Lisney chartered surveyors broadly welcome many of the property related measures announced in Budget 2026.  The two key measures are the changes to VAT on apartments and increased funding for infrastructure, both of which will assist in boosting housing delivery.

According to Aoife Brennan, Senior Director, Head of Research:

We note the introduction of a reduced VAT rate on new apartments as a positive step towards improving viability.  However, with just a four and a half percentage point reduction to 9%, its impact will be somewhat limited for certain developers.  We would have preferred to see the rate fall to at least 5% if zero rating was not possible under EU rules.  We welcome the increased funding for smaller-scale builders through the HBFI, the removal of corporation tax liability for cost rental providers, the extension of the Living City Initiative, and critically, the increased funding for utilities infrastructure; these are all constructive measures that should help boost housing delivery and urban regeneration.  The extension of stamp duty relief on the sale and subsequent development of residential lands, along with adjustments to the associated timelines, will provide greater certainty and continuity for developers.  Measures aimed at tackling dereliction, including the proposed Derelict Property Tax to be collected by the Revenue Commissioners, represent an important step toward revitalising underused sites; we await further details on its operation post 2027.  Changes to the RZLT that allow landowners seek rezoning to reflect the genuine economic activity being carried out is also welcome.  While further detail is due, consideration of additional exemptions would help ensure the tax is applied effectively and only panelises those actually hording lands.

VAT on New Apartments

Lisney welcomes the reduction in the VAT rate on new apartments from 13.5% to 9%.  We have long advocated for such a measure, having called for it for more than a decade.  However, we are disappointed that the rate was not reduced further – ideally to zero for a defined period but we recognise the issues associated with zero rates from EU regulations.  Budget 2026 also announced an enhanced corporation tax deduction for certain costs incurred in apartment development and the conversion of non-residential buildings into apartments, where a commencement notice is made from now up until the end of 2030.  At a high level, this appears positive, but no further details have yet to been provided, and we will await full details to understand the full impact.

According to Frank McSharry, Director, New Homes:

The four-and-a-half percentage point reduction represents a saving of just over €18,000 on a €500,000 apartment, which does improve viability.  When combined with the changes to the apartment design guidelines earlier this year, just over half of the viability gap of about €100,000 is met for most developers.  If a zero rate cannot be adopted, then we would have liked to see other complementary measures introduced such as the reintroduction of the temporary waiver on utilities connections and development contributions, and changes to the timing of payments under Croí Cónaithe (Cities) Scheme.  We are hopeful of further positive amendments in this area in the new housing plan due later this month.  The only way to increase housing completions quickly is through apartment development.

Help-to-Buy Scheme – Missed Opportunity

There was little mention of the Help-to-Buy scheme in Budget 2026, and we believe there has been a missed opportunity in terms of tweaking the scheme to make it more suitable for first-time-buyers in today’s market.

According to Frank McSharry, Director, New Homes:

The Help-to-Buy scheme has been very successful since its introduction in 2017, assisting approximately 59,000 first-time buyers over that period.  The Government’s commitment to maintain the scheme until the end of 2029 is very welcome.  However, the upper value limit of €500,000 is no longer adequate.  It has remained unchanged since 2017, during which time house prices in Dublin have risen by 57% and by 77% in the GDA.  Simultaneously, construction costs have increased by 60%.  For the scheme to continue to deliver on its objectives and genuinely support first-time buyers, a higher value threshold is now required.  Again, we suggest that this should be considered in the new housing plan due later this month.

Residential Zoned Land Tax (RZLT)

The Residential Zoned Land Tax (RZLT) was introduced under the Finance Act 2021 as part of the Housing for All strategy.  It is an annual self-assessed tax of 3% of the market value of zoned and serviced residential land.  The first payment was due last February.

According to Shane O’Connor, Director, Development Land:

While we welcome the option to seek rezoning of lands to reflect their prevailing use, we were disappointed not to see further amendments to the operation of this scheme in today’s announcements.  The RZLT is intended to encourage the activation of residential land, yet in practice, it often penalises developers who are actively working through lengthy planning processes or awaiting connections to essential utilities infrastructure.

Infrastructure

Budget 2026 allocated €19.1bn for capital investment in 2026, an increase of €2bn compared to 2025.

According to Shane O’Connor, Director, Development Land:

A detailed action plan on tackling barriers to infrastructure development is due from Government next month and will include legislative reforms to strike a balance between the rights of individuals and the public good, simplifying regulation, and reducing administrative burdens – all of which are very welcome and required.  Infrastructural deficits remain one of the key reasons for housing delays currently.  The increased capital investment funding next year is positive, and it will be important that water and power projects take priority as the level of development that can proceed without these improvements is limited.  We await specific details on projects, which we understand will be announced shortly.

Other

• Rent Tax Credit – Lisney supports any measures aimed at assisting renters, and the extension of the Rent Tax Credit for a further three years is welcome. However, it remains well below what would meaningfully assist most renters.  Amounting to €83.30 per month for an individual, it only covers about two weeks average rent for a one-bed apartment in Dublin.
• Mortgage Interest Relief – while a reasonably small measure, it is positive that the relief is extended for a further two years, albeit reducing in its final year. The relief applies to principal private residences with a mortgage balance of between €80,000 and €500,000 and is capped at €1,250 per annum.
• Retrofitting Deductions for Landlords – the Income Tax deduction roll-over for small landlords who retrofit their properties has been extended for a further three years, which is positive. However, with private landlords leaving the market in droves, we would have liked to see greater assistance.  While we understand changes are due from end-March next new in the private rental market, full details are not yet available.

For more information please contact:

Aoife Brennan | Senior Director, Head of Research & Consultancy: abrennan@lisney.com

Eva Kelly | Marketing Manager: ekelly1@lisney.com