Delivering cost rental housing
Minister for Housing, Local Government and Heritage, Darragh O’Brien TD, outlines a new cost rental measure to progress thousands of affordable rental apartments, and progress on enabling local authorities to directly deliver cost rental.
Cost rental housing is at the heart of Housing for All and is a key tool in our fight to make rents more affordable and renting more secure. It is a new form of tenure in Ireland, one where the tenant pays a rent which covers the cost of delivering, managing, and maintaining the home only, and not one driven by profit.
We often look across to our neighbours in Europe and see how renting there is much more secure, well cost rental is one way we will achieve that here in Ireland. One of the new tenants in City West told me: “It is your home for as long as you want. That makes us really, really happy. We feel secure.” That is exactly what I want to see replicated nationwide.
Rents are targeted at rates which are at least 25 per cent below the local market rent. In the developments we have delivered to date we have seen rents which are 35 per cent to 50 per cent below the local market rate, for example, in January 2023, work began at Bishop’s Gate development site at Kiltiernan with 72 cost rental homes currently being delivered by Tuath Housing, in partnership with Dún Laoghaire–Rathdown County Council. The rentals at Kiltiernan will be available at a 45 per cent decrease on local market rates.
We have already approved funding of €90 million for more than 1,000 cost rental homes. I absolutely acknowledge that people will say ‘it is drop in the ocean’ but it is important to remember that we are starting from a base of zero. When I travel around the country and meet tenants in new cost rental homes, I am heartened by what it means for them, and I am determined that we need to significantly scale up delivery, and quicker.
The Government and our Housing for All plan are always alert to how schemes and policies can be refined to adapt to changing circumstances. Rising construction costs and interest rates have impacted on the viability of projects. We have seen this particular pressure around the viability of build-to-rent apartment developments.
To this end, the Government has just approved the development of a new cost rental viability measure. It will take the form of a new €100,000-€150,000 cost rental subsidy of the capital cost of building apartments in return for designating those homes specifically as cost rental. This will be open to private developers and the Land Development Agency and targets 5,000 to 6,000 cost rental homes in the near term. The cost rental viability measure is one which I believe will really make an impact on our rental sector.
This new measure comes on top of the changes already made to enable approved housing bodies (AHBs) to apply for additional Cost Rental Equity Loan (CREL) funding to alleviate some of the rising costs of construction and finance. The CREL ceiling has been increased from its previous rate of 30 per cent of costs up to 45 per cent on a sliding scale basis. Our AHBs are crucial to our delivery of social and affordable rental homes, and we need to ensure we are doing all we can to assist them.
In addition, for those at risk of homelessness because a landlord intends on selling a property, the Government has developed the ‘Cost Rental Tenant In-Situ’ scheme for tenants in private rental homes. This is aimed at those who are not in receipt of social housing supports but would be eligible for cost rental. The Housing Agency, in partnership with a local authority, can purchase the property with government support. We are currently moving from an administrative scheme towards a standard ‘Cost Rental Tenant In-Situ’ scheme. This is key measure in the prevention of homelessness and seeks to protect those who would not otherwise be in receipt of State housing supports.
Finally, the Government and I are examining how to enable a significant expansion of the direct delivery of cost rental by local authorities. Work is currently underway to estimate the impact of the additional lending that would be required. We know that local authorities, along with our AHBs, are the key drivers of housing supply. Turning the sod on the first standalone cost rental development by a local authority in Ireland recently was a huge milestone. 133 cost rental homes being delivered directly by South Dublin County Council will have a huge impact in that local authority area.
Without doubt, I do understand how hard it can be for renters in Ireland. That is why we introduced the various pieces of rent protection legislation; the tenancies of indefinite duration; the extended notice to quit periods; the rules around deposits.
It is why we introduced a €500 renters tax credit which more than 200,000 renters have claimed to date. Those 200,000 people now have €1,000 back in their pocket this year.
But I know there is so much more needed. We want to see more tenants in safe, secure, affordable rental homes, where they are not worried about hanging a picture on the wall. Cost rental will ensure we get there.