Government to look at the idea of merging cost-rental and social housing in future

The Department of Housing plans to launch a “pathfinder project” to explore the idea of merging cost-rental housing with social housing at some stage in the future, according to the government’s new housing plan. 

It is also to look at scaling up cost-rental housing, the plan says.

Models of cost-rental housing differ across countries. In Ireland, the model is for rents to be set at the cost of financing, building, and managing the homes, as well as a limited profit.

It is aimed at households with incomes above the social housing threshold, but squeezed in the private-rental market – although the costs of schemes has triggered concern among department officials that not all of those theoretically eligible families have been able to access it.

Government scheme to help medium-income renters leaves some to fall through gap - Dublin Inquirer

There’s a cohort earning too much for social housing, but too little to qualify for the Land Development Agency’s new cost-rental “affordable” housing schemes.

Dublin InQuirerLois Kapila

The proposed changes to the system are based on the recommendations of the Housing Commission.

But they “would require major changes to policy, law, and funding if they were to be put in place”, the government’s new housing plan says.

It gives a timeline for testing it out. An exploratory project should kick off in 2027 and report back in 2030, it says. “This project will help identify what reforms are needed and test how they might be implemented.” 

“This is something that would take time,” says John O’Connor, the former chief executive officer of the Housing Agency, and chairperson of the Housing Commission. 

It is a goal worth working towards, he says. But before any transition, the state needs to scale-up delivery of cost-rental housing, with rents based on costs and not, he stressed, linked at all to market rents.

Fiona O’Driscoll, financial lead with the Irish Council for Social Housing, says that it would be quicker and easier for housing charities to roll out mixed-income affordable rental homes at scale if it were funded through the one system.

But Sinn Féin TD and housing spokesperson Eoin Ó Broin says he isn’t convinced that the government is serious about changing the system or delivering much cost-rental housing. 

“I don't think this is a serious proposal,” he says. 

A recipe, not a menu

O’Connor, who chaired the Housing Commission, says that the commission’s recommendations come as a package. 

They are interlinked and it would work best if all rolled out together, he says. “It's a recipe, not a menu.” 

The commission favours merging cost-rental and social housing, he says. But first, the state needs to scale up cost-rental housing delivery. 

There aren’t enough homes for people to rent, he says. “So we need significant affordable rental,” he says. 

At the end of 2024, there were about 2,400 cost-rental tenancies, shows data from the Residential Tenancies Board (RTB).

Rent subsidies for private-rental tenants “should be seen as short-term to medium-term”, says O’Connor. “Not considered as a long-term measure for families.”

Instead, under a cost-rental model, the state could subsidise public housing and, eventually, the cost of the homes would be paid off. “We need to get to a situation where capital outlay is repaid,” he says. 

Another issue at the moment is that cost-rental homes in Ireland are only guaranteed as cost-rental for 40 to 50 years, says O’Connor. 

In other European countries, where cost-rental works well, it is when properties mature, and are paid off, that the rents come down, he says. 

Another recommendation by the Housing Commission was that the state carry out regular housing-condition surveys, as is done in most western European countries, says O’Connor. 

The Irish government stopped doing those in the late 1990s, he says, after a failed attempt at improving the system. 

It instead abandoned the surveys, he says. “We need to know the standard of our housing.” 

Work is slowly progressing to fill this gap. 

In late 2017, the County and City Management Association (CCMA) set up a working group to look at, among other issues, the condition of social housing and stock surveys. 

A few years later – after meetings with the Department of Housing – it submitted an outline of what was needed, in particular an IT system, for councils to effectively carry out and record conditions in social housing and to move from the current system of reactive maintenance to planned maintenance.

That IT system is now in place across councils, and all of them have been onboarded this year, a spokesperson for the Department of Housing said recently. Councils have been set a goal of inspecting all of their social housing by the end of 2030.

To date, they have inspected 8,095 social homes, the spokesperson said. 

Councils own 155,060 social homes, show figures from National Oversight and Audit Commission.

How to scale up affordable rental

At the moment, the Land Development Agency, and some housing charities, and councils, have been delivering homes for cost-rentals. 

O’Driscoll, of the Irish Council for Social Housing, which represents housing charities, says there are several different schemes funding social housing – some of which provide full cost recovery to housing charities and some that don’t. 

Housing charities don’t currently get sufficient payment through tenant rents to fund regenerating some of their older social-housing stock, she says. 

So when a housing charity wants to develop a mixed housing scheme – meaning social housing and cost-rental housing together – it can be complicated by the fact that they are funded through different routes, she says. 

Rents will cover the full cost of the cost-rental homes, she says, including maintenance and finance, but the social homes' costs are not fully covered by tenants’ rents – and the gap has to be filled by local authorities. 

“In addition, sometimes the logistics of getting it to work are complicated by two different funding schemes for the capital costs across the two tenures in the same scheme,” she says. “That can lead to delays.”

Building communal facilities would benefit both sets of tenants, she says, but it isn’t always clear how they are to be provided for within the funding models.

Merging cost-rental and social housing into one capital funding and standardised cost-rental rent for all tenants in the future would be ideal and allow the development of many more cost rental homes, she says. “In the future, you could have one scheme.” 

Bringing it into one system would emulate the way that affordable rental developments work in Denmark, Austria and the Netherlands. 

They don’t have a split between the different income streams, she says, and many people with relatively high incomes do live in the affordable homes alongside social tenants paying the same rents – which achieves a true tenure mix. 

There would be a subsidy for anyone who couldn’t meet the full cost-rental rent, she says. 

“That is really, I think, what Nirvana is for the future,” she says. “It's the dream.”

Concerns

People Before Profit Councillor Conor Reddy, however, says he is worried about the impact of proposed changes to rents on social tenants. 

“I don’t know what this means for rents,” Reddy says.

He doesn’t agree that the social housing rents need to cover the maintenance costs to be sustainable, he says. “I don’t buy that. Public housing is a public good.”

The proposed new cost-rental system is likely to be “market-inspired”, says Reddy. It looks like the aim is to harmonise affordable housing with the private rental sector, he says. 

“We are advocating a universal public model,” he says. “I don’t think that is what they really have in mind.”

The new housing plan does say that it envisages a larger role for private operators in cost-rental going forward. 

It says that with changes to the government’s Secure Tenancy Affordable Rental (STAR) investment scheme, “coupled with viability measures and the corporation tax exemption for cost-rental activity announced in Budget 2026, more private operator delivery of cost-rental apartment homes is envisaged”.

O’Connor and O’Driscoll say that under the merged system as they envisage it, the cost of rent would be linked to the cost of building, financing and maintaining the homes. 

While low-income tenants would get a subsidy to fund the difference between the cost of the home and what they can afford, as long as they need it, says O’Connor.

“Where someone gets to sufficient income, when they could pay the full rent, they should be paying the full rent,” says O’Connor. 

Ó Broin, the Sinn Féin TD, says that in the medium to long term the idea of merging cost-rental and social housing is worth exploring.

“It would be entirely sensible for any government that plans to increase cost-rental and social housing to think about how the two tenure types interact with each other,” he says. 

There needs to be a way to move between the two systems, which could happen quite often, including when a cost-rental tenant retires, he says. 

But he doesn’t think that the government is serious about merging the two systems or about delivering cost-rental at scale, he says.