The number of social housing units being leased to local authorities on a long-term basis has increased significantly this year despite criticism of the costs involved.
Figures provided by Minister for Housing Darragh O'Brien, in response to a parliamentary question from Sinn Féin's Eoin Ó Broin, show a total of 726 new social units were leased by local authorities in the first three months of 2021.
This comprised 603 dwellings under long-term lease agreements and 123 under Part V lease agreements. The Part V rule stipulates that developers must set aside at least 10 per cent of new housing developments for social units, which the local authorities can buy at a discounted rate or lease. The 726 total compares to just over 1,000 for last year as a whole.
The average cost of all long-term leases approved in 2021 was €15,000, Mr O’Brien confirmed, which works out at €300,000 over a 20-year timeframe, the typical length of a lease.
The average cost of the Part V lease units, which were mainly in Dublin, was put at €18,049, which works out at €360,980 over a 20-year term.
While these figures are marginally cheaper or on a par with the cost of buying social housing units, the councils do not own the properties after the lease expires and must enter into another leasing arrangement, making them a much costlier proposition.
Mr O’Brien said the average lease cost varied on the basis of location, dwelling, size and property type, while the Part V agreements usually involved a rent-free period upfront.
Mr Ó Broin, however, said the figures pointed to an upward trend in the number of these arrangements, which he described as bad for the taxpayer and bad for the rental market in general.
“The very fact that the State is going in and entering into these leases means it is crowding out other renters and pushing up rents overall,” he said.
Mr Ó Broin cited a recent report by the Department for Public Expenditure and Reform which concluded that long-term leasing at the height of a rental market in high-demand areas represented bad value for money.
Investment fund
Fingal County Council recently entered into deal to lease 159 homes in the Hansfield Strategic Development Zone (SDZ), southwest of Blanchardstown in Dublin, which is expected to cost the council €60 million to €74 million.
Dún Laoghaire-Rathdown County Council also recently entered a long-term leasing arrangement with German investment fund Realis for 87 apartments in Dundrum, but the terms of the contract has not been disclosed.
The Government has come under fire over the number of apartment complexes, and more recently a housing estate, being bought outright by institutional investors for the rental market, which is seen as making it more difficult for young people to buy.
In response Mr O’Brien is preparing to introduce regulations that will allow councils to make developers reserve up to half of homes in a new housing estate for first-time buyers. The new powers could be given to city and county councils under the Planning and Development Act within weeks.
