Our private rental market is experiencing ongoing upward pressures due to strong economic and demographic growth. Ultimately the most effective way to reduce and stabilise rents in the medium to long term is to increase supply and accelerate delivery of housing for the private and social rental sectors. At this point, affordability remains a significant issue in the rental market and the Government is tackling this in a number of different ways to help ensure that families can provide themselves with a home - whether that be in the rental market itself or via home purchase.
Acknowledging that renters in Dublin and other major urban centres are facing significant housing access and affordability challenges, the Government is committed to the introduction of a Cost Rental sector in Ireland. Cost Rental relates to housing where the rents charged cover the cost of delivering, managing, and maintaining the homes only as opposed to private sector rentals where rents are set by the market, which may lead to high rents in high demand areas. The rent paid by a household in a Cost Rental tenancy will not be driven by market demand. A core objective of Cost Rental is to offer moderate income households the choice of a more affordable and stable form of rental tenure. Over the longer term, as homes are delivered at scale, it is envisaged that Cost Rental will have a stabilising effect on the broader private rental market. Together with delivering more affordable and predictable rents, Cost Rental can make a sustainable impact on national competitiveness and the attractiveness of our main urban centres as places to live and work.
The Government’s Strategy for the Rental Sector recognises that rapidly increasing rental inflation is the most significant challenge to security of tenure in the rental sector and that there is a need for a targeted, time-bound and transparent policy response to the issue of rising rents. To address this, the Government introduced the Rent Predictability Measure. This measure, which was provided for by the Planning and Development (Housing) and Residential Tenancies Act 2016, introduced the concept of Rent Pressure Zones (RPZs) to moderate the rate of rent increases in those areas of the country where rents are highest and rising quickly.
At this stage, some 68% of the approximate 311,000 tenancies in the private rental sector are covered by RPZ designations and come under the 4% rent increase restriction.
In order to support more robust enforcement of the RPZ regime, the Residential Tenancies (Amendment) Act 2019 has provided the Residential Tenancies Board (RTB) with additional powers and resources to carry out investigations and sanction landlords, if required, for any contravention of the 4% rent increase restriction in Rent Pressure Zones.
The Government has also introduced a number of affordability measures to support people who wish to purchase their own homes. In particular, a new loan offering, known as the Rebuilding Ireland Home Loan, was introduced with effect from 1 February 2018. The loan enables credit-worthy first time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range. The low rate of fixed interest associated with the Rebuilding Ireland Home Loan provides first time buyers with access to mortgage finance that they may not have otherwise been able to afford at a higher interest rate.
Additionally, the Help To Buy (HTB) incentive, announced in Budget 2017, is designed to assist first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home.
The incentive provides for a refund of Income Tax and DIRT paid over the previous four tax years, limited to a maximum of 5% of the purchase value. The HTB refund is capped at €20,000.
As of 30 November 2019, Revenue has received 34,760 applications, and a total of 16,550 HTB claims have been made, of which 15,903 are approved. The estimated total value of approved HTB claims to date is in the order of €236 million.
The Minister for Finance and Public Expenditure, Pascal Donohoe TD, extended the initiative in its current form in Budget 2020. This means that the HTB initiative will remain for another two years until 31st December 2021.”
Increasing the supply of new homes at affordable prices is a key pillar of the Rebuilding Ireland Action Plan.
Under Rebuilding Ireland the Government has introduced the Local Infrastructure Housing Activation Fund. The objective of the fund is to provide public off-site infrastructure to relieve infrastructure blockages, thereby enabling the accelerated delivery of housing in Dublin and in other urban areas in high demand. Funding of €200m has been allocated across 30 projects over the period to 2021 and work is underway to deliver the infrastructure with an associated housing delivery of up to 20,000 units. About 40% of these homes will be sold at rates which provide a discount on market prices. More than 3,000 will be social units and the remainder will be sold at market rates.
€310m has been made available under the Serviced Sites Fund over the period to 2021 for infrastructure works on local authority lands that will support the delivery of housing for rent or purchase at rates which provide a significant discount on open market costs. Two calls for proposals have been made to date which has resulted in ‘Approval in Principle’ being given for an allocation of c. €127m in funding to 35 projects and c. 3,200 more affordable homes. It is anticipated that a further call for proposals will issue in 2020.
In 2018, the affordability provisions set out in Part 5 of the Housing (Miscellaneous Provisions) Act 2009 came into force. Regulations in relation to a number of operational matters (including schemes of priority) were made earlier this year and further Regulations will be made in the coming months. Under affordable dwelling purchase arrangements, a maximum discount of 40% of the market price will be given. However, unlike previous affordable schemes, the percentage discount provided will remain a Local Authority equity charge until it is repaid.