Introduction & Background

On 9 March 2026, the Housing Agency (“HA”) published an important update to the Secure Tenancy Affordable Rental (“STAR”) investment scheme policy document. At a high level, the 2026 update signals a shift from a relatively rigid, time-bound subsidy model to a more flexible, rolling investment platform designed to increase private sector participation and accelerate Ireland's cost-rental pipelines.

The STAR scheme is a state-backed equity investment programme (with up to c. €750 million in aggregate funding) designed to stimulate the delivery of cost-rental homes. It serves as a cornerstone of Pillar 1 (Activating Supply) of the Government’s Delivering Homes, Building Communities 2025–2030 Plan (part of the broader Housing for All strategy). The scheme specifically targets middle-income households who struggle with private market rents but do not qualify for traditional social housing. All residential units delivered via STAR must be formally designated as cost-rental units under Part 3 of the Affordable Housing Act 2021.

 

How the Scheme Works

The State provides equity investment to ‘Qualified Proposers’ who meet strict long-term affordability and eligibility criteria:

  • Long-Term Commitment: Proposers must commit to retaining the units under the cost-rental scheme for a minimum of 50 years.
  • Rent Caps: Initial rents must be set at levels of at least 25% below local open-market rates. Subsequent rent reviews may only be increased in compliance with the Cost Rental Rent Setting Regulations 2021.
  • Investment Thresholds: Nationally, funding is available up to €150,000 per unit, rising to a Dublin exception of up to €175,000 per unit, plus an optional €25,000 sustainability investment in both cases.
  • Tenant Eligibility: Net household income caps are strictly limited to €66,000 in Dublin and €59,000 across the rest of Ireland.

 

Key Policy Changes: 2023 vs 2026

The March 2026 update introduces significant procedural changes designed to make the scheme more attractive to private market operators, senior lenders, and institutional developers.

Feature

2023 Original Framework

2026 Updated Policy

Agreement Type

Equity Participation Agreement

Equitable Trust Agreement (“ETA”) & Priorities Agreement (“PA”)

Balance Sheet Treatment

Treated effectively as debt, limiting commercial leverage and provider utilisation.

Treated as true equity, removing capital constraints from the provider's balance sheet.

Sunset Clause

Strict 2027 deadline; projects required completion by 31 December 2027.

Sunset clause completely removed to facilitate long-term master planning and multi-phase developments.

 

 

 

 

 

 

 

 

 

Inside the Equitable Trust Agreement & Lender Framework

The transition from a conventional equity stake to the ETA represents the most significant legal change in the 2026 update. Funding is advanced as a STAR ETA in the amount required to enable the Proposer to achieve target rents.

  • Title and Ownership: Property ownership remains with the Qualified Proposer. The State secures its equity investment by registering an inhibition as a burden on title, restricting the operator from dealing with or disposing of the asset without explicit consent from the HA.
  • Enhanced Bankability & Lender Protections: To integrate private debt financing, the HA introduces a standardised Priorities Agreement. Where a commercial lender provides finance, the HA will permit the lender to hold a first-ranking charge. The HA inhibition ranks behind the lender’s security, clarifying enforcement, security, and step-in rights.
  • Interest and Returns: The State’s investment features 0% interest and requires no ongoing financial return or dividend payable to the HA during the active 50-year term.
  • Clawback Risk: If a property owner breaches the core framework agreement or fails to maintain the cost-rental designation, the entire STAR investment becomes immediately repayable to the HA.

 

End-of-Term Options

Upon the expiration of the 50-year term, the ETA outlines three distinct exit or continuation pathways:

  1. Default Option: Extend the agreement and maintain the established cost-rental structure.
  2. Exit Option: Repay the original STAR investment to the HA and formally lift the cost-rental statutory designation.
  3. Acquisition Option: The HA reserves a right of first refusal to purchase the dwellings from the owner outright at current market value.

 

Key Takeaways for Industry Stakeholders

The March 2026 update represents a clear pivot toward bankability and long-term operational sustainability. In particular, the move to a trust-based structure, the introduction of lender protections, and the removal of the scheme's expiry date materially enhances the scheme's attractiveness to the private sector.

  • Developers & Operators: Will benefit from improved financial viability and better access to senior debt.
  • Lenders & Institutional Investors: Will benefit from greater clarity on priority of security and enforcement rights, a standardised contractual framework, and a predictable investment environment tailored to long-duration income strategies.

For market participants, the updated framework signals that STAR is intended to become a permanent cornerstone of Ireland’s affordable housing delivery model, rather than a temporary intervention.

For more information or assistance with queries relating to the STAR Investment Scheme, please contact Orlagh Caffrey or any member of the Flynn O’Driscoll Real Estate Team.

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