Real Estate and Housing

New measures not announced in Budget 2025

The measures included in the Finance Bill relating to Real Estate follow the announcements made on Budget Day. They include the extension of the Help to Buy scheme to the end of 2029 and the deduction for pre-letting expenditure on vacant premises to 2027, an increase to the rent tax credit from 1 January 2024 and an extension of relief for mortgage interest relief for 12 months to 31 December 2024.

Vacant Homes Tax is to increase to 7 times the existing local property tax of a relevant property and the expected changes to Residential Zoned Land Tax were included. An additional technical RZLT measure was introduced to deal with the transfer of sites liable to RZTL within a corporate tax group where those sites have been granted planning permission but no commencement notice has been lodged. The transferee company to be deemed to have acquired the site at the time it was acquired by the transferor. The transferee is the liable person for any pre-development deferred RZTL albeit the transferor and transferee are jointly and severally liable if any such pre-development deferred RZTL becomes due.

The increase in the rate of stamp duty on the bulk purchase of houses from 10% to 15% took effect from Budget Day and some technical amendments were included in the Finance Bill to ensure that the 6% rate of stamp duty should not apply on the bulk purchase of 3 or more units in an apartment block.

No new measures were introduced in relation to the tax treatment of REIT and IREF investment funds.

Who will be affected?

The extension of the HTB scheme is positive for both first time buyers and new home builders. The RZLT changes provide some relief to farmers but it remains to be seen whether large scale re-zoning will take place.

When? What to do now? 

The changes to the rate of stamp duty were effective from 1 October. The other provisions primarily relate to the extension of existing provisions.

Our view 

The changes in the rates of stamp duty continue a period of uncertainty in this space. The Finance Bill measures provide clarity on the impact of the 6% rate. We believe a long-term plan is needed which provides certainty of policy for a specified period of time to underpin longer term investment in Irish property.

RZLT has been an area of much debate leading up to the Budget and the Finance Bill does not contain any measures which were not announced on Budget Day other than a technical change to intra group transfers which had been expected. It includes provisions for farmers to seek a change in zoning to a zoning which reflects the economic activity they undertake on the land, a 12-month deferral of RZLT between the grant of planning and commencement of development and exemption during Judicial Review Proceedings brought by a third party. In our view, RZLT is still not fit for purpose as it does not address the phasing and other issues which are impediments to development i.e. a charge being imposed where a developer is not able to commence on site.

As we noted on Budget day, the Government chose direct capital investment rather than tax incentives to drive the much-needed increases in new housing delivery. While the need for the €3bn capital infrastructural investment is understood and seeks to address a key blocker to housing delivery, it remains to be seen whether this may be seen in the future as a missed opportunity in some respects that more has not been done to incentivise additional private investment.