State Subsidies for Developers of Student Housing Considered

Officials at the Department of Further and Higher Education are considering a version of the Croí Cónaithe scheme – which in its current form means the state giving developers money towards building apartments – for student housing.

In February, Fiona O’Byrne, a principal officer in the Department of Further and Higher Education, wrote to officials in the Department of Housing to follow up on “the potential for the Croí Cónaithe model to be considered for student accommodation”.

The idea had been raised at an earlier meeting between the two departments, the email says.

Other emails and presentations between the departments shared details around the set-up of new cost-rental laws and the cost-rental equity loan (CREL) scheme that approved housing bodies (AHBs, or housing charities) draw on to finance affordable rentals.

Last week, a spokesperson for the Department of Further and Higher Education didn’t directly answer whether or not a Croí Cónaithe-esque scheme is still being considered or has been ruled out.

“The Department of Further and Higher Education, Research, Innovation and Science and the Department of Housing, Local Government and Heritage are continuing to explore a number of options to support increased delivery of affordable student accommodation,” they said.

The Department of Further and Higher Education didn’t respond to queries about exactly what kind of Croí Cónaithe scheme it has been looking at, whether it would be a fund for universities or public bodies to apply to or private developers too.

It also didn’t respond to whether there would be any expectation around the affordability of any student homes built with the support of such a scheme – something that is missing from the current Croí Cónaithe scheme.

Affordability is the main issue for students, says Beth O’Reilly, vice president for campaigns with the Union of Students in Ireland.

Student accommodation prices should be in line with student grants, she says. “Anything less than that and you are essentially just saying students who can’t afford to pay extortionate rent prices don’t deserve to go to college.”

What and How?

Croí Cónaithe (Cities) is a state subsidy for developers to build apartments for sale to owner occupiers. There is €450 million in the pot for cities, and developers can get up to €120,000 towards each apartment they build in Dublin.

The aim of the scheme is to unlock developments that have planning permission but that aren’t currently “viable”, because the development costs are more than the price for which the developer can sell the homes, the Department of Housing says.

Opposition TDs say they can’t understand how a version of Croí Cónaithe could deliver student accommodation.

Its aim is to promote homeownership, not student rentals, says Social Democrats TD and housing spokesperson Cian O’Callaghan. “They are very, very different.”

Says Sinn Féin TD and housing spokesperson Eoin Ó Broin: “If they are looking at Croí Cónaithe for private developers of student accommodation they are mad.”

The state should back the supply of affordable-rental homes for students by financing cost-rental housing, he says.

In March, officials from the Department of Housing met their Swedish counterparts to discuss a scheme there that involved state subsidies for developers, and how it complied with EU rules around state aid to private companies, emails show.

Officials from the Department of Further and Higher Education sat in on that.

The scheme that was introduced in Sweden in June 2020 differs in several ways from the Croí Cónaithe (Cities) fund recently announced here in Ireland.

The Swedish scheme is an affordable-rental scheme, whereby the developer getting a state subsidy has to provide discounted rental housing, which can be student accommodation, and affordability is defined with a maximum price per square metre.

O’Callaghan, the Social Democrats TD, says that in other countries when governments subsidise the construction of housing there are requirements for the developer to deliver affordable homes.

But with Croí Cónaithe, the developer gets the subsidy but still sells the home at the full market price.

A document calling for expressions of interest for the scheme shows that the anticipated purchase price of a studio apartment under the scheme would be €275,000 and a two-bedroom apartment would be €390,000.

All those prices are estimated, and the final price of the homes and the amount of the subsidy will only be decided once the homes are completed, the document says.

O’Callaghan says that he doesn’t think it is clear whether the Irish scheme for apartments will pass the EU state aid rules based on the decision by the European Commission to allow the Swedish scheme

“The Swedish justified their scheme to the commission in a very specific way,” he says.

They argued for the need to provide lower-income households with rental accommodation and how that need ties into the needs of the labour market, he says.

The Irish scheme might not be able to rely on an equivalent justification, because it is so different, says O’Callaghan. “Its homeownership rather than rental, no tie into the labour market and is aimed at the top income percentage.”

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Laoise Neylon: Laoise Neylon is a city reporter for Dublin Inquirer. You can reach her at [email protected]

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