2026-06-25

84. Deputy Conor Sheehan asked the Minister for Housing, Local Government and Heritage his plans to introduce measures to reduce cost-rental rents; and if he will make a statement on the matter. [47823/26]

What are the Minister’s plans to introduce measures to reduce cost-rental rents? Will he make a statement on this because cost-rental rents are too high and are locking thousands of people out of the rental market? The average rent for a three-bedroom house in Oscar Traynor Road is now €1,800. More and more applicants are being refused on affordability grounds. There are flaws in the model, which I will go into in my supplementary questions.

I thank Deputy Sheehan for raising what is an important issue, namely, measures to reduce cost-rental rents. The cost-rental model was first introduced under the plan Housing for All and it has been continued and significantly expanded under the new plan, Delivering Homes, Building Communities. It is designed to provide secure, long-term homes for households on moderate incomes at rents that are significantly below private market levels. The cost-rental support schemes in the new housing plan are key measures in seeking to address affordability challenges in the rental sector. This is why, under the new housing plan, the Government has committed to growing the provision of affordable cost-rental properties across the country. What has been achieved in this area in the past number of years is significant. Cost-rental housing did not exist in this country five years ago. From a standing start in 2021, and because of the actions of this Government and the unprecedented level of funding provided in successive budgets, almost 6,000 new cost-rental homes had been delivered up to the end of last year and a substantial pipeline is currently in place. This is supporting people on moderate incomes who would otherwise struggle to afford rent to move into good quality homes at rents they can afford. It provides long-term security of tenure, provides a home and gives people who avail of the schemes a chance to plan for their future. We are only getting started. I am not for one moment suggesting that we have done enough. We must do more. Clearly, we are not yet at the stage of supplying enough cost-rental homes to meet the demand. We have more work to do to ensure that units are made available at rental levels that remain affordable and sustainable. This remains a key challenge and one that is a priority for me and my Department. While this is a real success story, I am not resting on my laurels. The homes that have already been delivered at heavy discounts to equivalent private rental market rates are meeting real demand, are incredibly popular and are providing much-needed secure and affordable homes in the rental sector. I am providing substantial funding to local authorities, the Land Development Agency and approved housing bodies to support cost-rental delivery. Since the introduction of the tenure in 2021, approximately €2.25 billion in departmental funding has been approved for cost-rental projects.

I thank the Minister for his response. There are a couple of questions I want to ask. Has the Minister any plans in relation to all the fragmented subsidies that exist, like those related to the secure tenancy affordable rental investment scheme, STAR, and cost-rental equity loan, CREL, and the local authority funds. Does he have any plans to merge these? I also want to ask about barriers to delivering cost rental at scale and whether consideration is being given to extending the repayment period of the CREL loan. This is something that has been raised with me by approved housing bodies, AHBs, because we have had incidents recently where some AHBs were pulling cost-rental developments. They are saying they are struggling because of the requirement for the rent to sit 25% below the market rate, yet rents are already high enough and need to come down.

I thank the Deputy again for his question on cost rental. As I have already pointed out, approximately €2.25 billion in departmental funding has been approved for cost-rental projects since 2021. In addition, significant loan financing is being made available through the State's Housing Finance Agency. Also, the reduction of VAT on new apartments to 9% under budget 2026 is playing an important role in reducing costs. All of these supports lower the net cost of delivery, enabling more cost-rental homes to be delivered and ensuring more affordable rents for tenants. My Department's funding comprises non-repayable grants, equity investments and long-term loans at very low interest rates, which enable rents to be set below full cost recovery levels. As a result, cost-rental homes can be provided at rents that are significantly more affordable and considerably lower than comparable rents in the private market. Cost-rental homes provide a significant saving for the tenant, and I am aware that tenants who benefit are very appreciative of both the rents and the security of tenure the homes provide.

To push back on that a bit, while cost-rental rents are somewhat lower, being on average about 30% lower than rents in the private rental market, they are still far too high. A market rent in Dublin of €2,300 still means €1,725 a month. Will the Minister consider the length of time AHBs have to repay the CREL loan? That will answer some of the issues they have. Furthermore, will he consider decoupling our cost-rental model from the open market down the line and tying it entirely to underlying financial costs of delivery by amending the 2021 Act? When building costs and long-term maintenance rise, rents set at 25% below market rate cannot generate enough revenue to cover the actual cost of housing. This has forced bodies to scrap projects. We need to move away from the explicit linkage between initial cost rents and prevailing market rates.

Again, I thank the Deputy for his question. If you have a pure cost model, you will have very significant variations in what the cost-rental rent will actually be. We have taken the approach of trying to ensure consistency below market rent values. A 30% discount below market rent value is a significant deduction, albeit in circumstances where rent is high, which I acknowledge. However, if we decouple and go purely with a cost model, based on the cost of providing the apartments, we could have apartments beside each other that could have very different rents based on very different costings. In some cases, there could be a reduction in the discount. That would provide a level of inconsistency and a lack of equity in the approach. That is where we have taken the view and approach we have taken, setting the rent based on the market rather than the cost inputs.