What Developers Need to Know: Croí Cónaithe (Cities) Scheme

What is the Croí Cónaithe (Cities) Scheme?

The Croí Cónaithe (Cities) Scheme provides funding to developers to bridge the viability gap for eligible new apartment block schemes in Dublin, Cork, Limerick, Galway and Waterford. A viability gap is where the cost of building apartments is higher than their market sale price. Funding will only be made available for suitable apartment developments where there is a demonstrated viability gap that, unless bridged, will prevent the apartments from being built or from being built for purchase by owner-occupiers.  

What are the eligibility criteria?

• Location: The apartments must be located in Dublin, Cork, Limerick, Galway or Waterford, within walking distance (1,250m) of high capacity urban public transport stops (such as DART or Luas) or reasonably frequent (min 15 minute peak hour frequency) urban bus services.

• Size and density: Apartment blocks must be four or more storeys high, with a net density threshold of 35 dwellings per hectare and proposals must be for 40 units or more.

• Planning: Full grant of planning approval must be in place and construction of apartment blocks must not have commenced. Un-commenced apartment blocks in multi-phased developments where some phases have commenced will be eligible.

• Viability gap: A viability gap per apartment must be proven. This will be determined and reviewed at three stages - at time of submission, at pre-contract stage and point of sale.

• Timescale: For submissions made in June 2022, dwellings must be commenced on site by 31 March 2023 or a later date as agreed with the Housing Agency and delivered as new homes by the end of 2025.

• Proven track record and project management: Applicants must demonstrate a proven track record in delivering residential developments and outline a clear programme management timeline/approach and resources to deliver the homes.

• Project financing: At the time of submission it is sufficient to outline the intended funding. Confirmation of financing is required for the later stages of the process.

• Eligible purchaser: Every apartment must be sold to an eligible purchaser. Anyone buying an apartment, either solely or jointly, to live in as their normal place of residence is eligible. Each purchaser will be required to confirm by affidavit that they are an eligible purchaser under the scheme. 

How much funding is available and when is it paid?

The level of support depends on the viability gap for each apartment. Generally, the maximum funding anticipated for each apartment is €120,000, but this may increase by no more than 20% in the four regional cities if (due to lower market prices in those cities) the calculated viability gap exceeds €120,000.

The Croí Cónaithe (Cities) Scheme is managed by the Housing Agency. During the approval process, successful applicants will be notified of the provisional allocation of funding. The funding will be finalised close to the date of delivery of the apartment based on the difference between the actual delivery cost (on the agreed basis) and the actual open market sales price achieved when an apartment is sold to an eligible purchaser. The subsidy will be paid to the developer’s solicitor and released to the developer when the sale closes.  

Is funding subject to clawback?

Funding support must result in reduced cost to purchasers. Purchasers are expected to live in the apartments for at least five years. If the property is sold within five years of purchase, purchasers will be required to pay to the Housing Agency a portion of the increased value of the property that relates to the funding support. A reduced payment is due if they sell more than five years and up to ten years after purchase. No payment is required if the property is sold after 10 years.

Is the scheme still open?

The first call for submissions for funding closed in June 2022. The Housing Agency is currently concluding appraisals of projects with the potential to deliver up to 1,750 owner-occupied apartments. Letters of Intent have issued to successful applicants, with a view to entering contracts on conclusion of the last appraisal/due diligence stage.  

A second call under the Croí Cónaithe (Cities) Scheme is due to be issued in Q2 2023.

Further information

Click here for further information on the Croí Cónaithe (Cities) Scheme process. If you wish to discuss any of the issues raised, please contact Neil Dunne or Claire O’Reilly from our Property/Real Estate Team or your usual ByrneWallace contact.