€430m accommodation fund to bring cheaper rents for students

Minister Simon Harris said that where projects are funded, there will be an expectation that rental prices are kept somewhat affordable or that units are made available at below-market rents. File picture: Stephen Collins/Collins Photos

A new European-backed fund to build student accommodation will lead to cheaper rents for students, the Higher Education Minister has said.

The €434 million fund includes €200 million made available to third-level institutions by the European Investment Bank (EIB) and €200 million from the Housing Finance Agency. 

Colleges will be able to borrow at lower rates and for longer periods than previously, which Simon Harris says will solve the issue of viability for third-level institutions who have previously said that uncertainty over rents and rising construction prices have made projects financially unsustainable.

However, Mr Harris said that where projects are funded, there will be an expectation that rental prices are kept somewhat affordable or that units are made available at below-market rents.

"When the government invests direct money in projects as we are doing now and I expect we will do many more over weeks and months ahead, that portion of public money is given back in a portion of properties offered at a below-market rate, and we do that one by one but it's certainly not done on a 'would you mind?' or a goodwill gesture—it's done as a formal agreement with the university.

"Absolutely be clear that if the State is involved in any initiative around student accommodation, as we will be in relation to this funding, part of that conversation will be making sure that investment results in below-market rates for rent. And that's the approach we've taken with the universities so far and it's a model that's working."

The funding arrangement involves a 40-year €200 million loan from the EIB, with the HFA more than matching the investment, bringing the total to €434 million. This funding will form part of the 25% of the Housing For All commitment made by the HFA.

Mr Harris said the funding could see up to 2,700 student beds built which "means that construction costs which have been a huge barrier for universities in recent years will be lessened".

Therefore it should also mean that student rents and the benefit to families and students should be apparent as well.

Werner Hoyer, President of the European Investment Bank said Ireland's struggles with housing and student accommodation are not unique across the EU.

"This is something that we share in the European Union, this one EU institution like ours is ready to intervene, because it's a serious thing when people decide not to go to university because they cannot afford the accommodation."

A feasibility study is underway to identify specific student accommodation demand and supply by region including an examination of a specific technological university borrowing framework as a mechanism to deliver financed student accommodation.