Budget 2027: €20.3bn capital programme, MetroLink boost and bigger Help to Buy headline construction measures
The Government will spend €20.3 billion on capital investment in 2027, an increase of €1.1 billion on this year, under Budget 2027.
The package, set out in the Dáil by Minister for Public Expenditure Jack Chambers and Tánaiste and Minister for Finance Simon Harris, includes €5.6 billion in housing capital, €1.5 billion for Uisce Éireann’s capital programme and an additional €6 billion for MetroLink over 2027 to 2030. Help to Buy rises to €35,000 with immediate effect, and a new 7% Derelict Property Tax will be legislated for in this year’s Finance Bill.
The Budget also slows the growth of day-to-day spending. Current expenditure will rise by 6% next year, down from over 8% in recent years, taking gross public expenditure to €125.6 billion.
The capital programme
Minister Chambers said success would be measured by how quickly the €275.4 billion committed through the National Development Plan turns into real projects. He tied that investment directly to the water, energy and transport infrastructure needed to deliver housing.
The main 2027 capital allocations named in the Budget are:
- Housing: €5.6 billion
- Transport (NDP): €4.2 billion, plus an additional €6 billion for MetroLink over 2027 to 2030
- Health (NDP): €1.7 billion
- Schools: €1.6 billion
- Uisce Éireann: €1.5 billion
- Higher education (NDP): €925 million
- SEAI energy upgrade schemes: €654.5 million, a record
- Defence (NDP): €340 million
- Shared Island Fund: €200 million
Local authorities will also be allowed to spend their own resources, or borrow, an additional €200 million a year on capital projects consistent with Government priorities.
Housing and homebuilders
The Department of Housing, Local Government and Heritage receives €9.4 billion for 2027. The €5.6 billion capital element includes:
- Social housing: €3 billion, including 11,250 new-build social homes
- Starter Homes Programme: over €1 billion to deliver “thousands” of starter homes through a range of affordability supports
- Specific housing needs: over €360 million, including adaptation grants and retrofitting of social homes
- Urban regeneration: €350 million
- Housing Infrastructure Investment Fund: €225 million
A further €2.2 billion in current spending supports 110,000 households through the Housing Assistance Payment, the Rental Accommodation Scheme and the Social Housing Current Expenditure Programme. The Towns and Cities Regeneration Investment Fund will support investment in every local authority, though no figure was given.
On the demand side, the maximum Help to Buy refund rises by €5,000 to €35,000 with immediate effect. The Rent Tax Credit rises to €1,150 for single claimants and €2,300 for couples.
On land, owners get a further opportunity in 2027 to seek an exemption from the Residential Zoned Land Tax by applying for rezoning that reflects genuine economic activity. The Tánaiste said the tax, in effect since 1 February 2025, is increasing the stock of zoned, serviced land.
The new Derelict Property Tax will be charged at 7%. Local authorities will start identifying derelict properties in January, publish preliminary registers on 1 September 2027, and work with Revenue on collection.
The Rent-a-Room relief limit rises from €14,000 to €16,000 and now covers newly installed Detached Auxiliary Dwellings of 32 to 45 square metres. The change applies retrospectively from 27 July, when revised planning rules for such units came into force.
Water, transport and energy
Water. Uisce Éireann receives €2.3 billion, of which €1.5 billion is capital. The funding covers supply capacity, new water and wastewater connections for housing, and wastewater treatment upgrades to improve compliance with regulatory standards. Over 400 projects will progress in 2027. Those named are the Eastern and Midlands Region Water Supply Project, the Greater Dublin Drainage Scheme, and wastewater treatment plant upgrades in Limerick and Waterford.
Transport. The Department of Transport receives €5.5 billion. The €4.2 billion NDP element funds additional investment in DART+, BusConnects and the Cork Area Commuter Rail programmes, along with maintenance of the existing network. It also supports major road projects, including the Adare Bypass, the Galway Ring Road and the M28 Cork to Ringaskiddy.
MetroLink. The additional €6 billion over 2027 to 2030 comes as the project reaches detailed tender phase. Minister Chambers said MetroLink “will be delivered” and will enable up to 120,000 more homes.
Energy. The Department of Climate, Energy and the Environment receives €1.3 billion. This includes the record €654.5 million SEAI capital allocation for more solar PV, enhanced retrofit and renewable grants, and a boiler scrappage scheme. The Tánaiste noted that €1.5 billion was injected into ESB last year, and that EirGrid will invest a further €2 billion in grid resilience in the coming years.
Environment. €47 million is allocated to tackling waste contamination sites, within a €155 million circular economy allocation.
The public building pipeline
Beyond housing and networks, the Budget funds a wide programme of public buildings:
- Schools (€1.6 billion): projects across the school estate, including additional accommodation and modernisation for special education, plus a second tranche of the Climate Action Summer Works Scheme.
- Health (€1.7 billion): relocation of the National Maternity Hospital, expansion of the Surgical Hub Network, Elective Treatment Centres in Cork, Galway and Dublin, and additional acute, community, mental health and residential beds.
- Higher education (€925 million): Public Private Partnership projects to improve and expand university campuses in Waterford, Carlow, Limerick, Galway and Letterkenny, and continued support for the INSPIRE research infrastructure programme.
- Defence (€340 million): modernisation and upgrade of military installations, alongside new helicopters and the Military Radar Programme.
- Shared Island (€200 million): completion of the Narrow Water Bridge, a new teaching building at Ulster University and phase three of the Ulster Canal restoration. The Government also committed to port infrastructure for offshore renewable energy, North and South, and rail upgrades between Dublin, Belfast and Derry.
- Sport and culture: the National Velodrome and Badminton Centre and the National Cricket Centre at the National Sports Campus, the Crawford Art Gallery redevelopment in Cork and the National Concert Hall Discovery Centre.
- Gaeltacht and islands: the pier at Inis Oírr, a new Irish-language centre on Sráid Fhearchair in Dublin and the redevelopment of Coláiste Lurgan in the Conamara Gaeltacht.
Costs, tax and workforce
For contractors and suppliers, the main business measures are:
- Employer PRSI: the weekly threshold rises from €552 to €600 for 2027. The Government puts the saving at €650 to €700 a year per employee below the new threshold.
- Fuel: reduced fuel excise rates stay fully in place until 28 February 2027, then are restored in four phases to 30 June 2027. The reduced NORA levy and the enhanced Diesel Rebate Scheme are extended to the end of December 2026. The Road Transport Support Scheme is extended by two months at an estimated cost of €73 million.
- Capital Gains Tax: the standard rate falls from 33% to 31%.
- Payroll reporting: from January, employers can choose between real-time reporting and monthly returns under the Enhanced Reporting Requirements.
- Professional Services Withholding Tax: the flat 20% rate will be replaced by personalised deduction rates, subject to a commencement order. This affects consultants paid by public bodies.
- R&D tax credit: limits on subcontracting to third-level institutions and third parties rise from 15% to 20% and from €100,000 to €200,000. The first-year payment threshold rises from €87,500 to €105,000, and a new enhancement applies to qualifying R&D wage costs.
- Apprenticeships: funding expands delivery towards the Government’s target of 12,500 registrations a year by 2030. A new three-year €360 million National Training Fund skills package is also announced.
The payroll reporting change follows recommendations from the Cost of Business Advisory Forum. The Government will also carry out a holistic assessment of enterprise grants, tax incentives and business development programmes.
Delivery reform, and what is not in the Budget
Minister Chambers said infrastructure reforms under the Accelerating Infrastructure Taskforce are already working. Nationally significant projects have been fast-tracked through the Critical Infrastructure Act, reformed approval processes have cut months from timelines, and steps have been taken to reduce the number of legal cases that hold up projects. He said 2027 will bring further measures.
A new Public Spending Efficiency Taskforce will also scrutinise day-to-day spending. Its terms of reference are due to be finalised and its work started within three months, to inform Budget 2028.
Several issues relevant to the sector are not addressed in either Budget speech:
- VAT: no change to VAT on new homes or construction activity.
- Planning capacity: no stated funding for An Coimisiún Pleanála or local authority planning departments.
- Housing targets: no overall completions target. The only numeric delivery target is the 11,250 new-build social homes.
- Flood relief: no mention of flood relief or the Office of Public Works.
- Derelict Property Tax detail: the speech gave the 7% rate but not the basis of the charge or the definition of dereliction.
The Finance Bill and the departmental Budget documents are expected to fill in further detail.
