Rental Sector

Dáil Éireann Debate, Wednesday - 10 March 2021

Wednesday, 10 March 2021

Questions (404, 405)

Eoin Ó Broin

Question:

404. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage if the financing model for the cost rental scheme currently being piloted by his Department includes 60% loan finance from the Housing Finance Agency or private banks, 30% equity contributed by the State through the cost rental equity loan scheme and 10% contribution from the approved housing body provider; and if this 10% contribution from the provider or approved housing body will take the form of cash or equity. [13338/21]

Eoin Ó Broin

Question:

405. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the way in which the 30% cost rental equity loan will be calculated in future years when the approved housing body reaches the point of having to repay the equity; if it will be passed on the open market value of the property or some other calculation; if there will be an interest charge on the equity loan; if so, the interest; and if it will change over time. [13339/21]

Written answers

Minister for Housing, Local Government and Heritage

I propose to take Questions Nos. 404 and 405 together.

On 8 February 2021 I announced that approval in principle had been given for the financing of 390 new homes for Cost Rental under the Cost Rental Equity Loan (CREL) scheme. Allocated €35m in Budget 2021, the CREL scheme will see the Government issue 40-year loans to Approved Housing Bodies (AHBs) to cover up to 30% of the capital cost of new homes for Cost Rental. These loans have 1% simple interest, fixed for the lifetime of the loan, and no repayment is required until the end of the loan term, at which point both the principal and the accrued interest will fall due.

Whilst AHBs may invest their own equity, it is anticipated the majority of remaining capital costs will be primarily sourced from long-term commercial debt funding. To this end, the Housing Finance Agency has made available €100m in 40-year loans for CREL-approved projects in 2021, competitively priced at 1.25% interest fixed for the first 30 years.

Following a Call for Proposals and a rigorous assessment process, approval in principle was granted to Clúid, Respond, and Tuath AHBs for CREL funding of 390 new Cost Rental homes in 2021. Precise details of the funded projects, including locations, housing typologies, and cost-covering rents, will be released when the AHBs have completed the financial and commercial arrangements.