Cost rental for local authorities: the Affordable Housing Fund explained

In 2024 the Affordable Housing Fund supported 809 homes, the large majority affordable purchase, with cost rental a growing share. For the 31 local authorities, the AHF is the lever that makes affordable delivery add up.

Cost rental has to be let at least 25% below market and recover its cost over at least 40 years. For a council, the AHF grant is what bridges the gap between what a scheme costs and what a sub-market rent can repay.

This article explains how the AHF works for cost rental: the grant tiers, how the subsidy moves the cost rent, how it compares with the AHB and LDA routes, and how to test a scheme before it goes to design.

How the Affordable Housing Fund works

The Affordable Housing Fund is a direct subvention on local authority housing delivery. It is tiered at EUR 50,000, 75,000, 100,000 and 150,000 per unit, set by two factors: the density of units per hectare and where the development is located. Higher density and higher cost areas attract more grant.

In 2024 the average subsidy worked out at about EUR 77,413 per unit, of which 95% came from the Exchequer and 5% from the local authority itself. Unlike a loan, the grant reduces the total development cost the scheme has to finance, so it feeds straight through to a lower rent.

For the wider council toolkit alongside cost rental, see our guides on affordable purchase schemes and the differential rent schemes across the councils.

How the grant moves the cost rent

Because AHF is a grant rather than debt, every euro of subsidy removes a euro of cost that would otherwise need financing. On a typical scheme, moving from the EUR 50,000 tier to the EUR 150,000 tier can be the difference between a rent that fails the 25% below market test and one that clears it comfortably.

The exact effect depends on land cost, build cost and the local market rent, which is why it is worth modelling rather than estimating. The feasibility calculator has an AHF route where you pick the grant tier and see the cost rent and the go or no-go verdict update immediately.

AHF, CREL and STAR side by side

Local authorities are not limited to the AHF. The same site can be delivered by an Approved Housing Body using the Cost Rental Equity Loan, or with Land Development Agency involvement using STAR equity. Each route changes the capital stack differently.

AHF is a grant that cuts cost directly. CREL is a 30% equity loan plus HFA debt. STAR is patient State equity of up to EUR 175,000 per unit in Dublin. Our companion pieces walk through cost rental viability for AHBs and how the LDA prices cost rental. The feasibility calculator lets you compare all four routes on the same scheme.

Delivery, allocations and reporting

Once a council scheme is approved, the operational load is allocations, eligibility checks, lease administration, inflation linked rent reviews and reporting. This runs alongside social and differential rent tenancies, so most councils manage it on shared social housing software rather than separate systems.

For the day to day rent side, see how differential rent works for housing officers, and the impact of Budget 2026 on housing portfolios. Cost rental, affordable and social tenures all sit on Rentalize Core for councils and AHBs.

Frequently asked questions

How much is the Affordable Housing Fund grant per unit?

The AHF is tiered at EUR 50,000, 75,000, 100,000 and 150,000 per unit, set by density and location. The 2024 average subsidy was about EUR 77,413 per unit.

Does the AHF apply to cost rental or only affordable purchase?

Both. AHF predominantly supported affordable purchase in 2024, but it also funds local authority cost rental delivery, and cost rental is a growing share.

How does AHF affect the cost rent?

The grant reduces total development cost directly, so it feeds straight through to a lower cost-covering rent. A higher grant tier can be the difference between failing and passing the 25% below market test.

Can a council combine AHF with AHB or LDA delivery?

Yes. The same site can be delivered through an AHB using CREL, or with LDA involvement using STAR equity. Each route changes the capital stack, so it is worth modelling all of them.

Who pays for the AHF grant?

About 95% is funded from the Exchequer with the remaining 5% contributed by the relevant local authority.

If you would like to see how Rentalize handles this in practice, you can book a 20-minute walkthrough. We will use one of your own properties as the worked example.