Inflation in costs remains a ‘serious challenge’ for cost rental scheme, says Cairn Homes chief executive

There were seven applicants for every available home in a new cost rental housing development in north Dublin, according to the head of the housing body behind the scheme.

Circle Voluntary Housing Association opened a 29-home cost rental development in Donabate, north Co Dublin on Thursday, where tenants have begun to move into new homes.

Cost rental housing is aimed at people who earn above social housing caps but struggle to afford rent in the private market. Under the cost rental scheme, the rent paid is based on the cost of building, managing and maintaining the homes and not market rates.

Currently, those earning up to €66,000 after tax in Dublin and €59,000 in the rest of the country, can apply to be picked for cost rental tenancies.

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The Lanestown View development in Donabate was built by developer Cairn Homes and will be managed by Circle, a voluntary housing body.

John Hannigan, chief executive of Circle, said for every cost rental home in the estate, the housing body had received “at least seven applicants”, with the successful tenants selected by lottery.

Circle currently manages 3,000 homes, with the Donabate site its first cost rental development. The housing body has plans to expand and “double in size” over the four years, Mr Hannigan said.

Many people who moved into long-term tenancies would likely be able to save money to buy a home down the line, due to rents being cheaper than in the private rental market, he said.

“You have a greater security of tenure, so there’s no chance that you get kicked out,” he said. “The rents are significantly below what you’re paying in the current [private rental] market, so at the moment these homes here are being rented at 33 per cent below the current market rate,” he said.

The Government should consider certain “tweaks” to the criteria of the cost rental scheme, Mr Hannigan said.

At present, if a family with one child applies for the scheme, they are limited to a two-bed rental property. There are cases where a family who are planning to expand could afford to rent a three-bed cost rental home, but were prevented from doing so under the current scheme, he said.

If families had more children and needed a bigger home they could apply to the cost rental “lottery system” again, or return to the private rental market, he said.

Speaking at the launch of the cost rental homes, Michael Stanley, chief executive of homebuilder Cairn Homes, said inflation in costs facing developers remained a “serious challenge”.

Inflation in the price of building materials and other costs seen in the last two years had “levelled off,” which was positive, he said. “But we’re not seeing the type of unwind in some of the material costs that we would have hoped for,” he added.

“If you look at a pre-Covid levels, the vast majority of individual homes are between 75,000 up to 100,000 euros per unit more expensive to build,” compared to three or four years ago, he said.

The cost rental homes in Lanestown View were part of a larger 72-home development, which also included social housing.

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