Property insights with Johnny Gannon, Fair Deal Property
Since July 27, one of the most significant changes to Irish planning law in a generation is live. Homeowners can now build a detached modular home of between 32 and 45 square metres in their back garden without planning permission. No application, no waiting, no neighbour objection period. For Galway property owners sitting on the large gardens of our older housing stock, this is a game-changing moment.
Regular readers will remember my June piece on back garden potential, when the exemptions were before Cabinet. They are now law, so let us get practical.
First, the rules. The exemption applies only to owner-occupiers building in the rear garden of their principal residence. The unit must be detached, between 32 and 45 square metres, and the combined floor area of the new home and any existing garden structures cannot exceed 45 square metres. At least 25 square metres of garden must remain, and side access is required if you intend to rent it. The exemption is time-limited to the end of 2030, and the build must be commenced and completed within that window. Building regulations still apply in full, so this is no licence for a glorified shed. Done properly, it is a compliant, A-rated, permanent home.
Second, the investment case, with real market pricing. A 38 square metre open plan turnkey unit, fully fitted with kitchen, bathroom and furniture, is currently on the market at €75,000 including VAT and delivery. Budget separately for the concrete base, service connections and professional fees. Alternatively, you could look at purchasing a steel structure and hire a contractor to finish it to regulation standards. On tax, be careful. The Government has committed to bringing these units under the Rent a Room scheme, allowing up to €14,000 per year completely tax-free, but Revenue guidance currently excludes detached units and the change must first come through the Finance Bill. Until then, rental income is taxable as normal, so take professional advice before building your sums on the tax-free figure. If the relief lands as promised, a €100,000 unit pays for itself in roughly seven years.
Third, and pay attention here, the occupant of your garden unit is a licensee, not a tenant. The Residential Tenancies Act does not apply. The new six-year tenancy terms do not apply. Rent caps do not apply, and there is no recourse to the RTB. That flexibility is what makes the scheme attractive, but it comes with responsibility. Put a written licence agreement in place, agree fair notice periods, keep the unit to proper standards, and choose your occupant carefully. This is someone living 30 feet from your door. Housing charities are lobbying hard on licensee rights, and if homeowners behave poorly, regulation will follow. Manage it well and you protect your income and the scheme itself.
The threats are worth naming. Revenue has confirmed the unit carries its own separate local property tax bill, you must notify the local authority, and drainage and insurance need professional attention. A poorly sited unit can hurt the main house's value, while a well-designed one adds to it.
For owners of suitable back gardens, the arithmetic of your property has changed fundamentally, and as always, we are happy to advise on siting, value impact and legislation. It is time to stop mowing the lawn and start making hay in your back garden.
Johnny Gannon is the founder of Fair Deal Property Auctioneers and Estate Agents. For advice on buying or selling in the Galway market, contact Fair Deal Property on 091 394593 or visit www.fairdealproperty.ie
