Homeowners across Ireland could soon earn up to €14,000 a year tax-free by renting out modular homes in their back gardens, under new proposals set to go before Cabinet.
The plan, being brought forward by Housing Minister James Browne and Minister of State John Cummins, would allow for planning exemptions on modular units of up to 45 square metres, provided they meet strict building regulations and standards.
Under the proposals, homeowners must be living in the main property, while the modular unit must have a separate entrance, appropriate distance from the primary dwelling, and be built in a garden of at least 25 square metres.
A key element of the scheme is an expansion of the existing Rent-a-Room relief by Tánaiste and Finance Minister Simon Harris, which would allow homeowners to earn up to €14,000 annually tax-free from renting out these units. However, any income above that threshold would be fully taxable.
Speaking ahead of Cabinet discussions, Simon Harris said the move is aimed at cutting red tape and giving homeowners greater flexibility. “I think it’s important that we take the planner out of the back garden, and that we enable planners to be freed up to work on critical infrastructure… and provide people in this country with a degree of flexibility around what they choose to do with their own garden,” he said.
He added that while the measure is designed to help address the ongoing housing crisis, it will be kept under close review.
“There is a housing emergency… we have to remove bureaucracy and administration and red tape and make it as easy as possible for people to be able to have homes,” he said, confirming a formal review after 18 months will be built into the legislation.
The proposals would also allow these modular homes to be rented under a licensing agreement, rather than traditional tenancy arrangements, with further planning exemptions expected to include home extensions of up to 45 square metres and the addition of self-contained units attached to existing houses.
Additional changes could see new allowances for cycle and bin storage, enabling space for up to four adult bicycles or three wheelie bins at both the front and rear of properties.
James Browne said the initiative is not about hitting housing targets, but rather about making it easier for homeowners to use their existing space. “There’s no target here… this is about really facilitating people in their own homes… it’s about reducing the burden. It’s about simplification,” he said.
Taoiseach Micheál Martin also backed the proposal, saying existing infrastructure such as water and electricity networks should be able to cope.
He pointed to ongoing investment in EirGrid and Irish Water, while acknowledging the scale of the housing challenge. “There are very serious challenges in housing… anything that takes pressure off the rental market is a positive environment,” he said.
However, the plans have already drawn criticism.
Sinn Féin housing spokesperson Eoin Ó Broin warned the scheme could lead to a rise in poor-quality accommodation and a lack of tenant protections. “Not only do we have the possibility of the proliferation of large volumes of poor-quality modular units, but the Government is proposing that these people will have no tenancy rights whatsoever,” he said, calling for full scrutiny of the proposals.
In response, Fianna Fáil housing spokesperson Séamus McGrath insisted the scheme would not be loosely regulated. “There will be a certification process… and there will be a notification system in place to the local authority as well,” he said, adding that the initiative is simply an extension of a scheme that already works well for renters such as students.
If approved, the measures could mark a significant shift in how residential space is used in Ireland, offering homeowners a new income stream while potentially easing pressure on the country’s strained rental market.
