ESRI Recommends Ireland's Cost Rental Scheme Break Link to Market Rents
Ireland's affordable rental scheme offers homes 30% cheaper than market rates, a success highlighted by ESRI. The scheme, with 3,600 homes, targets specific income brackets and provides tenure security. ESRI recommends delinking rents from market rates to ensure viability and expand the scheme's reach nationwide.
Ireland's affordable rental scheme, providing homes 30% cheaper than the private market, has been highlighted as a success by a new Economic and Social Research Institute (ESRI) study. The scheme, targeting households with net annual incomes below €66,000 in Dublin and €59,000 elsewhere, aims for rents to cover only development and maintenance costs, not profit. Tenants also benefit from security of tenure after an initial six-month probation.
Despite its popularity and thousands of applications for units, only about 3,600 cost rental homes exist in Ireland, representing approximately 1% of the over 330,000 rental properties recorded in the 2022 census. Current Irish cost rental models are unusual as they link rents to be at least 25% below market rates, unlike systems in Austria and Finland where cost rental can be significantly lower.
The ESRI recommends phasing out the explicit link to market rents, suggesting prices be set purely on economic costs. This change could prevent viability issues, such as Clúid's recent abandonment of 40 cost rental units in Cabra, Dublin, due to rising costs making the 25% below market rate unfeasible. The ESRI also advocates for a broader countrywide presence beyond Dublin suburbs to strengthen the scheme's impact and potentially dampen overall market prices, though this is a long-term goal.