An increase and expansion of the rent tax credit in Budget 2024 must form part of a "wider cohesive approach" to end the housing supply crisis.
Housing charity Threshold was reacting to measures announced earlier, which will see a total of €5 billion in capital funding for housing initiatives.
Minister Paschal Donohoe has said there will be €7 billion in funding for the Department of Housing.
This includes €1.9 billion to deliver 9,300 new-build social homes and €265 million to support the delivery of 6,400 affordable homes next year.
The Help-to-Buy Scheme has been extended to the end of 2025.
There will also be funding of €242 million for homeless services and accommodation - with a further €35 million in capital funding to support the Housing First initiative and house homeless adults in permanent homes.
The Rent Tax Credit is set to rise to €750 next year.
Threshold has said it had advocated to increase security of tenure through a sliding scale system to tax rental income, and is "disappointed" that this opportunity to increase security for renters was not adopted.
An increase in private renters’ tax relief from €500 to €750 is a progressive step, according to the charity, but it said this measure "needs to be promoted widely among relevant target audiences via a public information campaign and more easily available in terms of claiming it by renters whose landlord has not registered the tenancy".
"The specific details are yet to be seen on how the credit for students in 'digs' can be claimed," the charity said.
Threshold CEO John Mark McCafferty said there is still a long road ahead in terms of tackling soaring rents.
"Rents have increased dramatically in the last decade, and too many people are spending too much of their income on housing costs," he said.
"While the increase in the rent credit to €750 is welcome, only an increased supply in affordable housing, across social, cost rental, private rental and for purchase, will see renting become more affordable and secure.
"While we anticipated changes to the taxation of rental income, we made it clear this would need to be a targeted measure done in exchange for increased security of tenure, otherwise it has the potential to be a deadweight cost to the State.
"As currently designed, it will remain to be seen if the tax relief measure for small landlords incentivises more of them to stay in the market or not - and provide increased security for renters - and that is something that needs to be closely monitored," he added.
'A budget for landlords'
Sinn Féin TD for Dublin-Fingal Louise O'Reilly told The Hard Shoulder the measures won't help people living with their parents.
"This is not a housing budget; this is not a budget for renters," she said.
"This is a budget for landlords, and it will not do anything for...the hundreds of thousands of people who are stuck in their parent's back bedroom, because they simply cannot afford to move out.
"For people who need social and affordable housing, there was nothing in this budget for them... nothing new, just more of the same.
"We know what more of the same has got us: more of the same has got us to the greatest housing crisis the State has ever faced," she added.
Help-to-Buy scheme
The Institute of Professional Auctioneers & Valuers (IPAV) has welcomed the extension of the Help-to-Buy scheme to the end of 2025.
IPAV Chief Executive Pat Davitt said the scheme has been "critically important" in a market that is "reeling from the aggressive rise in interest rates and consequent tightening of lending conditions by banks."
"We would like to see it extended to €40,000 on new properties for purchasers under age 40 and a new grant of €20,000 be brought in for First-Time-Buyers aged under 40 and purchasing second-hand homes,” he said.
Mr Davitt also welcomed a new five-year tax incentive scheme for private landlords, but said it was unlikely to help the situation.
"Delivering between €600 a year in year one, increasing to €1,000 in year five, it’s unlikely to be significant in stemming the flow of private landlords from the market,” he added.
Mr Davitt said agents throughout the country continue to see small landlords exit the market.
What else was announced?
A one-year mortgage tax relief will make 165,000 mortgage holders eligible for up to €1,250.
A total of €90 million will be spent on the retrofitting of social homes, and €207 million aimed at bringing vacant and derelict homes back into supply.
The Vacant Homes Tax is being increased to five-times the property’s existing basic Local Property Tax rate, starting from this November.
Minister Donohoe said Ireland is expected to exceed its housing target for the year.
"Housing delivery is performing strongly, with more than 21,000 new homes started in the first eight months of the year, meaning we are now expected to exceed our target of delivering 29,000 new homes by the end of this year," he said.
As a result of this progress, around 400 first-time buyers are purchasing their own home each week.
"Next year, we will accelerate this progress with just under €7 billion of funding to the Department of Housing, Local Government and Heritage, of which €2.6 billion will be capital investment in housing," he added.
