It has been announced this week that the government’s “Cost rental scheme” will have its thresholds increased. The current limit stands at €53,000 nationwide, but the new threshold will see Dublin’s income limit increased to €66,00 with all other areas being increased to €59,000.
In this article, we will look at what the scheme is, who is eligible and what are the reasons for the threshold increase.
What is the cost rental scheme?
The cost rental scheme was introduced by the government to assist those who were on a relatively low income but do not qualify for social housing benefits.
The term ‘cost rental’ refers to a rental system where the rent is calculated solely based on the expenses of constructing, managing, and upkeeping the properties, without any developer profits included. As a result, the cost rental homes offer more affordable rent compared to standard rates, ensuring they are at least 25% below the regular market rents in the specific locality.
These cost-rental homes are made available through approved housing bodies (AHBs), local authorities, and the Land Development Agency (LDA).
The primary advantage of these homes is the provision of long-term security, allowing individuals to rent the same property indefinitely.
How does cost rental work?
Cost rental homes, works by calculating how building, managing and maintaining a property will cost. This cost is then calculated over a minimum period of 40 years, the rents attached to a cost rental home must be 25% lower than comparable private rents in the same geographical location.
The rents are levied against inflation, so any increase in inflation will be reflected in the rental amount.
The scheme was introduced amidst the housing crisis, its intention was to provide tenants with greater security, which allowed long-term renting to remain an affordable option for them.
Cost rental properties are provided by approved housing bodies (AHBs) local authorities and the Land Development Agency (LDA). These authorities can apply for funding from the government to assist in building or buying these homes.
Who is eligible for the scheme?
The scheme was created for lower-income households who will struggle to pay their rent, Anyone who meets the following criteria can apply:
- Your net household income should be below €66,000 for Dublin or €59,000 for other regions.
- You should not be receiving any social housing support, such as the Housing Assistance Payment (HAP).
- You must not own any property.
- The size of your household should match the size of the property you are interested in renting. For instance, a two-bedroom unit may be suitable for two adults, a couple, or a lone parent with one or more children.
- You must be able to afford the rent for the cost rental property.
- Your household should have applied for the specific cost rental property only once.
Why are the thresholds being increased?
The new limits are being introduced as part of the government’s 750m Secure Tenancies and Affordable Rent (Star) investment scheme. The housing minister said that the thresholds were reflective of the difficulty low-income households were experiencing in paying their rent. In an interview with the Irish examiner, he quoted :
“These changes will result in more families and individuals being able to avail of cost rental, We want to see thousands more safe and secure cost rental tenancies in place and the announcement last week of the new Star investment scheme will help us to do just that”
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