The Chartered Institute of Building (CIOB) has released a statement regarding yesterday’s announcement of the new Irish budget
The Irish construction budget 2026 has focused primarily on making business easier to conduct in the country in a time of global economic uncertainty.
The changes to taxes, VAT, etc. all aim at three primary objectives, to increase the housing supply, protect jobs, and protect growth.
Housing is a key issue in Ireland, that needs urgent attention according to industry bodies.
New policies will affect taxes for homeowners as well as for work on housing
One of the key policies is a corporation tax deduction for apartment construction costs, making the maximum amount of additional deduction €50,000 for each apartment in developments with 10 or more apartments.
Furthermore, an extension has been granted to the Living City Initiative, to 2030. The initiative means that if an enterprise carries out work on residential properties built before 1975, financial relief up to €300,000 will be available.
CIOB react to construction and housing policies
The contents relating to construction and housing in the CIOB budget statement are below:
Construction
In terms of interventions targeting the construction sector specifically, we welcome the reduction of VAT on the construction of new apartments: the VAT rate is lowered to 95% (from 13.5%) on new apartments, effective as of Wednesday 8 October 2025, and the measure will last until 31 December 2030.
However, we are concerned another opportunity to bring the tax system into line with Ireland’s climate targets as outlined in the Climate Act has been missed. Rather than incentivising sustainable construction practices, Ireland’s VAT structure places demolition and rebuild on parity with renovation and retrofit by charging both at the reduced rate of VAT – 13.5%.
This VAT structure is facilitating a culture of demolish and rebuild, rather than add, transform, and reuse in the construction sector; and this is reflected in the increasing rates of embodied carbon emitted by the construction sector. The CIOB is calling for a reform of VAT, such that the carbon-hungry activity of demolition is disincentivised, and the sustainable option of reuse and retrofit is incentivised.
Housing
We welcome the government’s ongoing commitment to public spending on housing, particularly where it leads to direct building of housing. As part of Budget 2026, the Department of Housing will receive €11.3bn, of which €7.2bn is earmarked for capital projects (new-build social homes, acquisitions). Within that, €2.9bn is for new build social homes and acquisitions, €140m for retrofit of social housing, and €130m for retrofitting older persons’ homes.
However, in policy terms, the CIOB does not support the extension of the Help to Buy scheme. Demand-side measures of this sort, particularly in the context of constrained supply, have an inflationary impact on house prices. The CIOB has repeatedly made the case to government that policy intervention should focus on the early stages of the development process, specifically land acquisition and preparation.
Help to Buy does nothing to address a dysfunctional land market in which developers are forced to bid inflated prices for land and make up for this inflated outlay by driving down costs – typically on quality, design, and tenure later in the building process. We urge the Government to focus policy intervention on the land market, rather than downstream demand-side measures like Help to Buy.
The CIOB reaction to the full budget can be found here.
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