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Affordable Purchase Shared Equity Schemes, a new Cost Rental Tenure and the wide-ranging powers of the the Land Development Agency have together recently progressed to a statutory footing. This is in advancement of the Programme for Government’s core objective to increase the supply of affordable housing throughout the country.

Whether by way of development agreement, leasing/licensing arrangement, joint venture or debt finance – or some blend of these – the new legislation is a means by which State bodies can reach out to the private sector to secure the delivery of 7,500 new affordable homes every year for the next 20 years.

The subsidy in order to achieve the provision of affordable homes is some combination of access to State land, supporting infrastructure investment funding and long term low cost public funding.

Sustainable mixed tenure communities comprising a balanced mix of social, affordable and private housing are the ultimate goal.

Available Shared Equity Schemes

There are two Affordable Purchase Shared Equity Schemes:

  • The first is a direct State subsidy to purchase a dwelling on public land. The subsidy is registered as a mortgage against the property and repayable on the sale of the property.

  • The second will see the State put forward up to 30% of the open market value purchase price of a newly constructed property on private land and is targeted at first time buyers. The State takes an equity share in the property which can be paid down by the purchaser during the period of ownership. This interest will rank after senior debt by way of a mortgage. Details of buyout, interest rates and servicing fees remain to be confirmed.

The private sector will be particularly interested to know that, under the second scheme, provision is made for additional private investment where parties other than the Exchequer/Housing Minister may support the scheme, subject to Central Bank regulatory rules.

Scope of the Cost Rental Tenure

The Cost Rental Tenure, sometimes referred to as the Vienna Model, as it is so widely used there, seeks to secure affordable rents for eligible participants in the private sector. These are households that cannot afford open market rents but do not qualify for social housing support. The parameters include:

  • Rent is set by the landlord at a cost covering level to offset the costs of delivering, managing and maintaining the property

  • Rent can only rise in accordance with rising operation costs and typical consider indices

  • A long term minimum of a 25% reduction in market rent is envisaged, and

  • The tenant under this arrangement is subject to most of the rights and obligations under residential tenancies legislation

There are currently a number of pilot schemes under way in Ireland involving various State authorities and approved housing bodies (AHBs) on public land. The AHBs’ costs in each case are financed by central government funding in the form of a Cost Rental Equity Loan. This is a soft unsecured loan to top up a mortgage by the Housing Finance Agency.

We regularly advise relevant stakeholders regarding developments around how private sector provision of cost rental tenure will avail of the necessary public funding similar to the established local authority standard leasing scheme.

Land Development Agency

One of the primary functions of the Land Development Agency (LDA) is to establish appropriate mechanisms and collaborative structures between public and private bodies to strategically develop public land. In addition to the LDA’s broad powers to compulsorily acquire private property and to enforce a right of first refusal on the acquisition of public lands, the legislation contains a statutory affordability requirement for these public lands. Essentially, a planning permission for over 10 dwellings on public land will contain a condition that 50% of the dwellings to be constructed will either:

  • Comprise cost rental tenancies, or

  • Be sold for a price in accordance with an affordable purchase mechanism

The commerciality and financial incentive for the private sector in working with the LDA will be found in availing of private sector funding under the new statutory schemes highlighted above and also in the commercial arrangement ultimately agreed with the LDA regarding development of the remaining 50% of the relevant public lands.


Just as with the more recent delivery of social housing in Ireland, the private sector – developers and also indigenous and foreign investors and alternative lenders – is now presented with new opportunities to partner with State bodies to solve the affordable housing crisis and deliver 150,000 affordable homes under Project Ireland 2040.

The nature of social and affordable housing development and investment requires bespoke legal advice.

Our Real Estate team have sector-specific knowledge in private sector involvement in the established social housing sector and the emerging sector of affordability. We advise on the establishment of property investment vehicles and property acquisition, through to financing structures and onward future holding and disposal

For more information and expert advice to help you navigate through the legal nuances of these projects in the context of Government initiatives and delivery mechanisms, contact a member of our Real Estate team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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