During the Covid-19 lockdowns, CaCHE undertook a research project that played a key role in shaping Northern Ireland’s new intermediate rental tenure—an innovative housing solution designed to bridge the gap between social housing and market renting. Last week, Northern Ireland’s housing minister Gordon Lyons announced plans for a government-funded intermediate rental housing scheme.

During the lockdowns of Covid-19, one of the projects CaCHE worked on was a multi-strand study for the Department of Communities in Northern Ireland. This work, published in 2021, supported the development of a new intermediate rented tenure proposed for pressured rental market areas.  Up to that point, Northern Ireland’s housing choices involved home ownership, including a long-standing and successful (co-ownership) shared ownership model, private renting, and social renting, the latter through the Housing Executive and the housing association sector. There was no affordable, mid-market or intermediate rental offer aimed at those who could not access ownership, would not qualify for social housing but found market renting too expensive.

Our project did several things. First, we estimated the existence of a need for such housing. Modelling work combining Chris Leishman’s econometric skills and those of a market-leading estate agent in Northern Ireland. We found that there was unmet demand for an intermediate product operating in the rental market, particularly in and around Belfast but also for Derry City/Londonderry. We confirmed that this unmet need among key workers and younger households warranted market intervention.

Second, we drew on evidence from Scotland where there had been success supporting affordable rent without grant through cheaper finance from the Scottish Government including applying soft loans in the form of financial transactions capital. Combined with long term private finance, this permitted investment in market rented housing operating to a significant discount compared to equivalent market rents, as was found in the case of the Lar housing trust and Places for People mid-market rent offers. This was helpful precisely because the then minister for housing in Northern Ireland wished to focus grant funding on social housing development, creating a space for lower-cost debt finance for this mid-market niche.

Third, we carried out a range of elite interviews with key stakeholders to test market interest in the product and its underlying feasibility. This was also positive and led to a series of due diligence exercises with different parts of the Northern Irish government. In particular, despite leaving the EU, Northern Ireland’s unique status regarding Ireland and the single market/customs union, post the Brexit agreement, meant that we had to confirm state aid rules were not any material barrier. They were not.

The signed-off report then became part of the emerging Northern Ireland housing supply strategy and in due course became part of the future supply programme.

Just last week, I was in Northern Ireland as part of a strategy session with the Centre for Homelessness Impact. A feature of this meetings is to do a service meeting and to this end we visited the Northern Ireland Housing Executive in Belfast. This led to a strategy session with the Chief Executive and Head of Housing management, respectively, Grania Long and Jennifer Hawthorne.

During our discussion, it became apparent that they had been at a launch event announcing the Housing Executive’s funding for the first new development of the intermediate rent product (see Housing Today piece). This will involve more than 300 homes across Northern Ireland with rents set at 80% market rent (or lower). I mentioned to Grania that it has been a great research project to work on, and she said: ‘Yes, it’s not every day that you help create a new housing tenure’.

While it is a niche product aimed at a particular strand of affordable housing need, it is genuinely novel to Northern Ireland and helps meet an underserved need and provides a high quality and affordable option to the private rented sector in pressurised market areas. It will be fascinating to see how it develops and whether it can be as effective as we hope. Perhaps possible future work might involve a comparative evaluation of such products in Scotland, Northern Ireland and elsewhere.

This article was originally published on the CaCHE website.