Local authorities will no longer enter long-term leases of homes for social housing with investment funds by the end of the lifetime of the Government, Minister for Housing Darragh O’Brien has said.
The council leases have been fiercely criticised by financier Dermot Desmond, who described the practice as a "criminal waste of money" and said investment funds were "having a laugh at Ireland".
In a letter to Mr O’Brien, Mr Desmond said the State’s treasury agency was borrowing at an average of 0.02 per cent when the State was paying 5 per cent on average to international funds for leased homes.
“In such a low-interest environment, the current policy of buying and leasing social housing from private developers and investment funds is a criminal waste of public money,” he told Mr O’Brien on December 15th, 2020.
Responding to Mr Desmond’s criticism on Monday, Mr O’Brien told RTÉ Radio 1’s Today with Claire Byrne programme that he did not need Mr Desmond to point out the problems, since he had opposed the leases during his Opposition days.
Disingenuous
However, Sinn Féin’s Eoin Ó Broin said the Minister was being disingenuous since leases would continue to be signed by local authorities with funds for years to come.
“When one of the country’s leading financiers and investors tells the Government that its housing policies do not make any sense from the taxpayers’ point of view, the Government has to sit up and listen,” he said.
“Whatever one thinks of his political views of the world he is a man who understands finance. The leasing arrangements are so expensive to the taxpayer. We know that from the Department of Public Expenditure reports.”
The Minister has given a five-year window for leases to be signed, said Mr Ó Broin, who argued that the State should immediately stop signing any more leases.
Small landlords are quitting, but the houses are being bought by medium-sized investors who were offering portfolios to local authorities for long-term leases, enjoying the same tax advantages as bigger funds.
Seventy such homes were leased by South Dublin County Council in the last two months, he said. “The local authority is not allowed to buy those properties but has to enter these very expensive long-term leases.”
The waste of State money is “crystal clear”, said Cian O’Callaghan of the Social Democrats, who said local authorities would sign another 2,500 of these long-term leases over the next two years.
