Introduction

As part of Budget 2027, the Government has signalled a stronger focus on measures aimed at increasing housing supply and bringing underused properties back into active use. The proposed Derelict Property Tax (DPT) is expected to form part of that wider policy agenda, reflecting a shift towards more robust identification, administration and enforcement of taxes on derelict properties. While the detailed legislation is still awaited, the announcements to date provide an early indication of how the new regime could affect property owners, investors and developers across Ireland.

What we know so far

The Government plans to introduce a new Derelict Property Tax (DPT) as part of a broader effort to tackle vacancy and dereliction and increase housing supply across Ireland. While the detailed legislation has yet to be published, Government and Revenue have already outlined several key elements of the proposed regime.

The new tax is expected to replace the existing Derelict Sites Levy and could significantly increase the number of properties subject to annual charges where owners do not bring derelict buildings back into use.

Why is a new tax being introduced?

Reducing vacancy and dereliction is now a central housing policy priority. The Government has consistently highlighted the need to reactivate existing buildings and return more homes to use, particularly in towns and cities facing housing shortages.

Under the current system, local authorities can place properties on a derelict sites register and impose an annual levy of 7% of the property's market value. However, the Government believes the existing framework does not fully reflect the scale of dereliction across the country, and that enforcement and collection of the levy have been inconsistent.

The new DPT is intended to strengthen enforcement by moving responsibility for tax collection and administration to Revenue.

 

What has been confirmed so far?

Based on public announcements, the following features are expected to form part of the new regime:

Unlike the current levy, which is managed by local authorities, the DPT will be a self-assessed tax administered by Revenue. The Government has indicated that the tax will fall within the standard tax administration framework, including provisions for collection, recovery, interest, surcharges and penalties.

The Government has confirmed that the tax rate will be no lower than the current Derelict Sites Levy rate of 7% of market value. While the final rate has not yet been set in legislation, official statements indicate it will be at least equivalent to the existing charge.

A key objective of the new regime is to broaden the range of properties captured. Approximately 2,100 properties currently appear on local authority derelict registers, but Government estimates suggest there may be close to 19,000 derelict residential properties nationwide.

As a result, the new system is expected to apply to substantially more properties than the current levy regime.

Local authorities will continue to play an important role in identifying derelict properties and maintaining property registers. Responsibility for collecting the tax, however, will transfer to Revenue.

The Government has also announced plans for a national, digitally accessible register of derelict properties, incorporating mapping information and standardised property data.

Proposed rollout

Current Government announcements indicate that local authorities will prepare and publish preliminary registers of derelict properties during 2027, with the tax expected to become operational after that.

The Government has also suggested that the initial phase may focus on larger urban centres before expanding more widely. Public comments from ministers indicate that cities and towns with populations above 4,000 could be included first, before the regime is extended to additional locations. This remains subject to the final legislation.

Key issues still to be clarified

While the direction of travel is clear, several important aspects of the regime remain uncertain until the Finance Bill and supporting legislation are published. Key questions include:

  • The precise legal definition of a "derelict property";
  • Whether residential and non-residential properties will be treated differently;
  • Valuation methodologies;
  • Exemptions and reliefs;
  • Appeals procedures;
  • Ownership verification requirements;
  • Interaction with existing local authority derelict site processes; and
  • Transitional arrangements for properties already subject to the Derelict Sites Levy.

How these provisions are designed will largely determine how broadly the new tax applies in practice and the level of compliance required from property owners.

What should property owners do now?

Although the DPT is not yet in force, owners of vacant or potentially derelict properties should keep a close eye on developments. Property owners should consider:

  • Reviewing whether any properties in their portfolio could fall within future dereliction criteria;
  • Assessing opportunities to refurbish, renovate or reactivate properties before the new regime takes effect;
  • Monitoring engagement from local authorities and the publication of property registers; and
  • Maintaining records relating to ownership, condition and occupation status that may be relevant under future compliance requirements.
  • The introduction of the DPT represents a significant shift in policy. By combining Revenue's enforcement powers with broader identification of derelict properties, the Government aims to create a stronger incentive for owners to bring unused buildings back into productive use and support Ireland's housing supply objectives.

How we can help?

Grant Thornton Ireland is closely monitoring the development of the Derelict Property Tax and the wider range of measures aimed at addressing vacancy and increasing housing supply. We can help property owners, investors, developers and local stakeholders understand the potential impact of the new regime, assess compliance obligations and identify opportunities linked to property tax and redevelopment incentives.

Get in touch with our real estate and tax teams to discuss how the proposed changes could affect your property portfolio.

About the author

Robert is a tax partner with over 15 years of experience. Robert specialises in the provision of tax advisory and compliance services to domestic and international clients including management companies, investment advisors, institutional investors, asset managers, PE houses, administrators, custodians, promoters and distributors.

Robert Fitzgerald

Partner - Tax

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