Income limits for cost-rental housing applicants are to increase to €66,000 in Dublin and €59,000 in the rest of the State, after tax, from next month to address the “severe affordability challenges” experienced by renters in the private sector, the Department of Housing has said.
A cash injection of €750 million in State funding is also being made available for private developers to entice them to provide cost-rental housing for the first time.
Current limits exclude households with an after-tax income of more than €53,000 annually from eligibility for cost-rental schemes.
Cost rental is aimed at people who earn above social housing caps but struggle to pay market rents. Under the cost-rental scheme, the rent paid is based on the cost of building, managing and maintaining the homes, and not market rates.
It had been signalled earlier this year that income limits could be extended to households taking in €75,000-€80,000 – equating to a pretax income well above €100,000.
However, the new limits will mean total household salaries would typically not exceed €80,000-€90,000 to qualify for the scheme.
The €53,000 net income limit had been set in 2021 and the new ceilings reflected rent increases over the period as well as inflation and average income increases, the department said.
While several hundred cost-rental homes have been provided by the not-for-profit housing sector, with State subsides, over the last two years, none have yet been provided in Dublin city. The private sector has also been excluded from availing of these subsidies.
The new Secure Tenancy Affordable Rental investment scheme, or Star, with €750 million to part-fund the construction 4,000 cost-rental homes by 2027, is also being made available from August 1st, to developers who will provide rental accommodation at a minimum of 25 per cent below comparable market rental levels.
Developers can secure State funding of up to €200,000 per home in Dublin and €175,000 outside the capital, as long as they agree to keep the homes within the cost-rental scheme for at least 50 years. At the end of the 50-year term, if they choose to leave the scheme the State equity and a percentage of any uplift would have to be repaid.
The scheme is designed to address the “viability challenges” in the private housing market, the department said, particularly in Dublin where planning permission has been granted for more than 40,000 homes that are not yet under construction.
Subsidies for the not-for-profit housing sector are also being increased with changes to the cost-rental equity loan. Approved housing bodies (AHBs) will be able to secure State funding for up to 55 per cent of capital costs, from a current limit of 45 per cent, if they can demonstrate this is required to keep rent levels at a minimum of 25 per cent below the market. It is hoped this measure might also encourage the AHB sector to provide cost-rental homes in Dublin city.
