Expert commentary:

Budget 2021: Real Estate and Construction

14 October 2020

Derek Henry, Tax Partner and Head of the R&D Tax Services group provides a breakdown of the measures and supports announced in Budget 2021 that are of relevance to the Real Estate and Construction.

Stamp Duty -Review of the residential development stamp duty refund scheme


Section 61 Finance Act 2017 introduced section 83D of the Stamp Duty Consolidated Act 1999. The scheme was introduced to provide a refund of the stamp duty paid by the purchasers of non-residential property that was subsequently developed as residential. Purchasers of non-residential property pay stamp duty at the rate of 7.5% (6%) whereas residential property attracts a rate of 2%.  The scheme effectively refunds the amount of stamp duty to the land purchaser to the extent that their effective rate of stamp duty is reduced to the 2% residential rate of stamp duty. The purpose of the scheme was to encourage developers to help address the housing crisis by converting non residential land into residential land thus creating extra housing capacity. There are a number of conditions that are required to be met to avail the relief in particular the following criteria:

  1. Specified Proportions- To encourage the efficient use of the site a specified proportion of that site must be developed for housing. The proportion of the site that must be used for residential is subject to two alternative tests that need to be satisfied. Either 75% of the area of the site must be occupied by housing or the gross floorspace of the housing units constructed must account for at least 75% of the area of the site.
  2. Time Limits- currently to be eligible for the refund, construction must begin before the end of 2021 and be completed within two years of the commencement.

The Minister for Finance directed the Department of Finance to carry out a review of the above relief to ensure that it has met its intended aims and is still appropriate.

The review noted the take up since its introduction in late 2017 has resulted in 1,984 applications with €17.2 million being refunded to date. It was noted that 92% of the applications were in relation to single dwellings, however, this only represented 25% of the amount refunded. The remaining 151 applications were in relation to multi unit developments and accounted for 75% of the total refund paid out.

Industry Submissions

Industry bodies representing the construction industry outlined the issues with the two criteria outlined above as follows;

  1. Specified Proportions- in relation to the floor area requirement, it is felt that it was appropriate with multi story units as each floor will count towards the floor area. However, on more traditional housing estates these proportion requirements have caused issue where green areas, pathways and roads have been included as non-residential area when calculating the percentage of use for residential purposes for the intention of the test. 
  2. Time Limits- In relation to the two year window from commencement to completion, it was submitted that this time limit is a challenge for large scale single phased developments completed under a single commencement notice. Furthermore, it was a more serious issue for multi-phase developments where, although each phase may be completed under a separate commencement notice, there was uncertainty in cases where the multi-phase development is completed on a single podium or underground carpark. It was submitted that a 4 year window would be more appropriate.


The report recommends that the current requirement that no more than two years can elapse between commencement and completion of an eligible construction should be extended to 2.5 years as a response to once off delays imposed by the COVID-19 shut down, the effect of the revised work practice on the pace of construction and the issue with the phased construction raised by the industry and also to allow for a much more generous timeframe for the completion of physical building work which can be subject to considerable unforeseen delay.

It was further recommended that the refund scheme be extended to include construction operations commencing before the 31st of December 2022 and completed before the 30th of June 2025 being 2.5 years after commencement in line with the above recommendation.

The review recommended that no change be made to the time allowed between acquisition and commencement. It is also recommended that no change be made to the 75% test set out as the efficient use of land remains a key objective the scheme. On this point, where planning and/or local area plans are causing issues the review recommends that developers should engage with local authorities and/or Department of Housing Local Government and Heritage to seek to resolve the issue.


The review concludes that the scheme has been successful In encouraging the prompt and efficient use of suitable non residential land for high density housing. It concludes that the success of the scheme can be shown by the delivery of 8,579 new housing units. It is felt that the 75% test from the floor area is encouraging the more efficient use of space including modern three story terraced housing in addition to apartments and high rise developments . The review concludes that the floor space requirement should not be diluted. It notes that the proposed timeline extension would provide certainty for the housing industry particularly in light of the ongoing impact of the COVID-19 pandemic.

Minister for Finance action in response to the Review

The Minister for Finance in his speech has confirmed that it is his intention to extend the operation of the scheme to the 31st of December 2022 and to allow the time between commencement and completion of qualifying projects to be extended by six months to 2.5 years. These are in line with the above recommendations of the review.

BDO Observations

It is a little disappointing that the submissions in relation to discounting green areas, footpaths and roads from the calculation of the 75% usage criteria were not given a more favorable response. To create modern healthy environments for residential units a certain amount of green area is desirable. These criteria could have unintended consequences for the development of a scheme. This could have been easily addressed with appropriately worded legislation and the suggestion that developers should work with their local authorities in relation to the matter is likely to introduce delays in the commencement of schemes which would be contrary to the aim of encouraging speed of development.

Help to Buy Scheme

It is welcomed that the Help to Buy scheme has been extended to the end of 2021 and the enhanced elements of the scheme introduced by the July stimulus (10% of cost or €30,000 up from 5% and €20,000) have also been extended to this date.

Accelerated Capital Allowances for Energy Efficient Equipment

Following a review by the Department of Finance and following the recommendation of that review the Minister for Finance announced that accelerated capital allowances for energy efficient equipment will been extended by 3 years to 31 December 2023.