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The affordability question: Cost rental and the affordable purchase schemes

Now that some time has passed since the introduction of the Affordable Housing Act 2021, Fidelma McManus considers the delivery and affordability of cost rental units to date and discusses the potential impact of the Affordable Purchase Schemes on affordability.

The cost rental model

On 21 July 2021, the Affordable Housing Act 2021 (the Act) was signed into law and introduced a variety of measures to make homeownership more affordable for buyers by introducing cost rental, a new form of tenure in Ireland that is to provide secure, long-term rental properties at below-market rates. Subsequent to the introduction of the Act, the Government published its Housing for All plan which aims to deliver about 18,000 cost rental homes between now and 2030, averaging about 2,000 a year.

Last year, 65 homes were occupied under the scheme: 25 at Taylor Hill in Balbriggan, Dublin and a further 40 at Barnhall Meadows in Leixlip, Kildare, both acquired by Clúid Housing. In March of this year, tenants began moving into 50 purpose built cost rental homes at Enniskerry Road in Dún Laoghaire-Rathdown (a joint venture pilot cost rental project between Respond and Tuath Housing), and approximately 700 additional cost rental units have been approved for completion this year.

i. Is cost rental delivering affordable units?

Now that the first cost rental units have been delivered by approved housing bodies (AHBs), it allows us to assess whether cost rental is an affordable option for those who qualify. To recap, as per section 34 of the Act, the rents payable are calculated on the basis of the cost of building, managing and maintaining the property in question and rents are typically pitched at rates of about 25 per cent (or more) below the market. This is a sizeable discount on the market rent for these tenants.

However, with rents having risen nationally at a rate of 3 per cent in Q3 2021 and the same again in Q4 2021 with no signs of slowing down, and coupled with the increase in the cost of building materials, the Government’s efforts to deliver affordable cost rental units are being undermined and genuine affordability is still an issue.

By way of example, the rents for cost rental projects in Kilcarbery in Clondalkin and City West in Dublin offer one-bedroom apartments at €1,000 a month with two-bedroom apartments at €1,200 and two-bed duplexes at €1,300. These rents are still too high for many individual workers, but they reflect the costs of the construction market at present and therefore more significant rental discounts cannot be passed on to tenants by AHBs. If something is not done to further reduce the costs involved for the AHBs, there is a real risk that these rents, although reduced from the private rental sector, will remain unaffordable for the very people cost rental is designed for.

ii. What role will the Land Development Agency play?

Under Housing for All , the Land Development Agency (LDA) will be the State’s primary channel for the development of cost rental housing. Perhaps the main potential benefit of the LDA cost rental schemes is that primarily state-owned land will be developed, so unlike AHBs who generally purchase homes from developers whose profit leads to increased costs, the LDA should, in theory, be able to pass the cost-savings on site acquisitions to tenants in the form of lower rents.

The LDA is to be the State’s primary channel for the long-term development of cost rental housing with plans for more than 10,000 housing units to be provided in the short to medium term. Accordingly, it remains to be seen whether reductions on land acquisition and other costs for the LDA will result in lower rents for cost rental tenants. That said, in the short term to accelerate delivery, it is worthwhile noting that the LDA is engaging with developers to deliver turn-key cost rental units under Project Tosaigh which will, one imagines, involve similar site acquisition costs and developer profit, as those encountered by the AHBs.

Conor McEvoy, Partner in Housing, Beauchamps.

Affordable purchase schemes

Housing for All aims to deliver 36,000 affordable homes for purchase by 2030. The proposed affordable purchase schemes are perhaps the most hotly anticipated developments under the Government’s plan and comprise:

i. The First Home Shared-Equity Scheme: Under this scheme, it is proposed that the State and banks will jointly support first-time buyers on moderate incomes to buy a new home on the private market. The State and participating banks will pay up to 30 per cent of the cost of the new home (funded 50:50 by the State and participating banks) in return for a stake in the home, which can be bought back at any time.

Unfortunately, plans to provide the First Home
Shared-Equity Scheme for affordable housing are delayed at present.

ii. Local authority-led Affordable Purchase Scheme: Under section 8 of the Act, these homes are intended to be available at a reduced price with the local authority taking an equity stake equivalent to the reduction from the prevailing market price for the property. The purchaser can redeem or buy out this equity stake at a time of their choosing. The prices will depend on the type, size, and location of the homes. However, local authorities have indicated they will aim to make homes available at average purchase prices of approximately €250,000. Applicants may also be able to avail of the Local Authority Home Loan which gives favourable rates to borrowers.

It will be momentous if these affordable purchase schemes genuinely improve affordability for purchasers. In particular, The First Home Shared Equity Scheme will be under scrutiny, given reported concerns that the similar British scheme led to a substantive increase in house prices in the Greater London area. The Minister for Housing, Local Government and Heritage, Darragh O’Brien TD has acknowledged similarities, but also outlined differences between the schemes stating that the first home shared equity scheme is “… carefully calibrated to address any inflationary risks”.

The hope and expectation is that these schemes will have a positive impact on affordability but delays in delivery to date are concerning.


There has been acknowledgment by the Government that Ireland’s housing market is not immune to the broader impacts of the war in Ukraine and, coupled with challenging inflationary pressures and disrupted supply chains, these external factors will most likely lead to continued turbulence in our already constrained housing market struggling with affordability. In addition, the capacity to house Ukrainian refugees in Ireland has led to acute concerns in Government circles and presents a further challenge unforeseen by Housing for All.

That said, the first step must be to ensure the Government can truly tackle the affordability question and further actions are required now to prevent costs spiralling even further out of control.

Fidelma McManus, Head of Housing, Beauchamps

Conor McEvoy, Partner in Housing, Beauchamps
E: c.mcevoy@beauchamps
T: +353 (0)1 4180600