Just over three years ago, the first cost-rental homes in the State opened for applications from tenants and were an instant hit.
More than 1,000 prospective tenants applied to rent the 25 homes on offer in the newly-built Taylor Hill estate in Balbriggan. The big draw? The level of rents.
Two-bedroom houses cost €935 a month and three-beds €1,100. These prices were about 40 per cent lower than similar rents in the area at the time.
While low rents were undeniably the initial attractor, arguably the biggest asset of the cost-rental system is that it recuses renters from the maw of the market, offering long-term security of tenure and protection from predatory rent rises.
The system is so called because it is designed to cover the “cost” of housing provision over a long period, typically 30 to 40 years. Rents are based on the cost of building, maintaining and managing the homes, rather than on making a profit.
The scheme is aimed at workers who earn too much to qualify for social housing supports, but who cannot afford open market rents. The current household income limit is €66,000 after tax.
Other eligibility criteria apply, all of which are listed on Housing Agency website at affordablehomes.ie. They include stipulations such as the available property must match the household’s size, applicants cannot be in receipt of any social housing supports, including rent supplement or housing assistance payment (HAP), they must not own a property, and must be able to afford the rent.
When the initial cost rental schemes came available, this last condition was not seen as a stumbling block. There was a sizeable cohort of eager tenants earning below the maximum limit, but for whom the rent was not more than 35 per cent of their net income, the level designated as “affordable”.
However, newer schemes are testing that affordability limit. Most recently the Land Development Agency advertised its apartments for rent in Shanganagh, South Dublin from €1,175 a month for a studio to €1,775 for a three-bed. While there would be a sizeable cohort with a net income under €66,000 in the running for the one-bed, there would be quite a narrow band qualifying for the three bed.
Cost rents for O’Devaney Gardens, the estate currently under construction near the Phoenix Park in Dublin city centre are expected to be higher still. While the scheme is not due for completion until 2026, rents of €1,895 have seen put forward for a three-bed, which under current limits would mean only those earning between €64,971 and €66,000 would qualify.
While the €66,000 is set in legislation, the 35 per cent limit is “policy”, said Jim Baneham director of delivery and innovation with the Housing Agency.
However, increasing costs are proving a “challenge”, he said. “The main reason for the increased rents is the construction inflation and the changes in interest rates. On the unit capital cost, being realistic we don’t see any significant downward movement there, but what should be helpful is improvements in interest rates”.
Legislative changes to allow sharing of cost-rental properties would also help reduce costs for individuals, but not families.
“There’s no magic wand unfortunately in terms of making it cheaper, but you’re getting a quality home with a quality landlord that will maintain that home for a very long period of time. The long-term benefit is there for tenants today, but also tenants in the future.”
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