Green light for Ireland’s first cost rental housing projects

The Minister for Housing Darragh O’Brien has today given approval in principle for Ireland’s first Cost Rental Homes.

In Budget 2021, €35 million was made available to Approved Housing Bodies (AHBs) to deliver approximately 350 cost rental homes in 2021 at rates which are a minimum 25% below open market values.

An additional 50 cost rental homes at Enniskerry Road, Dun Laoighaire Rathdown are also due to be completed this year supported by the Department’s Serviced Sites Fund.

Following a competitive assessment process, approval is being given today to three AHBs, Clúid, Respond and Tuath, for a total of 390 cost rental homes.

These developments are spread across Dublin, the GDA and Cork, with precise locations to be published on completion of commercial and contractual arrangements.

Subject to the application, the Housing Finance Agency has also made financing of up to €100m available to support schemes approved under this measure.

Speaking following the announcement of the Cost Renatal scheme, Minister O’Brien said: “Shortly before Christmas I put out a call to our AHBs asking them to submit proposals for Cost Rental homes.

“They responded enthusiastically and the standard of the proposals received is extremely high.

“I believe this is really encouraging for the future expansion of the scheme.”

“Cost Rental is a new form of tenure in Ireland where tenants will pay rent that covers the costs of delivering, managing, and maintaining the homes only.

“Through the Affordable Housing Bill 2020, Cost Rental will be placed on a statutory footing and the conditions and operational matters for cost rental are being finalised as part of this process.”

“The collective experience in bringing on stream these first cost rental homes in the State will be used to inform the ongoing policy development process. This will support the wider roll out of the model across local authorities, the Land Development Agency and Approved Housing Bodies.”

“These homes will be made available to middle income households with a reduction of at least 25% on open market rental values.

“It is my firm commitment that we build on this new scheme and expand it further so that many more tenants live securely in cost rental homes,” he concluded.

Respond, Approved Housing Body (AHB) and service provider, said they are very pleased to be selected for participation in the Cost Rental Equity Loan (CREL) Scheme.

They are also involved in delivering the 50 cost-rental homes on Enniskerry Road as part of the Cost Rental Pathways project which is currently under construction.

The organisation said this announcement represents a new departure in the delivery of housing in Ireland, providing a new type of housing tenure in addition to social housing, private renting and private purchase.

The Cost Rental Equity Loan Facility (CRELF) allows AHBs to borrow up to 30% of the cost of cost rental homes from the State.

Budget 2021 is the first time the Irish Government has introduced a funding scheme to finance the provision of cost rental homes.

Niamh Randall, Spokesperson for Respond said that the organisation was delighted to be involved in the scheme.

“We look forward very much to working with our partners in the Department of Housing, Local Government and Heritage, the Housing Finance Agency, the Housing Agency and Local Authorities to provide cost rental homes for families and individuals, ensuring that people can have access to safe, secure and permanent homes,” she said.

“Respond have been building and managing social housing for over 38 years and we currently have 1,324 homes in construction on-site around the country.

“We have been involved in building the first Cost Rental Pathfinder Project with our partners on Enniskerry Road which includes 50 cost rental and 105 homes on the same site (see Editors Notes). This experience and expertise in building and managing housing developments at scale gives us confidence in providing some of the first cost rental housing in Ireland. We look forward to handing over keys to new tenants.’

“For some time Respond have been advocating to have this gap addressed to provide housing for those who don’t qualify for social housing, won’t be able to afford a mortgages and yet cannot afford market rents.

“We have called for a sustainable and replicable model and we very much welcome Minister Darragh O’Brien’s announcement today.”

Labour housing spokesperson Senator Rebecca Moynihan has called on the Government to publish how cost rental costs are arrived at.

Following the announcement by Minister O’Brien, Senator Moynihan said:

“If we are serious about solving the housing crisis, State intervention is necessary. However, any intervention needs to be evidence based and costed.

“It’s welcome to see Clúid, Respond and Tuath given approval to deliver cost rental homes for middle income families, but we need to see what evidence the Government used to determine the cost of rent.

“In particular, why does rent of at least 25% below open market value automatically equate with affordability? In the context of one of the most unaffordable housing markets in the world, 25% market discount doesn’t necessarily correspond with cost rental.

“That’s why we need to see what evidence was used by the Minister.

“The Government needs to think long-term to ensure that this housing will actually represent a fair and low-cost option for working people.

“The Labour Party is calling on the Minister to push out the loans on these properties to over 40 years to make that a reality.

“The housing problem can be solved, but any attempt to do so must be rooted in evidence and fact.

“We can build an Ireland where every child grows up in decent housing in a good neighbourhood, but only if we invest in practical policies to deliver solutions like affordable housing that is actually within working families reach.”