Housing for All? Why Budget 2025 signalled housing will be the key battleground in the upcoming election

There is no doubt that one of the key battlegrounds if not the key battleground for the upcoming election (and the long-awaited date for that may have been announced by the time you read this) is going to be housing. 

Jack Chambers, who delivered his first Budget speech as Minister for Finance, alongside the returning Minister for Expenditure, Paschal Donohoe, made it very clear with their announcements on 1 October that they understand this. With speculation about a potential election in late November, all three parties in the coalition aimed to highlight their commitment to infrastructure and housing in Budget 2025. The substantial funding allocation serves as a cornerstone of the Government’s Housing for All policy, which will likely form the basis of key arguments for re-election

Housing at the forefront

It became clear by the time that Minister Donohue had sat down in the Dáil on 1 October that housing was the central focus of Budget 2025, with nearly €8bn allocated to the Department of Housing. Housing is a key issue for the electorate and the Government’s desire to resolving the housing ‘crisis’ is evident in the substantial funding dedicated to this area. 

So what else was revealed or reconfirmed on 1 October? Our team at Baker Tilly highlighted six specific initiatives relating to the housing market that were a key part of Budget 2025 which will also be front and centre of the upcoming election campaign. 

Spending the €3 billion from AIB share sales

One notable aspect of the budget was the allocation of €3bn obtained from the sale of Allied Irish Banks shares. As well as cash allocated to Irish Water and the National Grid it was announced that €1.25bn would be given to the Land Development Authority for housing development. 

The Government outlined a roadmap for how future windfall receipts, including those from future bank share sales, might be allocated, emphasising a strong commitment to infrastructure spending. This investment is critical for achieving Ireland’s ambitious housing targets, with all agencies and commentators signalling that 60,000 new housing units will need to be completed annually to address the chronic undersupply. 

However, despite these good intentions, planning delays and increased building costs remain significant constraints to meeting these targets.

Extension of the help to buy scheme

One welcome announcement made by the Minister of Finance was that the Help to Buy scheme, which offers an income tax refund of up to €30,000 for first-time buyers of new builds, has now been extended. This was originally set to expire on 31 December 2025, but the Government confirmed that the scheme will now continue until 31 December 2029, which will be welcomed by potential first-time buyers as well as the building industry to help bring additional housing supply onto the market. 

Over 50,000 individuals have benefited from this relief since its inception in 2017, and its extension aims to continue this trend which we wholeheartedly support. 

Increase in the vacant homes tax

Again, we were pleased to see the announcement from the Government that the Vacant Homes Tax that was introduced last year has been increased from five times the Local Property Tax to seven times its value, encouraging property owners to bring empty properties to the market. We welcome the broad intentions of this move intending to reduce the number of vacant homes unless there is a valid reason for them to be empty and thereby increase the supply of homes available for rent or purchase. 

Rental property tax measures 

The government also announced in the Dáil that for landlords, an allowance for pre-letting expenses will remain a taxable deduction until the end of 2027. Additionally, tenants will benefit from an increase in the rent tax credit, which will rise from €750 to €1,000 for both 2024 and 2025. Both these measures are helpful in providing support to both tenants and landlords in the rental market. 

Initiatives of this kind are certainly needed, with no end in sight to the ongoing house inflation and rental increases in the private sector across Ireland and especially in our cities which continue to be a headache for the Government, especially given the looming election. The title of the most expensive rental market in Europe is not one that any political party in power wishes to shout about from the rooftops

Mortgage interest relief 

This time the relief was for homeowners, not those in the rental market. The temporary mortgage interest tax relief provision that was introduced in Budget 2024 was intended as a one-off cost-of-living measure that was designed to expire at the end of last year. However, the break that is intended to help borrowers cope with high-interest rate payments has been somewhat surprisingly extended for one year, despite recent actions taken by the ECB to reduce the overall cost of borrowing. The rules remain the same as before with a maximum value of the relief at €1,250 per property

New stamp duty rates and the 'Mansion Tax'

One of the surprises in Budget 2025 was the introduction of new stamp duty rates for residential property. The changes were as follows: 

• The existing 1% rate on the first €1m and 2% on the excess remains. 
• A new 6% rate applies to property values exceeding €1.5m, dubbed the “mansion tax” by the media. 

This could significantly impact buyers of high-value properties which, given the relatively small numbers of people involved, is likely to be on balance a vote winner. Cynics have also suggested that with house prices rapidly increasing again in Ireland the increase would have less real impact than might have been supposed. Additionally, the stamp duty rate on bulk purchases of 10 or more residential units has increased from 10% to 15%. This measure aims to discourage institutional investors from acquiring large housing developments, which hopefully means that there is greater availability for individual homebuyers. 

Conclusion 

Whether or not you agree with the argument that Ireland faces a housing crisis, there is no doubt that Budget 2025 placed housing at the heart of its strategy, with significant investment and policy changes. While the Government’s commitment is evident, the challenges of planning delays, rising costs, and ongoing inflation mean that effective implementation will be crucial. Regardless of the years ahead, this autumn — through the extension of tax reliefs, the introduction of new tax bands, or the commitment to infrastructure development — the Government has made a clear decision to position itself as focused on meeting the country’s housing needs while looking ahead to the election and beyond. Success or failure in this will be critical for their future success.