The Government intends to restrict short-term lets in towns with a population of more than 20,000.
An agreement was reached in principle following discussions between Government party leaders and Minister for Tourism Peter Burke on the issue last night.
Short-term letting refers to the letting of accommodation for up to 21 nights at a time.
Initially the restriction was set to cover towns with a population of 10,000 but a significant change to this proposal is now in the offing.
There are 20 towns in the country with populations in excess of 20,000, according to the 2022 Census. Drogheda, Co Louth, was the largest, with 44,135 people counted there four years ago.
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It is understood that those involved in short-term letting will be allowed up to two years to get the required planning permission.
While those operating for seven years or more could benefit from what is called a grandfather regularisation.
It is understood that Minister Burke emphasised that operators need clarity.
Speaking on his way into cabinet today, Mr Burke welcomed the agreement on the restriction of short-term lets, saying it's important to "build resilience in our tourism sector".
"There are many areas in our country where it is not viable at the moment to construct hotels, and we need to work on that across 2026," he said.
The minister also said they need to ensure there is capacity for additional tourists coming into our country.
"Critically, for the five cities, which are going to be the key component in delivering into the housing sector from the short-term sector, this will provide a solid pathway for that."
Legislation which will require all short-term lets to be planning compliant will be discussed by an Oireachtas committee later in the week.
The Department of Housing is also set to come forward with a planning statement on this often fraught topic.
Sinn Féin Spokesperson on Housing Eoin Ó Broin described the change as a completely retrograde step, and said the Government was once again "shafting" renters.
While Labour TD Conor Sheehan has criticised the decision to raise the threshold for short-term letting regulations as one done for "political reasons".
Mr Sheehan, who is the party's spokesperson on housing, asked whether Minister for Tourism Peter Burke was in charge or if it was Minister of State Michael Healy-Rae, who had previously criticised the lower limit.
"The Government need to seriously clamp down on providers like Airbnb, platforms like them, who are at the moment allowing people to platform their properties, people who would not have registered and would not have been in compliance with the 2019 legislation," he said.
"We've had Threshold report after Threshold report on the effect that this is having on rents in the private rental market."
Speaking on RTÉ's Drivetime programme, Mr Healy-Rae welcomed the Government's plan to restrict short-term lets describing it as a "practical common-sense approach" to dealing with the issue.
He said the Government is recognising that rural areas do not have the hotel capacity that cities and larger towns enjoy.
He said that those who operate short-term lets did not create a housing shortage and that they are not the problem or solution.
"We need housing in this country, but we also need not to interfere with property owners' rights to carry on the business that they have established over many years," he said.
Mr Healy Rae added that some short-term lets would not be easy to transfer into long-term housing options and that it is a clear-cut decision by the Government to create balance, saying today is the first step to giving clarity.
City Living Initiative will tackle dereliction, vacancy - Harris
The Tánaiste said the City Living initiative is being expanded to "tackle dereliction and vacancy in many of the large towns".
Applications will open for people to avail of the scheme this summer which he thinks "will make a real difference in trying to regenerate some of these large towns".
He said it will also "get more housing supply back into use during the middle of a housing emergency".
Still a great deal of uncertainty - Irish Tourism Industry Confederation
CEO of the Irish Tourism Industry Confederation Eoghan O'Mara Walsh said that there is still a great deal of uncertainty in the industry about short-term letting properties.
Speaking on RTÉ's News At One, he said the Government intentions to restrict short-term lets in towns with a population of more than 20,000 is a step in the right direction, but said that more clarity was needed.
He asked whether there would be a ban on short-term lets and self catering properties, adding that this could be very damaging for the tourism economy in towns with more than 20,000 in population. He added that there needs to be a pragmatic approach to planning stipulations and the population threshold.
He also said there is big uncertainty over the planning permission that will be required to remain a short-term let because this part of the industry has been unregulated to date which he said was "problematic".
He explained that the vast majority of self-catering properties or short-term lets do not have planning permission, and there are no guidelines on this from the Department of Housing which is "hugely frustrating".
He said that there needs to be a period of grace, such as nine months or so, for properties to become planning compliant.
He added that certain parts such as urban centres need to come back into the housing market but in large parts of regional and rural Ireland, there is inadequate hotel stock and therefore there is a need to protect short-term rentals and holiday homes there.
