State aid: Commission approves €450 million Irish scheme to support the development of urban residential housing

The scheme aims to support the construction of apartment blocks of at least four floors in the urban areas of Dublin, Cork, Galway, Limerick and Waterford in line with Ireland's objectives of compact urban growth and social cohesion. These areas face an acute shortage of housing supply and a high number of unactivated planning permissions, due to the higher development cost of apartments compared to the actual sales price.

Under the scheme, the aid will take the form of a direct grant covering the difference between the actual price and the development cost of the apartment (the so-called ‘viability gap'), up to a certain maximum amount depending on the city. The scheme will be open to developers of apartment blocks that hold an unactivated planning permission and demonstrate the existence of a viability gap. Beneficiaries will be selected following a transparent selection procedure based on a number of criteria, including the residential density and the proximity to essential facilities, such as supermarkets, healthcare and education.

The Commission assessed the measures under EU State aid rules, and in particular under Article 107(3)(c) of the Treaty on the Functioning of the European Union, which enables Member States to support the development of certain economic activities under certain conditions. The Commission found that the measure is necessary and appropriate to ensure housing supply for sale to owner-occupiers in the targeted urban areas in line with the Irish objectives of compact growth and social cohesion. Moreover, the Commission concluded that the measure is proportionate, as it is limited to the minimum necessary, and has a limited impact on competition and trade between Member States.

On this basis, the Commission approved the Irish measure under EU State aid rules.

The non-confidential version of the decision will be made available under case number SA.102927 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved.