The 2026 Budget marks the government’s latest attempt to balance economic prudence with the pressing social challenges of housing. In presenting his statement, Minister for Public Expenditure Paschal Donohoe outlined the €9.4 billion budgetary package as one that invests both in Ireland’s future while securing the jobs, prosperity and stability of today.
While fiscal resilience and global uncertainty dominated his introduction, the central focus of this year’s measures was clear: addressing Ireland’s housing shortage through targeted investment, tax incentives, and planning reform.
1. Record Housing Investment
- The Budget confirms that €5 billion in capital funding will be directed to housing delivery next year.
- The funding will support direct government delivery, Approved Housing Bodies (AHBs), and the Land Development Agency (LDA), all under the framework of the National Planning Framework.
- To support homebuilders, an additional €200 million of additional external funding will be made available to Home Building Finance Ireland (HBFI) to ensure more projects can proceed amid rising construction costs and constrained finance.
2. Tax Measures to Improve Viability of apartment construction
- Budget 2026 outlines several measures to address the viability gap in housing development, particularly in apartment building. The Budget introduces a reduction in the VAT rate on the sale of completed apartments from 13.5% to 9%, effective from 8 October 2025 and lasting until the end of 2030.
- This is aimed squarely at boosting apartment construction in urban centres, where affordability pressures remain most acute.
- In parallel, an enhanced corporation tax deduction will apply to qualifying costs associated with the construction or conversion of buildings into apartments. The measure which will be available for projects commencing after 8 October 2025 and on or before 31 December 2030, seeks to incentivise developers to bring underused or non-residential properties into the housing market.
3. Reforming Land and Property Taxation
- Several structural tax changes were also announced as part of Budget 2026. A new Derelict Property Tax will replace the Derelict Sites Levy, with a broader scope designed to bring idle sites back into productive use.
- The Residential Development Stamp Duty Refund Scheme will be extended to 31 December 2030, with accelerated timelines to claim refunds for multi-phase developments.
- The Residential Zoned Land Tax (RZLT) framework has been refined as Minister Donohoe announced another opportunity for landowners to avail of an RZLT exemption in 2026 if they seek to have their land rezoned to reflect the genuine economic activity being carried out. The exemption will be considered by Local Authorities based on guidelines issued by the Minister for Housing, Local Government and Heritage.
4. Supporting the Rental Market and Retrofitting
- Budget 2026 outlines a new corporate tax exemption on rental profits derived from homes in designated Cost Rental Scheme, in a move designed to encourage more institutional investment and operators to deliver long term affordable rental supply.
- Small landlords will continue to receive income tax deductions for property retrofits; a measure extended for a further three years to 31 December 2028 to align with the government’s climate and housing goals.
5. Revitalising Urban Centres
- The Living City Initiative Scheme, which provides tax relief for the refurbishment of older properties in designated areas, is to be overhauled and extended to 2030 as part of Budget 2026. The scheme will now cover buildings constructed before 1975 (previously 1915) and incentivise “over the shop” residential conversions.
- Relief limits for enterprises have been raised from €200,000 to €300,000, and five new regional centres - Athlone, Drogheda, Dundalk, Letterkenny, and Sligo will be added, subject to local authority planning.
6. Outlook
Budget 2026 confirms housing as the Government’s defining economic and social priority. By coupling record capital investment with tax and planning reforms, the Government aims to address supply constraints and restore balance to the property market. With a particular focus on improving viability for apartment delivery and encouraging institutional investment into cost rental schemes, it looks like the Government is listening to stakeholders. However, success will depend on whether these measures can translate policy ambition into sufficiently increased new homes delivery.
For more information, please contact Fidelma McManus or your usual contact in Beauchamps LLP.
