Street this year and the Department of the Environment and Local Government will be urging local authorities to promote the scheme. A minimum size of 592 sq ft of residential space will apply under the scheme.
NEW building extensions will be allowed subject to a maximum of 30 per cent of the total floor area where they can be shown to be necessary for access or basic residential facilities.
The eligible expenditure on the commercial element of the premises may not exceed what is spent on the residential portion.
Owner-occupiers and investor/ lessors will qualify for a 50 per cent initial allowance in the first year and four per cent annual allowance up to a maximum of 100 per cent from then on.
It remains to be seen whether LOTS part two will lead to homely curtains and windowboxes replacing dusty lifeless windows but the flexibility of the scheme and the dramatic change in the property environment could make quite a difference.
