While the impact, if any, on the housing crisis of the Government’s proposal to exempt free-standing modular homes in back gardens from planning permission won’t be known for some time yet, the plan, unsurprisingly, continues to generate debate and divide opinion. Where its proponents might see a possibility, its opponents will invariably point to an unintended consequence.
While the Government plans to include modular homes in the rent-a-room tax exemption under which homeowners can earn up to €14,000 a year in tax-free rental income, they will be treated as independent structures and assessed accordingly for taxation purposes.
Confirmation of the tax authority’s intention to pursue the collection of separate local property tax payments for both the homeowner’s principal residence and the modular home in their back garden was provided to the chief executive of the Institute of Professional Auctioneers & Valuers (Ipav), Genevieve McGuirk, when she asked Revenue last week to clarify its position on the matter.
In a statement it said: “Many property owners have garages, greenhouses, modular cabins and other structures on the site of their home, all of which should be included when the property owners are making a true assessment of the correct value of the property.
“However, if one of those structures on the grounds of the property is permanent in nature and is suitable for use as a separate dwelling in its own right, for example a garage converted into an area that can be used as a dwelling, a separate LPT charge then applies to that structure as it constitutes a property liable to LPT.
“Similarly, a modular home that is in use as, or is suitable for use as, a dwelling, will be liable to LPT in its own right and required to have its own property ID and be valued independently.”
While property industry experts have estimated that a high-quality modular home could be constructed for about €100,000, the value of the back-garden site will likely have a more significant bearing on the amount due for such a structure under the LPT.
Local property tax is charged in progressive bands with homes valued at between €1-€240,000 billed, for example, at €95 a year, rising to €235 a year for homes valued between €240,001-€315,000.
Other charges, which homeowners thinking about building a modular home under the exemption should consider, are increases to both their mortgage and home insurance premiums.
As McGuirk points out, where you could be currently paying insurance premiums to cover a home with a value of €600,000, it may rise to about €700,000 when a modular home is added. Failing to alter your house value to include the addition of a modular home with your insurance company could result in you not receiving full cover on your main house should you need it, she says.
“The addition of a self-contained annex in your garden or on your lands could also be problematic when selling your home,” says Society of Chartered Surveyors Ireland (SCSI) president Gerard O’Toole, “as mortgage providers will generally not provide a mortgage on two properties.”
Additionally, confusion between planning permission and building regulations – “with many homeowners mistakenly believing that being exempt from planning permission also removes the need to comply with building regulations” – will need to be addressed, he says.
The Irish Times has asked property industry experts to give their take on the proposal to exempt modular homes from planning permission – taking property value, standards and potential income into account.
Genevieve McGuirk, chief executive of Ipav
Genevieve McGuirk, chief executive of Ipav: ‘It needs to be seen as just one element in a wider housing policy mix’
While the regulations have not yet been published, it does seem the idea has, potentially, great merit for various strata of society – young family members as a first step towards independence, other family members seeking independence who cannot afford to buy or rent, and for older generations who want to “rightsize” and stay within a family context.
In this regard, the proposal can be seen as promoting intergenerational living, which has been severely challenged by affordability and buyers having to move further from cities to be able to buy. It will likely also provide an income source for individual property owners and temporary rental accommodation outside of strict RTB (Residential Tenancies Board) legislation.
Some of these will be short-term, some more long-term in nature. The term will be decided upon by owners rather than being regulated by the State. It needs to be seen as just one element in a wider housing policy mix and, in that context, it will help.
How these regulations are framed in the first instance and, critically, how they are monitored will be crucial to their success or otherwise. Planning has, traditionally, been strict at one level but unimplemented at another. Think of the big fire safety deficits that the State is now having to fund, not because it didn’t have the right policy in place, but because it didn’t monitor and control the implementation of its own planning rules.
Lots of questions have yet to be answered. Under the proposed new policy, will a cert of compliance need to be submitted to the local authority for the development to be deemed an exempt structure? And how is this going to be monitored for compliance?
In terms of property values, where a high-quality, compliant unit creates legitimate rental income or multigenerational living space, it will attract wider market appeal and values.
Regarding neighbouring properties, it is to be hoped that the regulations will be firm enough to not adversely or unduly impact neighbours, and this seems to be the plan with the requirement that 25sq m of space should remain around the modular home.
However, exempt development reduces predictability. The size of the garden remaining could have a negative or positive impact on the value. Problems may arise with neighbours, where there are design and overlooking issues, and if it falls to local authorities already at maximum capacity to control, that could create difficulties.
In urban areas there are likely to be planning and infrastructure risks, leading to cumulative impacts on parking requirements, sewerage and water if uptake is strong in certain areas. As it falls under the category of a residential property suitable for use as a dwelling, there will be a local property tax liability.
Ultimately, modular homes should succeed or fail on the quality of the framework around them. Used to support family and intergenerational living, they have clear merit. Used as an unregulated rental product, they risk repeating well-documented failures in housing oversight. If the State proceeds, it must be explicit about use, tenure, compliance and enforcement from the outset. Without that clarity, a well-intentioned measure could quickly undermine housing standards rather than enhance them.
Keith Lowe, chief executive of DNG
Keith Lowe, DNG: ‘Government policy should be more in favour of home ownership’
The planning exemption for modular homes in owner-occupiers’ back gardens is cautiously welcomed. However, it is unlikely to ease the housing crisis in any meaningful way.
There are a number of practical considerations. The provision of modular homes could prove problematic if construction does not fully comply with building bylaws and fire safety regulations, potentially leading to substandard accommodation. Homeowners will also need to consider the impact on their insurance, which may not automatically extend to a separate residential structure.
From a planning perspective, while the exemption streamlines delivery, it also limits the ability of neighbouring properties to object, which may become a point of contention in more densely populated areas.
In value terms, the impact can be positive but only where it is done properly. A well-designed, high-quality modular home that respects privacy, does not overlook the main house and retains a usable garden will enhance the overall property value. Conversely, a poorly constructed modular building that dominates the site, reduces garden usability or impacts on privacy will negatively affect value. That said, one advantage is that such units could be removed before sale, restoring the property to its original state with full garden size in place.
From an owner’s perspective, particularly those seeking additional income, the proposition is compelling. If a high-quality modular home costs in the region of €100,000 and can achieve a rent of €1,166 per month (€14,000 annually), that represents a 14 per cent tax-free return, which is significantly more attractive than leaving the same capital on deposit. By comparison, €100,000 in a bank earning 2.5 per cent generates just €2,500 annually before tax. For many homeowners, this is a straightforward decision.
One of the key upsides of the change is the streamlining of the planning system, allowing local authorities to focus more of their resources on delivering larger-scale housing and critical infrastructure, which is ultimately where the real solution to the housing crisis lies.
Marian Finnegan, chief executive of Sherry FitzGerald
Marian Finnegan, chief executive of Sherry FitzGerald: ‘Exempting free-standing modular homes from planning permission should be approached cautiously’
While any measure that increases housing supply is welcome in the current crisis, exempting free-standing modular or cabin-style homes from planning permission should be approached cautiously.
The planning system provides structure and legal certainty by ensuring developments comply with zoning, safety and environmental standards, which in turn helps protect property values and market confidence. Removing this oversight could lead to poorly located or substandard units, with unintended long-term impacts on neighbourhood character, infrastructure capacity and appropriate urban density.
That said, in terms of property values, well-designed modular units can be an attractive addition, for example providing flexible space for home working, guests or multigenerational living, but any uplift is typically modest and highly site-specific. The effect will depend heavily on design quality, access and services, integration with the main dwelling, and particularly the impact on usable outdoor space, which remains a key driver of value for many buyers.
As such, exempting stand-alone modular homes from planning permission could boost supply in the short term but removing planning oversight risks substandard or poorly sited units that may harm neighbourhoods and confidence.
Gerard O’Toole, president of the Society of Chartered Surveyors Ireland 
Gerard O’Toole, president of the SCSI: ‘The benefits of these exemptions depend on adherence to standards’
The Society of Chartered Surveyors Ireland (SCSI) supports the principles of the new planning exemptions for detached exterior dwellings and exemptions for subdivision of principal dwellings. The SCSI is of the view that this will ease administrative pressures on local authorities and enable them to focus their planning resources on larger, more complex applications.
However, the benefits of these exemptions depend on adherence to standards. The exemptions, which also include attic conversions, will only be realised if implemented alongside existing robust safeguards that maintain quality, safety and compliance.
We believe there remains widespread public confusion between planning permission and building regulations, with many homeowners mistakenly believing that being exempt from planning permission also removes the need to comply with building regulations, building control, fire safety or other statutory requirements. We recommend that the Department of Housing publishes a comprehensive guidance document so that homeowners can make informed decisions before availing of these exemptions.
There is a noticeable increase in the use of modular units, and from an MMC (modern methods of construction) perspective, quality assurance is critical. Poor handling, storage or installation of modular units can compromise durability and performance, underscoring the need for consistent standards and oversight.
Therefore, we also propose introducing commencement notices for these exemptions to ensure the relevant authority retains oversight and maintains an up-to-date record of exempted works.
There should also be a limit of a single unit per site to avoid cumulative overdevelopment.
Every situation will be different and it is too early to determine the impact on property values. However, the addition of a self-contained annex in your garden/on your lands can be problematic when selling as mortgage providers will generally not provide a mortgage on two properties. Moreover, there may be some concerns about the long-term durability of such modular homes in an Irish climate and this may also adversely impact on values.
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