Since applications opened for the first cost-rental housing development in Balbriggan in north Dublin in July 2021, every scheme has been vastly over-subscribed.
Within a week, more than 1,000 prospective tenants had applied for the 25 Balbriggan cost-rental homes provided by housing association Clúid, with rents between €935 and €1,150 a month.
In December 2024, the Land Development Agency (LDA) advertised 195 cost-rental apartments at Shanganagh Castle near Shankill in south county Dublin. More than 4,600 people applied to rent homes ranging from €1,175 to €1,775 a month.
At the start of this year another housing body, Respond, advertised 145 cost-rental apartments in Tallaght for €1,875 a month and received more than 2,000 applications.
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The scheme is designed to cover the “cost” of housing provision over a period of up to 40 years. Rents are based on the cost of building, maintaining and managing the homes, rather than on making a profit, and although not stipulated in legislation, the Government has decided rents must be at least 25 per cent below market values.
Eligible tenants, those earning less than €66,000 net in Dublin or €59,000 outside the capital, should be spending no more than 35 per cent of their net income on rent. They would be living in newly-built A-rated homes and their landlord will be a highly regulated entity, generally a not-for-profit housing body, the LDA, or in a small number of cases, a local authority. Possibly the scheme’s biggest asset is there is no limit on the duration of the tenancy, so tenants effectively have a home for life.
For tenants, cost-rental is all positives, apart from the fact that there isn’t enough of it. However, for providers, cracks are starting to emerge.
The initial projects were able to provide rents considerably below market rates. In Clúid’s Balbriggan scheme, the rents were almost half of the local rents for new homes. The following year in Clondalkin in west Dublin, Tuath was offering homes in rents 30 per cent below market rates.
However, as construction prices have increased and schemes have been developed in more expensive areas, rents have been creeping up.
In O’Devaney Gardens (now called Montpelier) in Dublin 7, where applications for the first cost-rental homes closed this week, Tuath is offering one- and two-bedroom apartments with rents of €1,490 and €1,695 respectively, but also a small number of three-beds for €1,895.
While this would still be 25 per cent lower than local market rents for a three-bed, only a small number of eligible tenants would meet the affordability test. To not exceed a rent payment of 35 per cent of net income, the household would have to have take-home pay of at least €64,971, but to qualify for cost rental their pay can’t be above €66,000.
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Another financial difficulty emerged last week where the cost, not of construction but of the long-term maintenance, forced Clúid to abandon cost-rental plans in Cabra, Dublin. It said it would be unable to offer rents below the 25 per cent of market rates while still meeting its loan repayments.
Sinn Féin housing spokesman Eoin Ó Broin said the design of the scheme, which requires the cost of the development loan to be paid back over 40 years, is pushing rents beyond the viability limits.
“In most other jurisdictions cost-rental is repaid over 60 years,” he says. “The bottom line is it was badly designed from the start, messed around by constant reviews, and is not actually trying to address the real problem: how do you structure things in a way that gets the rent down to a point where people who need it can afford it?”
Minister for Housing James Browne said he is committed to cost-rental, and housing bodies experiencing challenges with the financing of projects should engage with his department.
“We can look again at their proposal and how they’re proposing to deliver it and what their challenges are.”
