Published: October 2025
Author: Amergin Consulting Ltd.
Target Audience: SME Owners, Property Managers, Financial Directors
Book a meeting: https://calendly.com/amergin-group_free/30min
Executive Summary
Budget 2026 signals a major shift in Ireland’s property and development landscape — with new measures designed to revive construction, repurpose vacant sites, and ease costs for small developers and business tenants.
For SMEs, this means new opportunities but also new compliance obligations.
The key takeaways:
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9% VAT rate now applies to new apartment construction until 2027 — a lifeline for small builders and investors.
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The Derelict Property Tax officially replaces the old Site Value Tax from 2026, tightening rules on long-vacant sites.
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Accelerated capital allowances and planning incentives aim to unlock underused buildings for commercial and residential conversion.
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Green retrofit grants and local authority funding schemes expand to help businesses improve energy efficiency in owned or leased premises.
Whether you’re a small property investor, landlord, or tenant planning your next lease renewal, these changes can shape your costs, valuations, and opportunities for 2026 and beyond.
1. The 9% VAT Rate – A Shot in the Arm for Apartment and Mixed-Use Projects
The standout measure from Budget 2026 is the temporary reduction of VAT on new apartment construction to 9%, effective from 1 January 2026 until 31 December 2027.
The Government’s goal is clear: to accelerate residential supply, especially in urban centres where apartment projects have stalled due to high costs.
For SME developers and contractors, the VAT cut can significantly improve project viability. A €3 million apartment project previously subject to 13.5% VAT will now save roughly €135,000 in VAT costs — improving margins and cash flow.
For mixed-use developments (e.g. ground-floor retail with apartments above), Revenue guidance confirms that the 9% rate applies to the residential portion only, while the commercial component remains at 13.5%. SMEs involved in such projects should maintain clear cost segregation in their records to apply the correct VAT treatment.
If you’re a property investor considering small-scale development or refurbishment, this window is worth exploring. With inflation pressures easing and credit conditions improving, the 2026–2027 period may offer the most favourable build costs seen in years.
2. Derelict Property Tax – Out with the Site Value Levy, In with Active Use
From 2026, the old Residential Zoned Land Tax (RZLT) and Vacant Site Levy systems are replaced by a unified Derelict Property Tax (DPT) — part of the Government’s “use it or lose it” approach to property.
Under the new regime:
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The DPT applies to vacant or derelict buildings that have been unoccupied for more than two years.
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The annual charge is set at 5% of the property’s market value, assessed by Revenue in partnership with local authorities.
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Owners will receive an annual notice of inclusion on the Derelict Property Register and have 30 days to appeal before charges apply.
For SMEs that own older or underutilised premises — for example, a warehouse, former retail unit, or inherited property — this is a wake-up call. Holding unused property will now carry a real financial penalty.
However, the policy also includes new repurposing supports: local authorities can offer planning priority and capital grants for bringing derelict properties back into commercial use. This could mean converting an old shopfront into coworking space, an empty upstairs flat into short-term rental, or an industrial unit into a small logistics hub.
Amergin’s advice: audit your property portfolio now. If you own vacant assets, evaluate whether to sell, lease, or redevelop before DPT assessments begin in mid-2026.
3. Capital Allowances and Refurbishment Incentives
Budget 2026 enhances the Accelerated Capital Allowance (ACA) regime for refurbishment and green retrofits. SMEs can now write off 100% of qualifying building upgrade costs in the year incurred (previously spread over eight years).
Eligible works include:
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Energy-efficient lighting and heating systems.
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Structural works to restore safety or accessibility in older premises.
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Conversion of disused upper floors to residential or mixed use.
The change applies to expenditure from 1 January 2026 and aligns with the expanded SEAI and Local Enterprise Office (LEO) energy grants.
For SMEs occupying older premises, this means faster tax relief on essential works. For landlords, it enhances the return on renovation projects. Combined with green grants (up to €8,000 for SMEs through the Energy Efficiency Voucher), these supports substantially reduce the payback period for sustainability investments.
4. A Push for Town Centre Renewal and SME Space
Another strong Budget theme is town-centre regeneration. Local authorities will receive €120 million in Urban Renewal Funding to help refurbish vacant high-street units and make them available to SMEs at reduced rents.
For small retailers, hospitality operators, or service providers, this could open new options for affordable premises in revitalised urban areas. Many local councils will operate competitive application rounds for “meanwhile use” grants and low-cost fit-out loans in 2026.
This policy not only supports local economies but could also drive lower commercial rent averages as more refurbished stock enters the market. SMEs looking to relocate or expand should watch council announcements in early 2026 for eligibility details.
5. Implications for Tenants and Owner-Occupiers
Even if you don’t own property, these Budget measures may affect your costs and negotiating position:
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Lower build costs could stabilise or reduce rent pressures, particularly in mixed-use developments.
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Refurbishment grants and green allowances may encourage landlords to upgrade older buildings — potentially improving comfort and energy efficiency for tenants.
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Derelict Property Tax may push some owners to sell or lease properties they’ve left idle, increasing availability of premises for SMEs seeking space.
SME tenants should consider lease flexibility in 2026 renewals — for example, requesting clauses allowing rent review adjustments if public incentives lower the landlord’s tax burden or renovation costs.
6. What Should SMEs Do Now?
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Review your current premises or holdings. Identify any underused or vacant properties that could attract the new tax.
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Model VAT and cost impacts if you’re planning construction or refurbishment projects.
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Explore grants and allowances early. Funding schemes open on a first-come basis via LEOs, SEAI, or local councils.
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Update budgets for 2026–2027. Incorporate property tax, PRSI, and inflation adjustments into your cost base.
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Seek professional advice on whether to buy, lease, or refurbish under the new fiscal regime.
Conclusion: 2026 Favors the Proactive
Budget 2026 gives SMEs a window of opportunity — but only for those ready to act.
With tax incentives for refurbishment, lower VAT on apartments, and new penalties for leaving assets idle, the message is simple: put your property to work.
Whether you’re a landlord considering a renovation, a retailer searching for an affordable unit, or a small developer aiming to revive a local site, now is the time to plan strategically.
At Amergin, we believe financial discipline is as essential as structural integrity.
Let our experts help you turn Budget 2026 into your blueprint for sustainable growth — from first draw to final handover.
Book your free Budget 2026 Planning Session today to secure your roadmap for a profitable year.
Book a free consultation: https://calendly.com/amergin-group_free/30min
About Amergin Consulting Ltd.
Amergin Consulting Ltd. is a Dublin-based chartered accountancy and business advisory firm serving Ireland’s SMEs and growth companies across construction, technology, professional services, and renewable energy.
We specialise in Accounting, Payroll, Taxation, and CFO Services that help businesses build stronger foundations for profit and compliance.
Disclaimer
This article is for general informational purposes only and does not constitute financial or tax advice. While every effort has been made to ensure accuracy, Budget 2026 legislation may change upon enactment of the Finance Act 2025.
Builders and developers should seek professional advice tailored to their specific circumstances before acting on any points discussed.
Sources
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Donohoe, P. – Budget 2026 Statement (Dept. of Finance)
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ThinkBusiness.ie – Budget 2026: Key Points for Business Owner
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Irish Times – R&D tax credit in Budget to rise from 30% to 35%
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Reuters – Expansionary Irish 2026 budget targets investment
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Amergin Consulting – Auto-Enrolment Guide for SME
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Amergin Consulting – Outsourced CFO Blog (Quick Facts section)
