423. Deputy Seán Ó Fearghaíl asked the Minister for Housing, Local Government and Heritage the key measures taken to expand cost-rental provision since January 2025; his priorities for same for the rest of 2026; and if he will make a statement on the matter. [53474/26]

The Government’s housing plan, Delivering Homes, Building Communities, reinforces and expands the range of existing measures being implemented to tackle the issues of supply and affordability, under a new Starter Homes Programme, which will deliver an average of 15,000 starter home supports annually to 2030.

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 above the income limits for social housing. The core principle is that rents cover the development, management, and maintenance costs of the homes, so that their long-term future is secure, without rents being subject to the pressures of the open market.

There are three Schemes, which support the delivery of cost rental homes at scale. They are:

1. The Affordable Housing Fund (AHF);

2. he Secure Tenancy Affordable Rental investment scheme (STAR);

3. The Cost Rental Equity Loan (CREL).

Where State funding has assisted with Cost Rental delivery under any of the above schemes, starting rents must be achieved which both cover costs and are at least 25% below comparable open market rents. Over time, rents may be increased only in line with general consumer inflation, according to the Central Statistics Office’s Harmonised Index of Consumer Prices, so remaining stable in real terms while covering the ongoing management and maintenance costs of the rental properties.

The Affordable Housing Fund (AHF) subsidy is available to local authorities as a direct subvention on local authority housing development costs at rates of €50,000, €75,000, and €100,000 per affordable home, including Cost Rental, depending on the density of the development and its location.  A subsidy of up to €150,000 per home is available for local authority Cost Rental development in high density urban locations. To date, over €143.5m in AHF support has been approved to assist the delivery of over 1,200 Cost Rental homes across 8 local authorities.

The Secure Tenancy Affordable Rental Investment Scheme (STAR) aims to deliver cost rental homes at scale for eligible households who are experiencing acute affordability pressures in the private rental sector, particularly in urban centres where prevailing rents are especially high. The maximum investment generally available nationally will be €150,000 per unit, with an additional investment of €25,000 available, subject to meeting the sustainability criteria set out under the scheme. In recognition of the viability challenges in specific areas of Dublin, the maximum investment available will be higher in Dublin at €175,000, with an additional investment of €25,000 similarly available subject to meeting the sustainability criteria set out under the STAR scheme. Private providers and public bodies can apply to provide cost rental homes under the Scheme and the State will make an equity investment available in return for designation of the homes as cost rental homes for 50 years. Since the inception of the Scheme, 10 projects have been approved for STAR funding totalling just over €312m for the delivery of 2422 cost rental homes.

The Cost Rental Equity Loan (CREL) Scheme provides funding to Approved Housing Bodies (AHBs) to finance the development or acquisitions of new cost rental homes, on a sliding scale basis of up to 55% of the total capital costs for these homes. The 55% CREL model incorporates a mix of a long-term loan (up to a maximum of 35% of capital costs) along with a state-equity investment element (up to a maximum of 20% of capital costs). In 2025 there was a 27% increase on the number of units delivered under the CREL Scheme, in comparison to the delivery in 2024.  To date in 2026, 12 projects (780 homes) have been approved across 8 different local authority areas for delivery by the end of 2028.

A provision of €575m has been made for AHB cost rental under the CREL scheme and €200m for cost rental delivery under the STAR scheme in my Department's 2026 Vote. €150m in funding has also been allocated for overall AHF provision, this funding covers both Affordable Purchase and Cost Rental delivery.

Cost rental delivery will continue to be expanded and will, along with other measures aimed at increasing the supply of homes to rent, help to moderate rent levels in the private rental sector over time.  The Government also announced several provisions as part of Budget 2026: to encourage delivery and increase viability of new cost rental homes, reducing costs and ensuing rents, therefore making them more affordable.

These provisions included;

- a reduction in VAT on the purchase of new apartments (down to 9% from 13.5%);

- 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.

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.

The 2025 Programme for Government includes a commitment to target Cost Rental homes at key local workers, and my Department is continuing to work to explore all options for achieving this.  On 2 July 2025, I made the Affordable Housing Act 2021 (Cost Rental Allocation Plan) Regulations 2025.  These Regulations allow for Cost Rental landlords to employ Allocation Plans which may prioritise particular homes for those with a link to an area though residence, employment, or children’s education. This will support people to live and work in their local area.

The Programme for Government also includes a commitment to introduce a cost rental version of the Repair and Lease scheme on a pilot basis. This is aimed both at tackling vacancy and dereliction and providing affordable housing. The new housing plan contains a commitment to develop a pathfinder project for an affordable rental version of the repair and lease scheme and my Department is working with Local Authorities and the Housing Agency to develop a viable scheme to achieve these aims.

My Department continues to review the operation of the Cost Rental housing tenure and changes to legislation may be made as appropriate in order to maintain the success of this new housing tenure.  Quarterly housing delivery reports, including for cost rental delivery, will continue to be published on my Department's website, to track delivery under the Starter Homes Programme in each local authority area to 2030.