Dáil Éireann Debate, Wednesday - 13 May 2020
1252. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government if local authorities and approved housing bodies will be permitted to access the 40-year financing and the serviced sites funding in order to ensure that the cost-rental rates are as affordable as possible, that is, between €700 and €900 per month. [4481/20]
Amharc ar fhreagraThe Government is committed to the introduction of the Cost Rental housing model in Ireland. Cost Rental is generally understood as being housing where the rents cover the cost of delivering, managing, and maintaining the homes only, less any financial supports provided by the State or Local Authorities. Depending on the nature of the model, Cost Rental lacks the level of profit margin often seen in the private rental sector and the rents are not overtly influenced by market supply and demand. With the resulting rents significantly below market levels, many households on more moderate incomes will have access to a more affordable and stable form of rental tenure than would otherwise have been the case. Cost Rental will be a new tenure option for Ireland, and is one of several schemes which my Department is pursuing in order to deliver on the Rebuilding Ireland Action Plan and provide more affordable housing.
The rents for Cost Rental units will naturally be a factor of the overall cost of each development and will vary according to the site and design specifics. My Department has identified a number of measures which can be used at the outset of a development in order put downward pressure on costs and make Cost Rental more affordable for tenants. These include provision of land at low/zero cost, a design approach with value engineering and long-term maintenance in mind, a potential State contribution to development costs via the Serviced Sites Fund, and the availability of low-cost, stable finance that is paid back over a long period of time.
The Serviced Sites Fund provides €310 million of support to help deliver more affordable homes. I can confirm that the SSF is available to local authorities to fund initial infrastructure works and so reduce the cost of building homes, which will be either sold under the Affordable Purchase scheme or made available under a Cost Rental scheme. Approved Housing Bodies will be able to access the benefits of SSF funding by working in partnership with Local Authorities.
A number of Cost Rental 'pathfinder' pilots are currently under development that will act as examples of how Cost Rental can operate in practice. The first of these to commence construction is at Enniskerry Road in Stepaside. It consists of 50 Cost Rental homes alongside 105 social housing apartments. It is being developed by two Approved Housing Bodies, Tuath and Respond, in partnership with Dún Laoghaire-Rathdown County Council and the Housing Agency. Construction began in July 2019 and delivery is currently scheduled for 2021.
This project at Enniskerry Road is being is supported through both the mechanisms suggested by the Deputy, namely long-term, low-interest loan financing from the Housing Finance Agency, to be repaid over 40 years, as well as upfront capital assistance from my Department through an investment of some €5 million of SSF funding. My Department is aware of the positive impact that these supports can have on reducing the cost of development and the ultimate rent paid by the tenants, which at Enniskerry Road is projected to be €1,200 for a two-bedroom apartment.
More generally, the terms of any financing mechanism used in the delivery of a Cost Rental development would obviously be a matter for agreement between the parties involved in each specific case. However, I can confirm that there is a clear understanding of the fundamental need for long term financing to support the delivery of the Cost Rental model and engagement with funders such as the EIB, who have signalled broad support in this area, are undertaken in that context.
