15 09 2023 Insights Real Estate

Secure Tenancy Affordable Rental (STAR) Scheme – How does it work and will it be a success?

Reading time: 4 minutes

Housing development


The STAR scheme has been brought forward by the Government to assist the delivery of new rental stock that will be earmarked for those in the private rental sector who are struggling to afford market rents.

It does this by addressing viability issues faced by developers (rising construction costs, softening of yields and increased finance cost) through an equity investment on the condition that the residential units will be designated as Cost Rental Units within the framework of the Affordable Housing Act 2021 (the “AHA”).

What are the Requirements?

In order to qualify for the equity investment, developers must commit to the following:

  • To dedicate the proposed units as Cost Rental Units available for Eligible Tenants under the regime set out in Part 3 of the AHA for a minimum period of 50 years.
  • In doing so the rent levels are set at the outset of this 50 year period at levels that are at least 25% below market rents – and also cannot exceed the rents set under Part 3 of the AHA (see below). The rents are then index-liked over the 50 year period.
  • The developer must meet certain other qualifying criteria (e.g. a proven track record in delivery of residential units and management of residential accommodation) and enter a Cost Rental Investment & Equity Participation Agreement with the Housing Agency.

Eligible Tenants:

The main criteria for prospective tenants of Cost Rental Units is that they meet annual net income limits prescribed by the relevant regulations. At present these are determined by Affordable Housing Act 2021 (Cost Rental Eligibility) Regulations 2023, which limit the annual net income for all prospective members of a household to:

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