Ireland Scraps Planning for 32-45 sqm Modular Garden Homes, Allows Rent-a-Room Scheme

Ireland's government has proposed scrapping standard planning rules for modular homes between 32 and 45 square metres in gardens, marking its latest effort to ease the accommodation crisis. This policy shift, confirmed this week, will allow these units to be rented out under the Rent-a-Room relief scheme, offering tax-free relief up to €14,000 annually.

The exemptions apply to gardens of at least 25 square metres, with the homeowner residing in the main dwelling and separate entrances required. This move is expected to relieve local authorities of minor planning applications, allowing them to focus on larger projects. Companies like Modular Homes Ireland are already seeing increased interest, with director Kevin Ward expecting production to triple by year-end.

While a recent customer saw a €75,000 modular unit add €125,000 to their property value, experts like economist Emma Howard of Technological University Dublin are cautious. Howard suggests the scheme will likely favor higher-value properties due to garden size requirements and may not significantly impact market rent prices, noting low uptake in the existing Rent-a-Room scheme. Jill O’Neill of Sherry FitzGerald advises caution on assuming full build costs will be added to sale prices, emphasizing that value increases are typically modest and site-specific, depending on design quality and impact on outdoor space.

Despite claims by proponents like Progress Ireland, backed by John Collison, that the measure could unlock thousands of beds and lower rents, Howard believes the government should focus on more effective, sustainable housing market actions. Mortgage lenders are also unlikely to consider potential rental income from these units in mortgage applications.