Kick-starting the construction of apartments across Ireland appears to have been the main aim of the housing measures in Budget 2026.
The VAT on the sale of new apartments was reduced from 13.5 per cent to 9 per cent. There were also reductions, and in some cases exemptions, on corporation tax involved in the building of new apartments, and the rental profits of cost-rental schemes.
Alongside these measures there was a focus on increasing the capital investment in infrastructure to support new homes, as well as other interventions to tackle dereliction and the regeneration of existing housing stock.
It was a gamble for the Government to take because it meant there was little left over to put money back in the pockets of the ordinary homebuyer and renter.
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But will it work to help ease the housing crisis in the long term? We’ve asked the experts for their view.
[ Will the budget solve the housing crisis?Opens in new window ]
The builder
Conor O’Connell, Construction Industry Federation
“There’s no one silver bullet,” says Conor O’Connell, director of housing and planning with the Construction Industry Federation, the representative body and lobbying group for the building sector.
Taxation measures, such as the reduction in VAT and corporation tax on apartments, “have to be considered as part of an overall package to enable housing delivery”, he says.
“The budget announcement should help more apartments to become viable, but particularly for smaller builders, it’s probably far more important to have a streamlined planning system, more zoned land and more infrastructure on that zoned land to deliver housing right across Ireland,” O’Connell says.
The reduction of the minimum size of apartments and the Minister for Housing’s instruction to local authorities to rezone more land for housing were the two most important policy changes to builders over the past six months, he says.
Despite this, “we are concerned about the pipeline for 2027,” he says.
“Until more lands are zoned, until we get greater viability on apartments, it’s a very challenging situation to deliver more homes in,” O’Connell says.
The estate agent
Lisa Kearney, Rooney Auctioneers
The VAT cut on apartment sales is a positive move and should help make new developments more viable, but planning delays could mean the buyer may never see a price drop, estate agent Lisa Kearney says.
“Apartment and other housing projects continue to be delayed time and time again, and by the time they reach the market, rising construction costs often render them no longer viable,” says Kearney, president of the Institute of Professional Auctioneers and Valuers and director of Rooney Auctioneers in Limerick.
“The VAT reduction could help to reduce prices for buyers, but that benefit will only materialise if developers can actually get these apartments built,” she says.
The economist
Conall Mac Coille, Bank of Ireland
While the reduction in VAT on apartment sales should have an impact on the viability concerns in the short term, it could eventually be eaten up by other cost pressures, says economist Conall Mac Coille.
“Things like VAT and local authority charges do ultimately have some impact on the cost [of a home], and there is an argument to be made that these things should be borne out by general taxation, rather than a person who happens to be buying a home. So that is a good reason to eliminate it [the VAT],” says Mac Coille, who is chief economist at Bank of Ireland.
However, that cost saving may never be passed on to the buyer, because apartments were not viable to build in the first place. On top of this, the cost saving from reducing the VAT rate may eventually be chipped away at by other inflationary pressures, he says.
“You will get an initial boost to your profit margin, but then if there’s a lack of workers, or a lack of zoned land or land with planning permission, then this will just raise the price so the profit margin goes back to where it was,” Mac Coille says.
The architect
Sean Mahon, Royal Institute of the Architects of Ireland
The expansion of the Living City Initiative, which provides tax relief for refurbishing old buildings, was welcomed by architects as a good way of using “untapped potential” in towns across Ireland.
Budget 2026 saw properties in Athlone, Drogheda, Dundalk, Letterkenny and Sligo added to the scheme, while those built before 1975 will now be eligible, instead of those predating 1915.
“We all recognise the enormity of the challenge and the fact that there isn’t an easy solution, but the significant advantage of this type of solution is that you’re building on existing public infrastructure,” says Sean Mahon, president of the Royal Institute of the Architects of Ireland (RIAI).
“We think it could work really, really well in actually revitalising these towns and making them attractive places to work. I think there is a big opportunity to get a lot more out of this than we’re getting at the moment,” Mahon says.
However, the expansion of the scheme must be accompanied by research on the existing stock in these towns.
“It has to be coupled with work on the ground to identify each property at a local level, and then plans and strategies on how to bring those into use,” he says.
Some towns that have already managed their vacant stock well are Westport in Co Mayo and Clonakilty in Co Cork, Mahon says.
“These towns have been actively looking at the public realm, looking at how they can put in place elements of infrastructure, [and] elements of planning that continue to encourage those towns to thrive.
“It’s that type of work on the ground that is really so important. A policy on its own doesn’t deliver, you have to support it with delivery on the ground,” he says.
The social policy expert
Mick Byrne, UCD
In an effort to ramp up the building of affordable homes, rental profits from homes that fall within the Cost Rental Scheme were made exempt from corporation tax in Budget 2026.
Mick Byrne, researcher at the UCD School of Social Policy, says this change has two objectives: to lower the cost of rent in those developments and to encourage more private investment in the sector.
“The Land Development Agency has become more active over the last year or two, and is now a big supplier of cost rental accommodation. But because it is a commercial semi-State body, it must pay corporation tax and that factors into costs,” Byrne says.
“Under the cost rental system, rents are set based on cost, so the tenant essentially ends up paying [the corporation tax],” he says.
“Rents are coming in very high on the new supply of cost rental homes, so anything that could be done to reduce the rent would be helpful. This is a straightforward way of doing this,” Byrne says.
[ Buyers fear VAT cut on apartment sales could be a double whammyOpens in new window ]
The move may also help to attract more private investment into the sector, because there “hasn’t been much interest” so far, with most cost rental provided by the Land Development Agency and Approved Housing Bodies, which are tasked with providing and managing social homes.
“There is quite strong interest among financial investors in Europe in the provision of affordable and social housing. Ireland, though, has very limited involvement [from private investors], compared to some other comparable countries.
“So some people believe that they could have a role to play, mainly in making more capital available for the provision of social and affordable housing, and therefore increasing supply,” Byrne says.
