As the end of the ban on no-fault eviction looms, 1,000 people who applied to become tenants of cost-rental homes in Dublin and Wicklow are waiting to find out if they have won what might be seen as the housing lottery.
The Land Development Agency (LDA) has advertised 22 three-and four-bed houses at Citywest, in south Dublin and 24 duplex apartments in Delgany, Co Wicklow. With 566 applications for the Citywest houses and 448 for the Delgany apartments, both schemes are vastly oversubscribed and it is not hard to see why. In Citywest the rent for a three-bed house has been set at €1,350 a month, with four beds at €1,450 and €1,460, a relative bargain in the current market. In Delgany, rent for a two-bed duplex has been set at €1,455 a month and €1,550 for a three-bed.
Cost-rental schemes have proved extremely popular since the first one came on the market in Balbriggan less than two years ago, when again a lottery was needed to select tenants.
Undoubtedly the rental rates drive the popularity of cost-rental schemes. The principle is the rent is in no way tied to the market but is instead based on what it costs to build, manage and maintain the property. However, their appeal goes beyond low rents. A significant draw is the security of tenure provided. Leases are for several years and theoretically a tenant can stay for life, even if their income rises and they no longer meet the eligibility terms under which they qualified for the scheme. These homes will remain in the rental market, so there is no landlord waiting for the end of the eviction ban to sell up. In this regard they are similar to the much-maligned build-to-rent system, albeit less expensive.
The only significant downside of cost-rental developments is there isn’t enough of them. Their introduction was announced by Government in 2015, but it took six years for the first one to come on the market, and still their numbers are only in the low hundreds nationally.
They have also yet to make an appearance in the market with the greatest housing need – Dublin city. While the LDA and the city council have plans for several cost-rental schemes in the city, the council’s head of housing has said it would be difficult to keep rents low, due to the high costs of construction in Dublin. In the current market that is unlikely to deter prospective tenants, as the rents would be still be less than on offer elsewhere , though if the market turns, it could cause future difficulties in filling vacancies.
Cost rental appears the best approach to provide options for those in the middle ground, who do not qualify for social housing but cannot afford the private market. But the lack of supply and the cost of building new units present a challenge. Public funds are a scarce resource, but ramping up cost rental supply should be a priority.