People earning up to € 82,000 per year before taxes will be eligible for the government’s cost-rent program, under new regulations to be approved by Housing Minister Darragh O’Brien this week.
The rent-to-cost system seeks to drive down rents in developments that will typically be managed by housing associations, developed without a built-in profit margin.
Eligibility for the scheme will be capped at a household income of € 82,273, or approximately € 53,000 net, single persons as well as dual-income households earning up to this level can apply. Different types of accommodation – such as one-bed apartments or larger apartments – will be allocated depending on the number of people in each household.
Previous government plans for cost-hire schemes have included different income eligibility limits for different household sizes – for example, a lower ceiling for single-income households. However, sources said that a single cap was chosen to reduce complexity for applicants and the burden of administering the program.
Government sources predict that demand for the program will be significantly oversubscribed, with a lottery being held among eligible applicants for different programs. Last month, more than 500 people applied in just 24 hours to rent 25 units in Balbriggan as the state’s first cost-renting program was announced. Rental type has for several years been identified as a key element in falling rents, but large-scale development has not progressed in the state.
There is no set minimum income level, although tenants cannot collect Housing Assistance Payment (HAP) or rent supplements and will have to prove that they can pay the rent on their own. . However, if a tenant loses their job and switches to HAP, they will remain eligible for the program and rentals will be indefinite.
Some € 35 million has been allocated to fund capital for cost-rental programs in 2021, but sources have indicated that this amount will be increased in the Housing for All plan and extended by the Land Development Agency.
Some 440 rental units at cost price are expected to come into production this year, for a rent of around € 1,155 on average for a T3. Government rules will state that rental units at cost must be at least 25 percent below the market rate in the region where they are built.
Rental developments are expected to be built primarily by licensed housing organizations, which will be able to benefit from specialist loan financing from the state, spread over 40 years and covering up to 30% of the cost of new housing. These loans, called rental value loans, will have a simple interest rate of 1% over the life of the loan, with repayment only due at the end of the loan term.
Housing organizations will have to cover the rest of the development costs using commercial debt financing, but the Housing Finance Agency has also made € 100 million available for these projects.
Both loans are designed to subsidize the cost of providing housing and allow housing organizations to offer housing at below market rents.