New research highlights the clear affordability benefits of new Cost Rental tenancies

The Economic and Social Research Institute (ESRI) has today released new research, funded by the Department of Housing, Local Government and Heritage, on the pricing and affordability of Ireland’s new Cost Rental tenure.

Cost Rental, or rental housing at non-market prices, is a new feature of the Irish housing system. Introduced as part of the Affordable Housing Act in 2021, this new tenure aims to lower the lifetime cost of renting by linking rents to economic cost, as well as providing long-term security of tenure. This paper provides the first microdata analysis of Ireland’s emerging Cost Rental sector, drawing on newly available administrative tenancy data and comparing Cost Rental prices with those in the private rental sector.

Key findings include:

• Cost Rental delivers substantial affordability benefits, with an average discount of 29.9 per cent relative to market rents on a like-for-like basis.
• Compared with private rental homes in the same areas, the Cost Rental stock is largely made up of apartments and smaller units, with one‑ and two‑bedroom homes accounting for most of the provision, helping to address longstanding shortages in this segment of the rental market.
• Cost Rental provision to date has been concentrated largely in suburban areas of Dublin. Expanding its presence to other urban centres and regional towns facing affordability challenges will be important as the tenure expands.
• Periodic review of scheme parameters, such as income thresholds and affordability criteria, could help to broaden access across the households the tenure is intended to serve, and support wider geographic delivery.
• Over time, reducing the explicit link between initial cost rents and prevailing market rents, and basing rents solely on underlying economic costs, could help strengthen the long-term viability of the tenure.

Dr Rachel Slaymaker, co-author of the report commented: “Cost Rental is already offering a more affordable, higher quality and secure alternative for many households. As the tenure expands, achieving a sustainable balance between affordability, financial viability and broader geographic delivery will be key to embedding it as an established part of Ireland’s housing system.”

Prof. Conor O’Toole, co-author of the report commented: “Cost Rental is a significant positive development in terms of broadening affordable rental options for Irish households. These findings show a clear affordability benefit for households in Cost Rental properties relative to what they would face in the private market.”

James Browne TD, Minister for Housing, Local Government and Heritage, commented: “Cost Rental is a key element of the Government’s housing strategy, and the research is extremely helpful in understanding how this new tenure is developing in Ireland. Clearly, Cost Rental is already providing a more affordable option for moderate-income households, with thousands of

Cost Rental options already delivered. The finding that, on average, the rents are almost 30% below those in the private rental market is a clear indication that this cost-based model, together with the unprecedented levels of funding provided by my Department, is making a difference in the lives of many renters.”