The Economic and Social Research Institute have said the State's cost rental scheme will offer tenants rents nearly 30% below private market levels.
This was revealed in a new report filed by the ESRI, which was funded by the Department of Housing, and mainly concentrated in the Dublin area. Their analysis indicates that Cost Rental offers at a discount of 29.9% to private tenants.
Cost Rental sets rents based on the economic cost of the provision of the accommodation instead of the price in the open rental market. Expanding the presence of the Cost Rental to other urban centres and regional towns who are facing difficulties over affordability is important, according to the ESRI.
The study also said that periodic reviews of the scheme including income thresholds and affordability criteria could help to enhance access across and support wider geographic delivery.
Professor Conor O'Toole who co-authored this report said: "These findings show a clear affordability benefit for households in Cost Rental properties relative to what they would face in the private market".
Speaking about this, Research Officer with the ESRI, Dr Rachel Slaymaker has said that cost rental schemes will allow "really important affordability benefits for households". She said that this can reduce the amount of income which households are spending on their rent, "which is obviously very positive for those households".
Dr Slaymaker went on to say that cost reduction is achieved through discounts, for instance taking out the developer margin having access to long term, as well as low cost finance at cheaper rates than what is available on the market.
"So all of these are kind of coming together to reduce the cost that tenants are paying", she added, while stating that certain schemes also have access to public land and discounted price land too.
"So it's really no surprise, I think, that there's a very strong demand for these cost rental properties. And we are obviously only at the kind of very initial stages of this new tenure. It was only introduced in 2021. Delivery has certainly ramped up. We see that very clearly in 2024 and 2025," she continued.
"But obviously we know that there is a long-term lack of supply and it will certainly take time and there is a need to carry on scaling up that supply because … there are many households who would be looking to avail of this tenure".
Dr Slaymaker said that schemes like these are always oversubscribed, but that is reflective on the general market, which is very strong price pressures and a lack of available accomodation.
