Ensuring affordability: The role of the LDA in delivering cost rental homes

Almost 1,000 households currently live in a Land Development Agency (LDA) cost rental home. And that figure is continuing to rise.

Later this year, the LDA will open applications for new cost rental homes in Shanganagh Castle Estate in south County Dublin and The Mills in Casteltroy in Limerick. Next year more LDA developments will be launched with more new cost rental homes coming on stream.

Cost rental is a relatively new tenure in Ireland, designed to provide secure and affordable rental accommodation for those who do not qualify for social housing, but who are effectively locked out of the private market.

The rent is based on the cost of building, managing, and maintaining the homes, and to qualify as affordable, the rent involved must be no greater than 35 per cent of an applicant’s monthly net income.

Housing for All, the Government’s housing plan to 2030, sets out an annual average requirement of 2,000 new cost rental homes every year with rents targeted at least 25 per cent below market level. This equates to a total of 18,000 cost rental homes by 2030 with 10,000 of these due to be delivered by 2026.

As the State’s affordable housing delivery body, the LDA is at the forefront of expanding the provision of cost rental homes and it is currently scaling up delivery of this essential offering. The Agency develops housing, through two delivery streams, Direct Delivery and Project Tosaigh.

Under the former, new homes are developed on state-owned or acquired land either by the LDA on its own or in partnership with local authorities and other state bodies.

Project Tosaigh

Project Tosaigh, sees the LDA partnering with private homebuilders providing the funding needed to complete housing projects and overseeing their delivery.

Some of the homes are made available to purchasers at affordable prices, but the majority are retained by the LDA and made available as cost rental.

The delivery of cost rental units is ramping up extensively with new projects being launched regularly and more being added to the LDA’s development pipeline.

Just this year, for example, the Agency announced the opening of the application process for over 600 cost rental apartments in developments in Hansfield, Citywest, and Kilternan in Dublin as well as Leixlip in Kildare. A further 180 apartments were then released in Cookstown in Tallaght.

More completions are imminent, including on direct delivery developments in Shanganagh Castle Estate in Dublin, St Kevin’s in Cork and Devoy Barracks in Kildare. Construction is due to start on five more sites by the end of this year including developments in Mungret in Limerick and St Teresa’s Gardens in Dublin.

A total of 180 cost rental Project Tosaigh homes will soon be released in Castletroy in Limerick while the LDA also announced a recent deal to deliver 392 apartments in Adamstown in west Dublin with more announcements expected soon.

Cost rental seeks to offer a long-term and secure rental option, which will contribute to the development of a sustainable housing market.

The average rent for LDA cost rental homes is significantly lower than the private rental sector. In Dublin, for example, according to Daft.ie, the average rent for an LDA cost rental home is €1,354 per month compared to €2,395 in the private market, with LDA rents starting from €1,050 for studio apartments.

Each cost rental home offers people the opportunity to secure stable, affordable housing, enabling them to live and plan for the future without the fear of sudden rent hikes or eviction. Once they qualify for a home, they can continue to rent it at cost rental rates even if their household income increases.

In 2023, the government introduced the Secure Tenancy Affordable Rental (STAR) scheme, which is available to private developers in addition to the LDA and Approved Housing Bodies.

The scheme seeks to provide extra funding for cost rental homes that ultimately helps to address viability issues and ensures rents can be set at 25 per cent below current market rates. Private developers must agree to designate qualifying homes as cost rental for at least 50 years.

Once a rent is set via the STAR scheme, the homes are advertised for a minimum of seven days, during which interested potential tenants register their interest online. Once advertising is complete a lottery is conducted to rank all self-declared eligible applicants. The process moves on to eligibility checking, where applicants must demonstrate they meet the following criteria:

• their net household income must be below €66,000 per annum for properties in Dublin and €59,000 for properties elsewhere in the country;

• they must not be in receipt of any social housing supports;
• they must not own a property;
• heir household size must match the size of the property advertised and all members of the household must be living in Ireland at the time of applying;
• each household can only make one application for a particular unit type; and
• they must be able to afford to pay the rent advertised.

The recent Report of the Housing Commission strongly advocates for the delivery of cost rental housing at scale. It believes that such a move would address the challenges in maintaining rental housing supply and assist in tackling affordability issues.

As with all new measures, cost rental is still evolving, and changes may enhance its provision. The definitions of what a household is and what income thresholds should apply to allow two or three people to rent together, for example, are two areas which could be reviewed. Similarly, the ability to target specific demographics with needs in certain geographic areas is limited by the existing regulations.

It awaits to be seen what impact the provision of cost rental housing will have on the private rental market, but it is likely that as supply increases it will help to stabilise the market and reduce the rate at which rents are increasing.

In the meantime, each new LDA cost rental home continues to offer security and affordability for eligible households, many of whom have already availed of this groundbreaking housing type.

T: 01 910 3400
W: www.lda.ie