Proposals for subsidies totalling up to €600m to encourage apartment building

Proposals for subsidies totalling up to €600 million to encourage the building of apartments are being developed by the Government.

The Irish Times understands that the plans involve giving the Land Development Agency (LDA) an extra €500 million to €600 million over a number of years to help fund the development of apartments.

In return for the subsidies builders would have to set aside a certain amount of the developments for use as cost rental homes.

The goal is to activate thousands of existing planning permissions for apartments that are currently not being developed amid a view among builders that they are not financially viable.

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The proposals are said to be based on a similar scheme in Sweden and it is anticipated that the subsidy scheme could deliver between 6,000 and 8,000 apartments.

The expected additional expenditure on the subsidies by the State would be in the region of around €200 million per year.

Any such subsidy scheme will require European Union approval as it is a market intervention.

Sources confirmed that work is ongoing on the plan but it is expected to be finalised in the next couple of weeks.

The Government has been keen to push the cost-rental model for affordable homes as part of efforts aimed at tackling the housing crisis.

It is aimed at people who earn above the limits for social housing but struggle to pay market rents.

Under a cost-rental scheme, the rent paid is based on the cost of building, managing and maintaining the homes.

It does not include any profit for a developer and must be at least 25 per cent below regular market rents in an area.

There has been a high demand when such schemes have opened for potential tenants in recent months.

The Irish Times reported last month that almost 1,000 households applied to become tenants of 46 cost-rental homes advertised by the LDA in Citywest, Co Dublin and Delgany, Co Wicklow.

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Demand for both schemes was expected to be strong with rents about 57 per cent below market rates in Citywest and about 30 per cent below the market in Delgany.

Rents in Parklands at Citywest start at €1,350 a month for a three-bed house, €1,450 for a four-bed, two-storey house, and €1,460 for a four-bed, three-storey house.

At Archers Wood in Delgany, rent for a two-bed duplex has been set at €1,455 a month and €1,550 for a three-bed.

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