Minister for Housing James Browne is urging housing bodies who have hit financial difficulties in delivering cost-rental projects to engage with his department to ensure the viability of the schemes.
Browne was speaking following the collapse in recent days of a north Dublin cost-rental project because it had become financially “unviable”.
Housing association Clúid plans to scrap the cost-rental element of a complex of more than 140 apartments in Cabra and change the development to 100 per cent social housing.
Rising maintenance costs “mean that it would not be possible to deliver these as cost-rental homes with rents 25 per cent below market rate,” Clúid said.
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Under the cost-rental system, operating since 2021, rents are based on the cost of building, managing and maintaining the properties. It aims to help workers who earn too much to qualify for social housing but cannot afford private market rents.
There was, Browne said, a “very significant pipeline” of cost-rental projects, designed for workers who earn too much to qualify for social housing but cannot afford private market rents.
“Individual projects may be challenging, individual approved housing bodies may be having an issue with particular projects. The way you resolve them is by engaging with the Department of Housing and to ensure that they are viable and what the challenges are, and as to why they’re finding their particular project is unviable, when others are not,” he said.
“In relation to any approved housing body who’s having difficulty in terms of the maths around what they have proposed to provide ... what they need to do, is to come in and talk to the Department of Housing.”
Browne was speaking at an event to mark the start of construction of 578 cost-rental and social housing apartments at the former St Michael’s estate in Inchicore, the only cost-rental scheme being undertaken directly by Dublin City Council.
The council had to borrow €132.5 million to fund the construction of the cost-rental apartments, which represent three-quarters of the homes in the estate. The apartments are expected to cost up to €450,500 each to build, but the Government only provides local authorities with a grant of €150,000 per cost-rental home.
Most schemes are undertaken by approved housing bodies or the Land Development Agency due to the high debt burden their development places on local authorities. The council will use the rents charged to the cost-rental tenants to pay back its 40-year loan. The level of rents will be determined before the completion of the development in early 2028.
Browne said he wanted more cost-rental schemes undertaken by local authorities.
“I think from ourselves in Government, we have to look at how do we help local authorities – because I think they do have the ambition here they do have the drive – how we can help them now to scale up this model here and help them to be able to deliver more on cost-rental.”
