CALL THEM CABINS, modular homes or sheds, but the Government’s proposal this week to scrap standard planning rules around modular builds marks its latest attempt to ease Ireland’s accommodation crisis.

Proposed exemptions for modular homes were brought to Cabinet this week, with plans now afoot to exempt modular units between 32 and 45 square metres in size in gardens at the back of people’s homes from requiring planning permission.

It raises many questions, such as what impact their construction will have on the exorbitant costs involved in buying or renting a home, and what it means for those looking to use the cabins, both owner and inhabitant.

Why the Government is doing this now

Proponents of the plan believe it will ease the housing crisis by unlocking a raft of new beds around the country.

When the change was first flagged last year, the government stated that it would enable both younger and older generations to live close to family, but also “independently of the family home in the short-term”.

However, in a policy shift by the government, confirmed this week, the new plan will see modular homes allowed to be put up for rent under the Rent-A-Room relief scheme, which allows a person to rent out a room in their home and avail of tax-free relief up to €14,000.

It’s also hoped by relieving local authorities of such minor planning applications, council planners can instead prioritise more complex and large-scale projects.

There are caveats to the plan, as they only apply to gardens that still have 25 square metres of space remaining after the cabin is built. The homeowner must also be living in the main dwelling. Separate entrances will also be required.

Modular unit maker

The moves in recent weeks had already begun sparking a boom time for companies like Modular Homes Ireland, which provides such garden structures.

The company, which is based between Dublin and Wicklow, produced 48 units in the last quarter, but director Kevin Ward is expecting this to “triple” by the end of the year.

While Ward’s clients have included farmers who are able to use them to house seasonal staff and people looking for extra liveable space in their garden, the government’s proposals are resulting in an uptick in interest.

One selling point for homeowners, Ward told The Journal, is how much these structures could potentially add to the value of a property.

A recent customer who owns a semi-detached house in Adamstown in Dublin spent €75,000 on a modular unit for their garden before getting the overall property valued afterwards.

“After it was revalued, the property was coming to an extra €125,000,” Ward said.

“The general rise in prices is a factor too, of course, but it was only a four-month gap between valuations.”

So could a ‘bed-in-a-shed’ raise the market value of a house by that much?

A €125,000 increase might seem steep, but the Government’s attempts to make the cabins more attractive for a homeowner to build could yet prove to be a factor.

Under the proposals, owners can rent out these cabins for up to €14,000 a year tax-free under the Rent-a-Room scheme.

This works out at €1,200 a month.

According to UK mortgage provider Nationwide, an additional bedroom adds between 10-17% to a house’s value, while extensions or loft conversions with a bedroom can increase value by up to 24%.

The effectiveness of the measure also depends how widespread any take-up will be. Emma Howard, economist at Technological University Dublin, told The Journal that as the proposals require larger gardens, they will likely favour higher value properties.

She added that an idea proposed by proponents, that it could help to slower down rising rents, may not take place.

“These tend to be owned by higher income people but will they need the money enough to give up their privacy for renting out a garden cabin? I don’t think this is going to impact on market rent prices as much as some believe it will.”

October 2025 report by Nationwide on the impact of extra rooms to a property. Nationwide Nationwide

Jill O’Neill, director of marketing and PR for Sherry FitzGerald, noted that any potential value increases will vary due to the quality of design, ease of access and other factors such as location.

The real estate agent expects modular garden homes to “become more common”, but noted that homeowners “should be cautious about assuming the full build cost will be added to the sale price.

“From our experience, a well‑designed unit can add appeal to a property, particularly where buyers are looking for flexible space such as a home office, guest accommodation or multi‑generational use,” O’Neill said.

This means, O’Neill added, that any jumps in cost may be “typically modest rather than dramatic, and very site‑specific”.

A key factor is the impact on the remaining outdoor space, which remains “highly valued by buyers”, especially in suburban family homes, and a unit that “significantly compromises garden size or usability can offset much of the benefit”.

Further questions

Sources in the sector have noted that such cabins have already been erected in parts of the country, with some also rented out on the private market. It is likely these situations would need to be regularised over the coming months.

Another question around the modular cabins is whether the owner would have the benefit of having it getting taken into account in a mortgage application.

According to MortageAdvice.ie, most lenders will not take the potential for such income into account when assessing borrowing capacity.

Can it help to solve the housing crisis?

What works for a farmer or a homeowner in a city is one thing, but if you take a step back, there are questions over what impact this will have on the wider housing crisis.

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Its proponents have claimed that the government’s move this week could unlock “thousands” of beds across the country.

The founder of Progress Ireland – a think-tank backed by Stripe billionaire John Collison, among others – welcomed the developments this week around the measure, while mentioning that it had lobbied and “played a part” in trying to get the planning rules changed.

Collison came to attention in Irish politics last year after penning an essay about the country’s infrastructure failings.

“Thousands of small homes will soon be popping up all over the country,” Sean Keyes said on social media. “More options for renters and lower rents for everyone. And for homeowners, help with the bills.” NB: I’ve asked Progress for comment on Emma Howard’s comments.

Delighted @ProgressIreland played a part in this. Thousands of small homes will soon be popping up all over the country. More options for renters and lower rents for everyone. And for homeowners, help with the bills. https://t.co/xy0lOkY2o1 pic.twitter.com/jkIT7ImotK

— Seán Keyes 🖐️ (@Keyes) April 21, 2026

Howard, the economist at TUD, disagrees with the argument that the cabins will play a part in easing the housing crisis and suggested that the Government would be better to take more sustainable action elsewhere in the housing market.

Howard noted that while the proposed scheme will work through an extension of the Rent-a-Room programme, she pointed to figures on uptake in the current scheme.

“In the last Census in 2022, 21% of homeowners had two or more spare bedrooms. When we compare that with the latest data on Rent-a-Room, it shows just over 16,500 households availing of the scheme – that’s 4% of those with two or more spare rooms who are availing of this,” Howard told The Journal.

“That’s a very small percentage of people, and you have this much larger group who could avail of this income but who don’t seem to want to.”

Overall, Howard said she was not against the garden home idea but believes the Government is pursuing the measure when its time could have been spent on a more “effective” proposal.

“It’s a kind of a cover for, ‘look, we’re doing something about the housing situation’, when there are other policies that they could focus on that would actually have a quicker and more significant impact on the housing supply and the amount available to rent,” she said.

She added that the proposals may be viewed as an “easy win because there’s not a big opposition to it from vested interest groups”, unlike the likes of short-term lets in holiday destinations.

“If you look at the Threshold report released about a month ago, it found there were nine times the number of short term less available compared to rental units,” Howard said.

Further concerns were raised recently by Threshold and Age Action that “substandard” garden units could be rented out without appropriate inspections under the proposals. That body and advocacy organisations like Age Action had argued that such cabins should only be used by carers or family members.

Homeowner or landlords who rent-a-room are not required to register with the (RTB) Residential Tenancies Board via the existing scheme, a regulatory easing that it looks like will be extended to the new garden sheds.

However, as a high-quality shed can cost up to €80,000, Taoiseach Micheál Martin had said this week they needed to be opened up to private rental after a homeowner’s children had made use of them, as a way of encouraging parents to build such homes in the first place.

But it was likely with the criticisms of the likes of Age Action in mind that the Taoiseach and Tánaiste both noted this week that the proposals, once enacted, would be kept under “tight” review over the coming 18 months.