Dáil Éireann Debate, Thursday - 5 March 2026
234. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage his plans for reducing the rents in cost rental accommodation to reduce the percentage of applicants excluded on affordability grounds. [17591/26]
View answerUnder the Delivering Homes, Building Communities action plan, 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 market pressures. Cost Rental is a growing housing tenure in Ireland, with over 4,800 homes delivered by Q3 2025, and a substantial future pipeline now in place.
The legislation does not set a minimum 'affordability' threshold for a Cost Rental tenant, but as with any letting of a home, the landlord must consider the issues of affordability and tenancy sustainability. A landlord such as an Approved Housing Body, a Local Authority or the Land Development Agency will assess prospective Cost Rental tenants to ensure they can sustainably afford the rent over the long term, and to do this a landlord may employ financial metrics, such as a rent-to-income ratio.
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. Different Cost Rental homes will be more or less affordable for different applicants, but all delivery partners are actively managing costs to ensure that new homes are provided at the best rents that are achievable.
My Department is also providing significant funding to delivery partners for Cost Rental homes. As well as making delivery of new homes viable, State funding drives down rent levels. Given the subsidy element to this capital funding, rents are in fact being set below full cost levels.
In addition, the Government announced in Budget 2026:
• a reduction in VAT on the purchase of new apartments (down to 9% from 13.5%), including for Cost Rental use;
• 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, to allow the financial models to match even more closely the cost elements of providing the home.
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.
