A proposal to grant planning exemptions for modular homes of up to 45sq.m in back gardens will be brought to the Cabinet.
The memo from both Minister for Housing James Browne and Minister of State John Cummins stipulates that the homes must comply with building regulations and standards.
These changes have taken some time to get to Cabinet, but the outline of this plan is now taking shape.
In order to put a modular home in a back garden, the homeowner must be living in the primary dwelling.
Separate entrances and a certain distance from the main residence will also be required, and the garden must be at least 25sq.m.
Tánaiste and Minister for Finance Simon Harris is set to expand the Rent a Room scheme to cover these modular units, which means the owner can receive €14,000 in rent tax free annually.
Anyone charging above this will pay tax on the full amount.
Review within 18 months - Tánaiste
Speaking as he arrived at this morning's Cabinet meeting, Mr Harris said that it is "important" that the garden homes measure is reviewed 18 months after it comes into effect.
"I think it's important that we take the planner out of the back garden, and that we enable planners to be freed up to work on critical infrastructure, to work on major housing developments, and provide people in this country with a degree of flexibility around what they choose to do with their own garden," he said.
"Obviously, they've got to operate within regulations, building standards and the likes, but I think this is a positive measure in a housing emergency, but also I think it's a positive planning reform measure too."
He added: "There is a housing emergency, and we have to, and I believe this instinctively, we have to remove bureaucracy and administration and red tape and make it as easy as possible for people to be able to have homes, have shelters, use their own garden space as well.
"But it is also important we look at this and keep it under tight review. So built into the proposal today will be a review within 18 months and I think that is important."
Mr Browne is expected to amend legislation to allow these modular homes to be rented using what is called a licencing agreement.
Other planning exemptions which are likely to get the green light include extensions of up to 45sq.m and a self-contained unit can also be built on to the main home.
A new exemption will provide for cycle or bin storage at both the front and back of the property, with enough space to hold either four adult bicycles or three wheelie bins.
Mr Browne said he does not expect an additional strain on local utilities, saying that the people using such homes are using the facilities that already exist.
He said the units built in this way will not counted in government housing output figures.
"There's no target here. I'm not saying a target. This is about really facilitating people in their own homes for a family member, whoever the case may be. So it's about reducing the burden. It's about simplification."
The Taoiseach also said that he expects local water and electricity services will be able to deal with the consequences of allowing modular homes in people's back gardens.
Speaking on his way into the Cabinet meeting, Micheál Martin said that "in many areas here, there is significant availability of utilities already in the case of planning exemptions. But again, we have put investment now into the Eirgrid and into Irish Water."
He added there are "very serious challenges in housing, in terms in terms of a sufficiency of rental accommodation, and we know that, and we have to put out all the stops to deal with housing, and because the younger generation need access, and anything that takes pressure off the rental market is a positive environment."
Full scrutiny of regulations needed, says Sinn Féin
Sinn Féin Spokesperson on Housing Eoin Ó Broin said he is concerned the proposed modular home exemptions are not just for family use, but for private rental stock.
Speaking on RTÉ's Today with David McCullagh, Mr Ó Broin said: "Not only do we have the possibility of the proliferation of large volumes of poor-quality modular units, but the Government is proposing that these people will have no tenancy rights whatsoever, that they will be licensees."
He said he wanted the regulations to be published and for there to be full scrutiny in the Oireachtas Committee on Housing.
"We need to ensure that we do give families the flexibility that they need for their own direct family members, but [that] we do not ... have a return to very, very poor quality high cost accommodation because the Government made a mess of this."
Hiding generation in back gardens 'not a solution'
Social Democrats Housing Spokesperson Rory Hearne TD said "hiding a generation in back gardens is not a solution to our housing crisis".
Deputy Hearne said there are "so many flaws in this half-baked plan that it's difficult to know where to start".
"This was initially put forward as an initiative to allow parents provide modular housing units on their properties for family members to live in. However, it has now morphed into something completely different – a carte blanche for unscrupulous landlords to build back garden AirBnbs or substandard rental pods.
"There has been a lot of vague talk about safeguards and regulation as part of the Government’s plan to allow planning exemptions for modular homes in gardens. But this only raises further questions," he said.
Adding: "Who will be responsible for ensuring compliance with regulations? Who will enforce building and health and safety standards? And if this responsibility ends up falling on local authorities, will they be sufficiently funded and resourced by the Government to allow for the increased workload?
"Another major flaw with this proposal is that anyone renting a back garden modular unit will be subject to a licence arrangement as opposed to a tenancy agreement. This will put them outside the scope of the Residential Tenancies Board (RTB) and deny them the normal protections afforded to renters - it is a recipe for exploitation."
Scheme 'not a free for all', says McGrath
Fianna Fáil Spokesperson on Housing Seamus McGrath said the proposed modular home exemptions will not be "a free for all" and will have serious terms and conditions and restrictions in place.
He said people will not be able to rent out sheds, and they will be "subject to very strict terms and conditions".
Speaking on the same programme, Mr McGrath said: "There will be a certification process involved here in terms of fire standards and building standards and there will be a notification system in place to the local authority as well."
He said it is important to provide options for people seeking rental accommodation.
He added that the rent-a-room scheme works well for single people and students, and this is "just an extension of that scheme", which will be subject to a certification by a professional.
Additional reporting PA
