Rent for thousands of State-funded student beds to be provided at ‘below market rates’

Thousands of student beds due to be built by universities with access to State funding and low-interest loans must be provided at “below market rates”, Minister for Higher Education Simon Harris has said.

The Minister confirmed details on Thursday of a €434 million partnership between the European Investment Bank (EIB) and the Housing Finance Agency aimed at delivering up to 2,700 student beds. It comes as many third-level institutions complain that the cost of building accommodation is no longer economical given rampant inflation in the construction sector.

Mr Harris said the new arrangement would unlock building projects and deliver “affordable” rents to students. “We will reach an agreement [with universities] that the proportion of public money we put in is given back in a proportion of properties and accommodation being offered at below market rates. It is certainly not done on a ‘would you mind’ or goodwill gesture. It is an agreement with the university.”

Mr Harris said the new financing mechanism would assist institutions with the cost of building accommodation and help bridge the gap between viability and affordability for students.

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In addition, he said taxpayer funding was being made available to universities to help bridge the affordability gap in undertaking to build new student accommodation. “Every student bed we create has a double benefit. It helps the student and their family, but it also frees up private rental accommodation in our cities and towns. This investment by the EIB and Housing Finance Agency will have significant benefits for access to education, and crucially to the wider housing market.”

The investment announced on Thursday is separate to the Government announcement where a total of just over €60 million has been provided to unlock the development of over 1,000 beds across four universities, with delivery beginning in 2024. These beds are based at DCU, University of Galway, University of Limerick and Maynooth University. A separate announcement is expected soon to unlock planned developments at UCD and Trinity College Dublin.

Barry O’Leary, chief executive officer of the Housing Finance Agency, said the initiative announced on Thursday was backed by a 40-year load facility at the EIB which would ensure “long-term, competitive financing is available for new student housing projects over the next five years”.

“The EIB backing will reduce financing costs for universities and enable lower monthly rents for students living in new accommodation,” he said.

Mr O’Leary said discussions were already under way with Irish universities and technological universities about the provision of financing from this new fund to support the construction of additional student housing.

Separately, it is understood that Trinity College Dublin has decided to freeze rents for students in college-owned accommodation in the next academic year. The university provides hundreds of student beds at its campus in Dublin city centre as well as at Trinity Hall in Darty, Dublin, where rents range from between €166 to €276 a week.

A source said the decision to freeze rents was taken in light of affordability concerns for students despite the fact that college accommodation was running a significant financial deficit due to the cost of upkeep and renovation.

Last month a group of students blockaded the entrance to the Book of Kells exhibition at Trinity College Dublin in protest over a 2 per cent rise in accommodation prices on campus. Around 30 students blocked the entry to the tourist attraction, with placards stating “students not cash cows” and “freeze rent”.

The college’s student union claimed that Trinity College was “making €10 million a year” from its student accommodation.

Trinity said in a statement at the time that the 2 per cent increase was part of a three-year plan that would expire this year and would be subject to review. A spokeswoman at the time said that, in light of persistently high inflation, “modest increases in rents” had been required to cover rising costs. “Inflation has been high for an extended period; in the 12 months to August 2023, the category of housing, water, electricity, gas and other fuels rose 17.3 per cent.”