Cost Rental Study
Two thirds of renters interested in an affordable and secure long-term rental option – LDA survey
- Tenants seek lower rents, security of tenure and more green space
- Cost rental model decouples rent levels from the market
- LDA aims to deliver a large portfolio of cost-rental accommodation
Over two thirds of renters find the option of long-term cost rental attractive, according to new research published today by the Land Development Agency. The research – conducted by Behaviour & Attitudes – found that 67% of renters saw cost-rental as a housing option for them, with 89% saying they like the idea in principle.
The cost rental model seeks to decouple rent levels from the market and instead charge rents that cover the costs of constructing and maintaining the homes, with rent increases linked to the rate of inflation, thereby providing tenants with a predictable and typically lower level of rent. The fact that costs of delivery and operation are covered also supports the sustainability and scalability of cost rental over the long term.
Under Housing For All, the LDA will be the State’s primary channel for the development of cost rental housing, offering a fair deal for those who don’t qualify for social housing but cannot afford the private market. The LDA’s model aims for tenants to pay about a third of their net disposable income on rent, a generally accepted level of housing cost affordability. By delivering affordable rents at scale, the LDA’s cost rental offering will have a stabilising effect on wider rental market.
According to the survey, affordable rental levels that could only increase by limited amounts were identified as the prime factor that would make renting more attractive by 78% of respondents. Better security of tenure (61%) and enhanced green/open space (52%) were identified as the two other leading factors.
The desire for home ownership remains strong in Ireland, with 84% of survey respondents saying they aspire to own their own home at some stage. However, the research suggested that where high quality affordable long-term accommodation is provided people are happy to choose it, at least for a period of their lives. Only 28% of people surveyed disagreed with the proposition that they would be happy to stay renting if it was affordable and there was security of tenure.
In many continental European markets – including Germany, Netherlands, Sweden and Austria – the affordable rental sector is well developed and a common option for long-term living. Homes are typically rented unfurnished allowing occupiers to put their own stamp on a home they will occupy for many years, even though renting. An openness to an unfurnished long-term rental option was confirmed for Ireland in the LDA study. Just 36% of respondents said that a home being furnished was a key requirement, dropping to 26% in Cork and 18% in Galway.
The research suggests that around one third of renters are paying unaffordable rents (more than one third of net disposable income on accommodation). The LDA’s research shows 32% of renters pay more than this (rising to 38% for the Dublin area), and one in six people (17%) are spending over half of their net income on their monthly rent.
The research also showed a high proportion of so-called ‘crammer’ households1, with respondents to the survey reporting an average of 3.7 people sharing their home. Typically, these large households of unrelated people are indicative of people having to choose sub-optimal solutions to be able to afford the rent. The LDA’s affordable rental option would help give these people an affordable option to avoid a ‘crammer’ scenario.
John Coleman, Chief Executive of the LDA, said:
“We carried out this research to help us better understand the aspirations and challenges faced by renters in Ireland. We believe the cost rental model that is central to the LDA’s strategy can help address a crucial gap in the market to give a fair deal to the many thousands of people who currently struggle to meet their housing needs in an affordable way. Our focus now is on using the increased resourcing and pipeline of sites made available as part of Housing for All to accelerate delivery.
Larry Ryan, Director of Behaviour & Attitudes said:
“The survey was designed to capture the views of the cohort of people who are likely have greater relevance to a cost rental solution. We have focused on adult renters in the major urban areas, and looked to get a detailed understanding of their situation and aspirations. Where cost rental was properly explained and understood it was viewed by a large majority as an attractive long-term solution.
A presentation of the full research is available for download here.
1 Institutional Investment and the Private Rental Sector in Ireland; p.38 https://irp.cdn-website.com/4065c16c/files/uploaded/Identify%20Consulting%20June%202021%20PRS%20Report%20for%20IIP%20-%20final.pdf
For further information:
- Doug Keatinge; [email protected]; 086-0374163
The research was conducted by Behaviour & Attitudes in February 2021 in a survey of 520 adults, all living in rented accommodation, or alternatively with their parents but aiming to move out, in the urban environs of Dublin, Cork, Limerick, Waterford and Galway.
About the LDA
The Land Development Agency (LDA) was created in September 2018 with the purpose of improving the supply of affordable homes for individuals and families through the development of State and other land to deliver long-term sustainable solutions.
The LDA’s strategy is underpinned by 5 key pillars:
- Affordable: Increasing supply of affordable housing to deliver a fair deal for those who don’t qualify for social housing but cannot afford the private market
- Stable Supply Ensuing a long-term pipeline of delivery from state-owned assets to provide a counter-cyclical mechanism that will deliver new homes even in an economic downturn where private sector delivery slows
- State Land: Using state land to avoid the burden of land costs and operate at scale to deliver new homes at lower cost
- Community: Offering security of tenure and high-quality amenities so that residents in LDA developments become part of the local community
- Sustainability Ensuring a best-in-class approach to sustainable construction methods and maximising public transport access and open space
The LDA has a national focus and is advancing schemes throughout Ireland including:
- Shanganagh: Planning has been approved and a tender process is in place to appoint a contractor for the construction of 597 social and affordable homes on the LDA’s first project at Shanganagh, Co. Dublin. First homes will be completed in 2023.
- Dundrum Central: Public consultation has been completed for the redevelopment of the Dundrum Central Mental Hospital site to deliver around 1,200 new homes, with a planning application to be submitted in the coming months
- Cork City Docklands: A delivery office has been established for the redevelopment of Cork City Docklands in partnership with Cork City Council. The 146-hectare site is capable of accommodating c.25,000 people in what will be Ireland’s largest regeneration project
- Colbert Station, Limerick: A design review has been completed to inform the regeneration of this 50-hectare site, which will deliver an enhanced city living experience for about 5,000 people in a prime city centre location
- Sandy Road, Galway: Plans for 1,000 new homes are in progress on an 8-hectare site at Sandy Row in Galway City in collaboration with a range of local stakeholders including Galway City and County Councils, Galway Education and Training Board and Galway Bay FM
- Donore Project, Dublin 8: The LDA is partnering with Dublin City Council on plans to build around 600 social and affordable homes on the site of the former St Teresa’s Gardens flat complex in Dublin 8
- St Kevin’s, Cork: Planning permission approved for the construction of 266 homes, an enterprise centre and creche facilities at the former St. Kevin’s Hospital site in Shanakiel, Cork. Enabling works will commence in the coming months
For more information visit: www.lda.ie