A levy waiver designed to stimulate home building will not be extended following warnings from the Department of Finance that the State does not have the capacity to build all those that applied, writes Craig Hughes.

A development rates and water connection waiver was introduced in April 2023 in a bid to accelerate housing development.

Developers who commenced home building between April 25, 2023 and December 31, 2024 will avoid paying in the region of €16,000 per home if they are delivered by the end of 2026.

This led to a surge in commencement notices for new homes being submitted to the Building Control Management System, with 69,060 commenced in 2024 compared to 26,957 in 2022.

It costs €30 to submit a commencement notice but that does not mean development has actually started.

The Irish Daily Mail revealed in August last year that officials in the Department of Finance warned that it was “highly unlikely” that the State has the capacity to deliver this volume of homes that have been officially registered as “commenced” during that period.

The officials also warned that commencement data, which was once an extremely reliable indicator of housing output for the following year, had become “nullified” as a result of the scheme.

“The spike in commencement notices prior to the scheduled expiration of the development levy waiver and water charge rebate has effectively nullified the use of the series as an indicator of underlying activity,” they wrote.

In a press release in May, then minister for housing Darragh O’Brien said the massive jump to 18,000 commencements in a single month was “hugely impressive” and insisted it would lead to “life-changing” outcomes.

BusinessPlus.ie understands that Minister for Housing James Browne will tell Cabinet the scheme will not be extended beyond 2026.

He will tell his Cabinet colleagues that developers now have 21 months left to complete these housing developments to qualify for the waivers.

Mr Browne is also set to write to all local authorities in the coming weeks seeking an update on the progress of the development of sites under both schemes.

The Government is under intense pressure to reverse disappointing predictions on housing delivery after falling short by almost 10,000 homes on the 40,000 they promised would be built during the general election campaign.

The Central Bank’s first quarterly bulletin of 2025, which was published last month, projects that completions will hit just 35,000 this year, 40,000 in 2026, and 44,000 in 2027.

Speaking on RTÉ’s Morning Ireland yesterday, Mr Browne refused to set out the Government’s social housing targets for the year ahead, saying he did not want to get into “guessing numbers” and instead said he wants to “maximise” the delivery of homes.

The Government said it would build 9,300 social homes in 2024, however question marks remain over whether the target will be reached.

Mr Browne told RTÉ Radio One’s Morning Ireland: “What matters are the real numbers... The only way we will solve the housing crisis is supply, supply, supply, and that’s what I intend to do over my period as Minister for Housing,” he said.