This is our Real Estate Update: a round-up of recent Irish and international legal and regulatory news. Updates in this edition include Budget 2025 including changes to stamp duty rates, the residential zoned land tax and the vacant homes tax; upcoming real estate legislation; a new draft code of practice for providers of building works; developments and initiatives for sustainable construction and the decarbonisation of buildings; and recent Irish commercial landlord and tenant cases. We also look at developments in other practice areas and sectors relevant to real estate investment.
Go to:
- Budget 2025
- Upcoming Legislation
- Real Estate Finance
- PRS and Housing
- Property Development and Construction
- Climate Change and Decarbonisation of Buildings
- Healthcare Real Estate Investment
- Irish Case Reports
- Other Practice Area Developments
News
Budget 2025
Stamp Duty Measures
As part of the Budget speech on 1 October 2024, the Minister for Finance announced the following stamp duty changes:
- An increase in the higher rate of stamp duty on bulk acquisitions of houses from 10% to 15%; and
- An increase in the rate of stamp duty applicable to residential property valued above €1.5 million to 6%.
Residential Zoned Land Tax
Landowners whose lands are in scope for the RZLT (the first payment of which is due on 1 February 2025) will be given an opportunity to avail of an exemption in 2025 if they seek to have their land rezoned to reflect the activity they carry out on their land, e.g. active farming.
The Minister for Housing, Local Government and Heritage will issue guidelines to local authorities indicating that they should consider and accommodate rezoning requests where landowners seek to continue existing economic activity.
Vacant Homes Tax
The vacant homes tax rate has been increased from five to seven times the property's existing local property tax rate. The increase will take effect from the next chargeable period, commencing this November.
Land Development Agency Funding
An additional €1.25 billion has been allocated to the Land Development Agency.
Pre-Letting Expenses Extension
Relief for pre-letting expenses for residential landlords will continue for a further three years to the end of 2027.
Help to Buy Extension
The help-to-buy scheme has been extended to 31 December 2029.
The Finance Bill, due to be published on Thursday 10 October, will contain further detail on the above measures.
Upcoming Legislation
Government Autumn 2024 Legislation Programme
Dáil Éireann resumed on 18 September 2024. Upcoming real estate legislation, as set out in the Government's Autumn 2024 Legislation Programme, is summarised in our recent Insights Briefing below.
FDI Screening
The Screening of Third Country Transactions Act 2023 was signed into law on 31 October 2023 but has not yet been commenced. The Department of Enterprise, Trade and Employment anticipates that the screening mechanism under the Act will commence operation during the latter part of Q4 2024.
Reform of Limited Partnerships Law
The General Scheme of the Registration of Limited Partnerships and Business Names Bill 2024, which will repeal and replace the Limited Partnerships Act 1907, has been published. Further detail on these reforms is available in our recent Insights Briefing here.
Nature Restoration Law
The Regulation on Nature Restoration has been published in the EU Official Journal and entered into force on 18 August 2024. The Regulation is directly applicable in all Member States.
Real Estate Finance
CRE Valuations
The ECB's Supervision Newsletter - August 2024 includes an article on Commercial real estate valuations: insights from on-site inspections. The article identifies problems the ECB inspection teams found with valuations of commercial real estate during its inspections of banks' loan books.
Mortgage Arrears
The Report of the Interdepartmental Mortgage Arrears Review Group was published in September. The Group first met in October 2023 and examined the Irish framework for dealing with PDH mortgage arrears against the backdrop of a changing interest rate environment and the increased cost of living.
PRS and Housing
Extension of Rent Pressure Zones
The Planning and Development Bill, which is expected to be enacted shortly, includes a provision extending rent pressure zone legislation to 31 December 2025. Current RPZ designations are due to expire on 31 December 2024.
New Rent Pressure Zones
The Administrative Area of Galway County Council and the Local Electoral Area of Carrigaline have been designated as Rent Pressure Zones under the Residential Tenancies Acts from 12 September 2024 to 31 December 2024. See: S.I. No. 455 of 2024 and S.I. No. 456 of 2024.
Central Bank – Economic Policy Issues in the Irish Housing Market
The Central Bank has published several recommendations to help address the housing crisis including:
- developers need policy certainty in the planning and building regulation process;
- the State needs to service more land with water and other utilities and needs to improve productivity in the sector by promoting modern methods of construction (MMC)* and standardising of designs; and
- policy levers must be used to incentivise private investment, in particular equity investment, into the Irish construction sector.
*See the NESC's report Boosting Ireland's Housing Supply: Modern Methods of Construction for further discussion of promoting MMC.
Property Development and Construction
Draft Code of Practice for Providers of Building Works
The Regulation of Providers of Building Works and Miscellaneous Provisions Act 2022 introduced a statutory register making it mandatory for all providers of building works to register with the Construction Industry Register Ireland and comply with the requirements of the Act.
A draft Code of Practice has been published and submitted to the Minister under Section 20 of the Act. A public consultation on the draft Code is open until 13 November 2024.
Amended Building Control Regulations
The Building Control (Amendment) Regulations 2024 have been made by the Minister for Housing, Local Government and Heritage.
The Regulations reinstate the obligation to submit a commencement notice and follow building control processes for the construction of dwelling houses, regardless of planning exempted development status.
The consolidated Regulations are here (note that the above Regulations have not yet been incorporated).
Compulsory Purchase
Section 47 of the Electricity Regulation Act 1999 gives the Commission for Regulation of Utilities certain powers to grant orders for the compulsory purchase of land in certain circumstances including the construction of large electricity infrastructure.
The CRU has published an application form and guidance for special orders under Section 47.
Sustainable Construction – LEED Version 5
The Leadership in Energy and Environmental Design (LEED) certification system, developed by the U.S. Green Building Council, has been a cornerstone of sustainable building practices in Ireland and elsewhere, with over 200 projects certified.
The latest iteration, LEED Version 5 (v5), is currently in consultation, and is set to be launched in early 2025.
Sustainable Construction – Cement
New guidance from the Department of Enterprise, Trade and Employment published earlier this year on the design of public projects and procurement of cement and concrete products, requires State funded building such as roads, schools and hospitals to use low-carbon concrete from 1 September 2024. The intention is to achieve a consistent approach to reducing embedded carbon in construction.
The Office of Government Procurement has added a sustainability and green public procurement area to its website to bring together resources relevant to construction.
Sustainable Construction – Circular Economy
The RIAI has published a report on Supporting the Circular Economy Transition in the Irish construction sector. It sets out a roadmap of short, medium, and long-term actions, as well as several case studies.
Climate Change and Decarbonisation of Buildings
National Energy and Climate Action Plan
Ireland has submitted its draft updated National Energy and Climate Plan (NECP) as required by the EU Governance of the Energy Union and Climate Action Regulation. The NECP is required to outline how Ireland will meet its commitments under the Renewable Energy Directive, Energy Efficiency Directive, Energy Performance of Buildings Directive, and Effort sharing Regulation
Future Ireland Fund and Infrastructure, Climate and Nature Fund
The Minister for Finance, Jack Chambers, has signed the commencement order to officially establish the Future Ireland Fund and Infrastructure, Climate and Nature Fund. This follows the enactment of the Future Ireland Fund and Infrastructure, Climate and Nature Fund Act on 18 June 2024.
Funding for Retrofitting HSE Buildings
Funding of €48 million has been announced under Ireland's National Recovery and Resilience Plan for an investment into a HSE Pilot Energy and Decarbonisation Pathfinder Project.
About 1 in 5 buildings in the public sector are healthcare buildings. The SEAI/HSE Pilot Energy and Decarbonisation Pathfinder Project is the first deep retrofit of HSE sites with the funds being directed to five HSE sites: Lusk Community Nursing Unit, Baltinglass Community Nursing Unit, Clonakilty Community Nursing Unit, Midlands Regional Hospital Mullingar and Our Lady of Lourdes Hospital, Drogheda.
Energy Performance of Buildings Directive – Implementing Legislation
The Government's Autumn 2024 Legislation Programme lists the Energy Performance of Buildings Bill for priority drafting in this session. The programme describes the Bill's purpose as: To partly transpose the requirements of the recast Energy Performance of Buildings Directive.
Ireland must transpose the Directive by 29 May 2026 (though there is an earlier deadline of 1 January 2025 prohibiting certain support for boilers powered by fossil fuels). See our Q&A briefing on the Directive here.
UK BBP Net Zero Carbon Building Standard
The UK Better Buildings Partnership (BBP) has launched a pilot version of the Net Zero Carbon Building Standard, which can be downloaded here: www.nzcbuildings.co.uk.
The voluntary standard sets out what individual buildings must achieve to stay within the built environment 1.5°C carbon budget and will provide a consistent approach to assessing whether a building can be defined as ‘Net Zero Carbon', which can then be used as the basis for verification by other independent bodies.
EV Charging
227 sports clubs, ranging from golf to GAA, have been deemed eligible to progress to the delivery phase of the Shared Island Sports Club EV Charging Infrastructure Scheme.
See: Over 220 Sports Clubs Eligible for new EV Charge Points (www.gov.ie).
Healthcare
Healthcare (Miscellaneous Provisions) Act 2024 Commenced
All sections of the Healthcare (Miscellaneous Provisions) (No.2) Act 2024, save for Section 16 on Compliance Notices, were commenced on 23 September 2024. The Act strengthens the regulatory framework for nursing homes and residential care facilities for people with disabilities and children and amends the Nursing Home Support Scheme Act 2009. See our July update for a summary of the measures in the Act.
Cases Round Up
Irish Cases
Commercial Landlord and Tenant – Statutory Renewal Rights
The case of Howard and Ors v Crown Paints Ireland Limited [2024] IECC 10 illustrates the importance for landlords of progressing statutory renewal claims in a rising market. The Circuit Court held that the tenant could claim a new tenancy, continue to pay the passing rent for several years, and then withdraw the claim thereby avoiding having to pay the (higher) market rent for the intervening period.
For more, see our Insights Briefing here.
Commercial Landlord and Tenant – Fixtures
In RGRE Grafton Ltd v Bewley's Café Grafton Street Ltd [2024] IECA 199 the Court of Appeal varied McDonald J's High Court ruling concerning whether the windows designed by Harry Clarke were landlord's or tenant's fixtures.
The court upheld the ruling that the four windows in the external wall were part and parcel of the premises. The court overruled McDonald J's ruling that the other two windows, which formed the inner layer of a double fenestration system, were tenant's fixtures.
Planning – Constitutionality of Section 28 Guidelines Upheld
The Supreme Court has unanimously dismissed an appeal challenging the constitutionality of Section 28(1C) of the Planning and Development Act 2000.
Other Practice Area Developments
Updates in our August 2024 and September 2024 Infrastructure, Construction & Energy Horizon Scanner include:
| Sector | Highlights |
|---|---|
| Construction & Engineering |
|
| Energy |
|
| Transport |
|
Our September 2024 and October 2024 Finance Horizon Scanners include updates on:
- legislation for the dissolution of NAMA.
- key upcoming finance-related legislation.
- a potential amendment to the Financial Services and Pensions Ombudsman (Amendment) Bill which will be important in the context of loan sales.
Our Corporate and M&A
Update includes updates on:
- the Companies Act (Corporate Governance, Enforcement and Regulatory Provisions) Bill which, amongst other measures, will replace the so-called ‘interim fix' for the execution of documents by a company under seal, previously available between August 2020 and December 2022 (during the COVID-19 pandemic), on a permanent footing;
- the commencement of changes to the test for reckless trading in the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024;
- changes to charities legislation;
- the Corporate Sustainability Reporting Directive which requires certain companies to regularly disclose information on their societal and environmental impact – a detailed summary of the key provisions of the Irish Regulations which transpose the CSRD is available in our Briefing here: CSRD: Transposition into Irish Law)*;
- the Corporate Sustainability Due Diligence Directive which imposes due diligence obligations on large companies regarding impacts on human rights and the environment from their own operations, those of their subsidiaries and those carried out by their business partners – for more information on the CSDDD, including the scope, timing of application, climate transition plans and the due diligence process, see our Briefing: New Due Diligence Obligations for Corporates Enter into Force)*;
- the EU Deforestation Regulation which will require operators and traders to comply with new due diligence obligations, to ensure that certain products traded on or exported from the EU market are “deforestation-free” from 30 December 2024 – for more, see our Insights: EUDR: New Supply Chain Obligations for Relevant Commodities and Products.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
