Dáil Éireann Debate, Wednesday - 21 January 2026
171. Deputy Rory Hearne asked the Minister for Housing, Local Government and Heritage to detail his plans to lower cost rental rents, so that they are actually affordable; and if he will make a statement on the matter. [5106/26]
View answerUnder Delivering Homes, Building Communities, Cost Rental is a key element of the Government's strategy to improve affordability in the rental sector and to provide secure, long-term homes for moderate-income households. The core principle of Cost Rental is that the rents cover the development, management, and maintenance costs of the homes, so that the long-term future of the homes is financially secure, but that rents are not subject to the pressures of the open market. Though it was only introduced in 2021, cost rental delivery is accelerating, with over 4,800 homes already delivered by Q3 2025, and a substantial future pipeline now in place.
My Department is providing significant funding to delivery partners for cost rental homes. As well as making delivery viable, this State funding drives down rent levels. With this funding, all State-supported cost rental projects must achieve cost-covering rents that start at least 25% below comparable new properties in the private rental market, and therefore present a significant saving to the tenant from the outset.
Cost-covering rents are different depending on a range of factors, including the size and typology of dwelling and the location, as well as the level of State funding towards the capital costs. Since rents for cost rental homes are set according to the actual costs of delivering, managing, and maintaining the homes, recent inflation in delivery costs has proven challenging. All delivery partners are actively managing costs to ensure that these new homes are provided at the best rents that are achievable.
In addition, the Government announced in Budget 2026:
• a reduction in VAT on the purchase of new apartments (down to 9% from 13.5%);
• enhanced Corporation Tax deductions on construction expenses to improve the viability of apartment building; and
• a Corporation Tax exemption for rental income from Cost Rental tenants.
Together these reforms aim to encourage delivery and increase viability of new cost rental homes, reducing costs and ensuing rents, therefore making them more affordable.
In parallel, the Government is focused on reducing construction and delivery costs more broadly through standardisation, improved procurement, and increased efficiency, while maintaining high quality and sustainability standards.
