Pricing and affordability of Ireland’s new Cost Rental housing tenure: A microdata exploration

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. We examine the characteristics and spatial distribution of cost rental supply, estimate like-for-like price differences relative to the private rental sector using hedonic methods, assess affordability impacts, and test for early evidence of broader impacts on the private market. We find that cost rental delivers substantial affordability gains, with both an average and median discount of 29.9 per cent relative to market rents. Simple comparisons understate these differences due to the higher quality of cost rental dwellings. Cost rental provision to date has been highly concentrated in urban areas, particularly in Dublin suburbs and increasing its presence across other urban centres and regional towns facing affordability challenges will be important as the tenure expands. Reviewing the scheme parameterisation and income thresholds over time could help to broaden its reach, both geographically and across relevant households. Finally, moving away from the explicit linkage between initial cost rents and prevailing market rents and basing rents solely on underlying economic costs would enhance the long-term viability of the tenure and mitigate the risk of pro-cyclical supply feedback loops.