9% VAT for new apartment construction will speed up delivery of new homes – Murphy

The reduction in the VAT rate on new apartments kicks in tomorrow and should accelerate the delivery of new homes over the next five years, a Fine Gael Senator has said.

Senator PJ Murphy said that new apartments will be a crucial component of additional housing stock and this financial incentive to build them is what’s needed to increase supply. He was speaking after the Government passed a financial resolution to introduce the reduced VAT rate, as provided for in Budget 2026.

Senator Murphy explained: “The VAT on construction of new apartment blocks will be set at 9% from tomorrow and will be set at that rate for the next 5 years, until December 2030. This will allow it to cover the life cycle of a building project, which can stretch over a number of years. It will also incentivise builders to move on new developments which may already have planning permission, but up to now, weren’t financially viable.

“Our increasing population and evolving demographic means that a greater diversity of choice must be offered alongside adequate supply. More apartments will be part of that offering.

“These new apartments will also qualify for the ‘Help to Buy’ scheme, which should give a greater choice to those who want to own their own home.

“Government has committed to delivering 300,000 new homes by 2030. We need to acknowledge that apartments will make up a considerable share of these new homes and the 9% VAT rate should address the viability gap which currently exists between building houses and building apartments,” Senator Murphy concluded.