Current housing models have not, so far, been able to provide an adequate supply of housing that meets the needs of all sections of Irish society, meaning new solutions are needed.
One area that has, until now, arguably been under-represented is that of the affordable housing sector. How do we meet the needs of those that are in work and have an income, do not qualify for social support, but are likely to never be able to afford to buy their own home? It is extremely welcome news that the Government has now issued 'Calls for Proposals' to the new Cost Rental Equity Loan (CREL) scheme, as was originally announced in Budget 2021, and also contained in the Programme for Government (PfG).
The PfG included an ambitious commitment to increase social housing stock by 50,000 units, led by local authorities with the assistance of AHBs – who supplied over 40 per cent of social housing in 2019, with the objective of speeding up the procurement of new homes and enabling access to alternative funding. What was clear at the time of the PfG was that it was imperative that Ireland's stock of public housing is maintained, and this is best achieved through a suitable cost rental model to meet the affordable housing needs of those who would otherwise have few long term housing options.
The Cost Rental Model
In essence, the principal of a cost rental model is that a state body, such as a local authority or AHB, provides rental accommodation to those who are above the threshold for social housing but unable to afford to buy their own property or rent on the open market, at cost. This means the low rent charged is calculated to only cover the cost of delivering, managing and maintaining the home. With the costs spread over the long-term and not subject to open market rent fluctuations, this should provide a long-term sustainable housing solution. The "Vienna Model" is a popular and proven example of a cost rental scheme that has delivered sustainable and high-quality affordable housing in the Austrian capital and a model that we should inevitably look to replicate here.
The CREL Scheme
For any cost rental model to succeed, low-cost, long-term and stable finance is required. This is why the Government's CREL scheme is a big step forward for the cost rental model. The €35 million made available by the Government will be in the form of long-term loans on "favourable terms" – meaning low interest rates. This is intended to cover up to 30% of the development or acquisition cost to AHBs for new cost rental homes with a further €100 million of long-term commercial loans due to be made available by the Housing Finance Agency, to fill the remaining development cost gap for AHBs. The Government has announced that this fund will support AHBs to deliver approximately 350 cost rental homes next year prior to delivery of further homes by the Land Development Agency and forms part of a larger allocation of €468 million for all housing affordability measures.
It is important to note that cost rental is intended to complement social housing adding to the public housing stock. It is envisaged these homes will be made available to applicants who meet defined eligibility criteria which will be set in advance of the completion of the first projects. All of this will be underpinned by a new affordable housing Bill, that will define and regulate this new sector. The detail of this Bill will be important and something Beauchamps will be monitoring closely for our clients.
Cost Rental Works
This commitment from Government is important validation for our AHB clients, who have been championing the cost rental cause for some time. For example, Beauchamps are extremely proud to have worked closely with Respond, in conjunction with Tuath Housing, on the Enniskerry Road Cost Rental Project. This is a successful pilot scheme for the cost rental model that has demonstrated to Government that this type of cost rental scheme works in providing a solution to a significant gap in the market. This greater plurality of housing models is the only way forward in tackling the diverse housing requirements in Ireland.
Beauchamps will continue to support our partners in delivering new homes for all sections of society and look forward with optimism to further improved housing provision in Ireland.