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The Affordable Housing Act 2021

Our Real Estate team takes a closer look into the Affordable Housing Act 2021. This forms part of the Government’s new multi-annual, multi-billion euro housing plan for Ireland – Housing for All.

The main objectives of the Affordable Housing Act 2021 is to provide affordable homes and cost rental homes at low level rents to eligible candidates. There has been a relatively slow uptake of these projects as they require a buy in from all parties involved. These parties are the local authorities, approved housing bodies (AHBs) and the Land Development Agency (the LDA). More recently however, we have seen a considerable amount of progress since the Act’s implementation and the eligible parties themselves.

In this article we will focus on the following Schemes that are in place:

  • Affordable Dwelling Purchase Arrangement
  • First Home National Shared Equity Scheme
  • Cost Rental model

Affordable Dwelling Purchase Arrangement

The Act introduced the Local Authority-led Affordable Dwelling Purchase Arrangement which is aimed at buyers who are seeking to purchase a newly built home but need to bridge the gap between their mortgage and deposit to cover the full price of the home. This process entails buyers entering into an agreement with the Local Authority to receive funds for the purchase of the property in return for a percentage ownership.

The Eligibility process attached to this scheme had the following requirements for eligible buyers:

  • Households which, using their combined deposit and their approved maximum mortgage, cannot afford the home at its open market value
  • The scheme is targeted at first-time buyers in local authorities with the greatest affordability challenges
  • Provision will also be made for:
    • Divorced or separated individuals who do not retain an interest in a home previously owned with their former spouse/Civil Partner
    • A limited category of second-time buyers, those who purchased previously but whose home is now demonstrably too small for their household needs, and
    • Applicants who previously purchased a dwelling but who sold it or became divested of it as part of insolvency/bankruptcy proceedings

As of Q3 last year, local authorities had advertised approximately 300 affordable purchase homes applications, however we are expecting a much higher number of applications in 2024.

First Home National Shared Equity Scheme

Under the Act we saw the introduction of the First Home National Shared Equity Scheme (the First Home Scheme). The First Home Scheme, launched in July 2022, is a shared-equity scheme that will be provided by the State, in partnership with participating mortgage lenders. This also allows eligible buyers to purchase new homes for sale on the open market that are below the relevant location-based price caps. An equity share is available to an eligible purchaser where there is a shortfall between their mortgage capacity and the new home price. This means that the buyers will receive funds from the First Home Scheme in return for the First Home Scheme taking an equity share in the ownership of their property. The equity share ranks second to the banks interest in the property.

The eligibility process for the First Home Scheme provides you must:

  • Be over 18 years of age
  • Be a first-time buyer or other eligible homebuyer
  • Have Mortgage Approval with a Participating Lender
  • Borrow the maximum amount available to you from one of the Participating Lenders, that is up to 4 times your income
  • Not be availing of a Macro Prudential Exception (MPE) with a Participating Lender
  • Have a minimum deposit of 10% of the property purchase price or build cost, for self-builds, equity in your site can contribute to your deposit.

The report for 2023 shows continued strong interest in the Scheme, with 3,196 buyers approved and 1,255 homes already purchased. Of the 1,255 homes purchased using the Scheme, 1,118 were purchased in 2023 and 137 in 2022. The report also shows a significant uplift in Scheme usage during 2023, with the number of homes purchased in H2 2023 over 5 times the number purchased in H2 2022 and more than double the number purchased in H1 2023.

Cost Rental model

The Act also provided for the introduction of the Cost Rental model which aims to provide homes for rent at levels that are substantially below market rent while sufficient to meet the financing and on-going management and maintenance costs for the owner. The provision of Cost Rental homes is being funded by the Government through fixed rate loans provided by the Housing Finance Agency (the HFA) and the Cost Rental Equity Loan (CREL), provided by The Housing Agency for up to 55% of the capital costs.

CREL is a low-cost loan at 1% simple interest that is not repayable until the end of the 40 year loan period. The Housing Agency is providing CREL funding as a secondary loan for up to 55% of the capital cost, with the HFA funding the balance percentage. By the end of 2023, almost 2,000 Cost Rental Homes were estimated to be delivered through the CREL facility, Affordable Housing Fund and the LDA.

You will be eligible for CREL if:

  • Your net household income is below €66,000 per annum for Dublin and €59,000 for everywhere else in the country
  • You are not getting any social housing supports, including the Housing Assistance Payment
  • You do not own a property
  • Your household size matches the size of the property advertised. For example, a two-bed unit may be suitable for two adults, a couple, or lone parent with 1 or more children
  • You can afford to pay the rent for the home
  • Your household has only applied once for a specific cost rental property
  • All members of the household are living in Ireland when you apply

The new Secure Tenancy Affordable Rental (STAR) investment scheme was launched in July 2023. STAR aims to invest up to €750m in the delivery of over 4,000 Cost Rental homes, which will benefit from secure tenancies under the Affordable Housing Act 2021 (Cost Rental Letting and Eligibility) Regulations 2021 and will be let at a minimum of 25% below comparable market rental levels in high demand urban areas. By increasing the supply of Cost Rental homes, STAR will benefit households who are disadvantaged by prevailing market rents, through providing an option of a home for rent at a more affordable level with security of tenure.


From the introduction of the Act, it took nearly two years to complete the Affordable Dwelling Purchase Arrangement Development with South Dublin County Council. This stresses the need for buy in for all relevant parties to the Housing Plan and more information to be provided to the eligible buyers from an earlier stage. By doing so, the number of eligible buyers being housed, and the availability of houses will increase rapidly in Ireland.

Timing aside, the successful implementation of Developments such as the Local Authority led Scheme in Clondalkin, the LDA Scheme in Wicklow and “Project Tosaigh” has set the benchmark for the future of the housing market’s supply under the Government’s plan. The Government proposes to increase the supply of housing to an average of 33,000 per year over the next decade. The figures in late 2023 were reported likely to exceed the 2023 target of 29,000 units and it is forecasted to exceed the 2024 target of 33,000 units.

The Government has stated there will be a major focus on improving the viability of residential construction, including through modern methods of construction and enhanced construction sector capacity in 2024.

We look forward to watching the further success in the Government’s Housing Plan for the year 2024.

For more information and expert advice, 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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