The housing crisis: How tax policy could help

Ireland’s housing deficit is estimated at around 250,000 units – a shortfall built up over recent years. Clearing that backlog over the next decade would require 25,000 additional homes per year, on top of the 35,000 new homes needed annually to meet ongoing demand. In total, that means 60,000 homes per year would need to be delivered for the next ten years to both close the gap and meet current needs.

The updated National Development Plan (NDP) Review 2025 commits €275 billion in capital investment between 2026 and 2035, including €112 billion for projects from 2026 to 2030. It targets critical sectors like transport, energy, housing and healthcare to address infrastructure deficits and boost economic growth. The plan also proposes measures to accelerate delivery, including potential fast-tracking legislation. However, even with this level of investment, the plan’s success in addressing Ireland’s infrastructure and housing challenges, will ultimately depend on one critical factor: labour availability.

With unemployment forecast to remain around 4.6% through 2026 – effectively full employment – the question arises: who will build these homes?

To deliver on our housing ambitions, Ireland must look beyond domestic capacity and create incentives to attract skilled construction workers from abroad. The tax system alone cannot solve the housing crisis, but targeted tax and immigration measures could play an important role in expanding the available workforce.

Proposed measures

1. Income tax – special regime for foreign construction workers

• Double the standard rate band
• Exempt from USC
• Reduce benefit-in-kind (BIK) on employer-provided accommodation by 50%
• Exempt BIK on employer-funded travel (arrival, one annual holiday, and return)
• Limit eligibility to two years, after which normal taxation applies

2. Work permits

• Fast-track processing for non-EU construction workers

3. VAT

• Apply a 0% VAT rate on accommodation provided by hotels or guest houses to foreign construction workers qualifying under the special tax regime

These targeted incentives could help address the skills and labour shortages that currently constrain housing delivery. Without expanding the construction workforce, even the most ambitious funding plans will fall short of their targets.