Five towns added to Living City Initiative expanding conversion opportunities for commercial property owners
New tax reliefs target vacancy and support over shop residential development in regional centres
19 April 2026 | editor@irishrealestate.news
Commercial property owners in five regional towns are now eligible for targeted tax incentives aimed at unlocking underused space and accelerating town centre regeneration.
The Tánaiste and Minister for Finance, Simon Harris, has formally designated Athlone, Drogheda, Dundalk, Letterkenny and Sligo under the Living City Initiative (LCI), extending a scheme previously limited to Ireland’s main cities. The move enables qualifying property owners within newly defined Special Regeneration Areas (SRAs) to access tax reliefs for refurbishment, conversion and reuse of existing buildings.
For owners of existing commercial units, the most significant change is the introduction of a dedicated “Living Over the Shop” relief. This measure supports the conversion of commercial premises, particularly upper floors, into residential accommodation. Notably, this category carries no building age restriction, widening its applicability across town centre stock.
The designation follows submissions by local authorities, with SRA maps independently assessed and published. These areas are characterised by high levels of vacancy, dereliction and underutilisation, alongside a concentration of older building stock considered suitable for redevelopment.
The LCI offers a mix of income tax relief and accelerated capital allowances for qualifying expenditure. For commercial landlords and investors, the availability of capital allowances on refurbishment and conversion works is expected to improve the viability of reactivating vacant or underperforming assets.
Changes introduced under Budget 2026 further enhance the scheme’s relevance to existing property owners. Eligibility for residential refurbishment has been extended to buildings constructed before 1975, significantly increasing the pool of qualifying properties. In addition, the initiative has been extended to run until the end of 2030, providing a longer investment horizon.
Government positioning of the scheme is focused on addressing vacancy while increasing housing supply within established urban footprints. The policy also aims to reinforce the economic function of town centres by increasing residential density and footfall.
For commercial unit owners, the implications are twofold. First, the financial support may offset refurbishment costs in locations where vacancy has persisted due to marginal returns. Second, the introduction of residential conversion relief creates a pathway to diversify income streams, particularly where retail demand has weakened.
The Living City Initiative is designed to support the reuse of existing buildings rather than new development, aligning with broader policy objectives around compact growth and sustainable land use. Its expansion into regional towns signals a shift towards activating smaller urban centres as part of national housing and regeneration strategy.
Property owners seeking to avail of the scheme must meet specific qualifying criteria linked to location within SRAs and the nature of works undertaken. Local authorities are expected to play a key role in implementation, including verification of eligibility and alignment with regeneration objectives.
