COST RENTAL IS a relatively new form of tenure of housing in Ireland, first introduced in 2021. Its purpose is to offer secure, affordable and high-quality housing to the middle-income group – those who earn too much to make them eligible for social housing but who are struggling to rent or buy in the current, ever-inflating housing market in Ireland.
The idea is simple – the housing provider or landlord charges a rent that covers the cost of building, managing, maintaining and paying the finance on the home but does not make a profit. Rents are only ever increased in order to cover costs – speculation and rent increases in line with market demand are taken out of the equation.
This means that, for the renter, whether it be an individual, a family or even friends sharing a home, the rent should remain relatively affordable, with rents targeted at least 25% below market level, with any rent increases linked to inflation (Harmonised Indices of Consumer Prices – HICP).
In addition, as their landlord is driven by a social mission of providing a home, as opposed to by profit, they offer a high level of security of tenure, or, in other words, a ‘forever home’, for as long as the tenant wants to stay. As well as this, cost rental units are unfurnished, allowing tenants to put ‘their own stamp’ on their home, kitting it out to their own needs and tastes.
To date, more than 1,700 cost rental homes have been provided by Approved Housing Bodies (AHBs or housing associations), local authorities, and the Land Development Agency (LDA). AHBs, primarily Clúid, Respond and Tuath, have provided the majority — 976. The delivery of cost rental is underpinned by a commitment to the tenure within the Government’s housing plan, ‘Housing for All’, and funded by Government via the Housing Agency.
Homes have now been delivered right across the country, including in Dublin, Kildare, Cork, Laois, Meath, Westmeath, Kilkenny and Louth. Cost rental houses or apartments are usually delivered as part of larger housing estates or complexes, which provides a ‘tenure mix’ of cost rental, social housing and private housing, widely believed to be important in creating thriving, sustainable communities.
New research, released today in collaboration with the Approved Housing Bodies (AHBs) Clúid, Respond and Tuath was based on surveys and interviews with cost rental residents. It paints an overwhelmingly positive picture of cost rental housing.
The vast majority (80%) of cost rental residents surveyed described their housing situation as ‘very secure’, with one of those interviewed stating, ‘I think it changed my life’.
Residents reported that their sense of having a secure home was based on the long-term nature of their tenancy (i.e. knowing that they could stay for as long as they wanted), the predictability of rents, the ability to control aspects of the home like furnishing, the approachability and professionalism of the landlord (the AHB), and the high quality of the home.
To sum it up, a strong sense of home, ownership and belonging was reflected in the research. The impact of these positive factors on the entire family was also captured, with one resident describing that, given their number of previous moves within the more insecure Private Rental Sector (PRS), her daughter had been reluctant to ‘take clothes out of her bags from months’, but then explaining to her that ‘this is your home now’, and that she could ‘do up (her) room’ as she liked.
The security of tenure offered within cost rental was also highlighted by some residents as enabling them to become involved with the local community, as, as one resident put it, ‘Here, we know we’re not going anywhere, so we kind of embraced it’.
The affordability of cost rental housing, as compared with privately rented housing, was also raised as a very important feature, with one resident describing how a cost saving of a thousand euros a month now meant that they could afford childcare, to allow her husband to return to work. Another resident referred to being able to reduce their ‘reliance on debt’, given the affordability of the rent.
Nonetheless, survey data from the research did show that half of the respondents were currently paying more rent in cost rental than in their previous private rental housing, and the research found that on average rent represents 34.5% of household disposable income. Given a core aim of cost rental is to increase affordability, more needs to be done to ensure cost rental housing achieves this objective. That said, however, many of the same residents noted that the quality and size of their cost rental home was far superior to their previous accommodation. It is also important to note the broader role of cost rental housing in encouraging a greater overall supply of affordable housing, which can help to dampen rents across the wider rental market.
Finally, while one resident described cost rental housing as being ‘the next best thing to being a homeowner’, most respondents (66%) still held aspirations to own their own home at some point in the future. Given that cost rental still remains a relatively new and not yet widely understood form of housing in Ireland, and that a strong culture of home ownership continues to exist in Ireland (despite falling homeownership levels), this is perhaps unsurprising. However, it will be interesting, and, indeed, essential, to monitor any shifts in aspirations and attitudes over time.
In short, it seems that cost rental housing is off to a good start. The addition of a completely new form of housing tenure in Ireland, a secure rental option for middle-income households, should be celebrated as a significant step forward for the Irish housing market. When compared with the need that exists, though, 1,700 cost rental homes is just a drop in the ocean.
The location of cost rental homes also merits close consideration. While a considerable proportion of cost rental housing has been delivered in suburban areas, we need more cost rental homes within our cities, close to education, employment, transport links and amenities, from a quality of life and climate sustainability perspective. One thing is for sure, however — cost rental housing clearly has the power to enable individuals and families to thrive and grow within our communities – let’s allow cost rental, as a fledgling form of housing, to do the same.
Fiona Dunkin is Housing Policy Manager with Clúid Housing. The full report can be accessed here.
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