Mr. Ivan Grimes:

Waterford City and County Council, along with Carlow County Council, was chosen to pilot the repair and lease scheme on foot of a proposal by ourselves. In Waterford we have been looking at vacant houses as a potential source of social housing for well over a year. In the first quarter of 2016 we carried out an extensive survey of areas in Waterford city. Each property in nine local areas was surveyed to ascertain whether each housing unit was occupied or not. Our survey ascertained that the vacancy rate for those areas in the first quarter of 2016 was 8.8%. The census 2016 data for the nine local areas recorded a combined vacancy rate of 13.6%.

What can we conclude from these figures? It is our view that the official vacancy rates, as recorded in the census, are overstated, possibly by 30% to 40% in larger urban areas. The only reason we can deduce for this is that there are significant numbers of people who simply will not engage with State agencies, including the Central Statistics Office, despite the guarantee of confidentiality in respect of the census.

I will now briefly outline our experience in Waterford with the repair and lease scheme. The scheme is targeted at the owners of long-term vacant properties that require some investment to bring them up to standard for occupation. A loan of up to €40,000 per property is available on condition that the owner leases the property to the local authority for social housing for a minimum of ten years. The loan is repaid over the lifetime of the lease from the rental payment to the owner.

Waterford City and County Council has engaged with the owners of more than 60 properties so far. We have entered agreements with or are about to enter agreements with the owners of nearly 20 properties. We are also in ongoing discussions with owners of more than 30 other properties. Two approved housing bodies are working on a further 18 properties in Waterford.

Not every property will be suitable for the scheme. The issues that we have encountered include properties requiring too much work and expenditure, properties located in areas with no demand for social housing or properties not being suitable for social housing. Several farmhouses were offered, for example, but these would require a significant maintenance commitment from tenants.

The biggest issue we have experienced with the scheme relates to the owners of the properties. It is important to understand that every vacant property is owned by somebody. Identifying the vacant property is fairly straightforward but identifying the owner is much more difficult. Having identified the owner, convincing him or her to sign up to a new scheme is definitely not straightforward. Some owners were reluctant to engage because the scheme is new while others are deterred by the length of the lease or the discount that is applied to the rents under leasing arrangements. There is also an ingrained resistance by some owners towards a social housing solution in their properties.

Finally, it is important to note that the scheme may not be suitable in all locations, depending on the position of the rental market or the value of house prices. Waterford City and County Council has not attracted any interest for the scheme in the seaside town of Tramore, which has a strong rental market particularly in the summer. Looking at how the scheme might operate in areas where house prices have been increasing significantly like Dublin or Cork, an owner of a property that is in need of investment would probably generate a better economic return by simply selling the property.

In a national context, our view is that the scheme can be an effective instrument where property market values are around or below average. Where property values and rents are very high there is less incentive for an owner to use the scheme and where values and rents are very low the economic conditions for use of the scheme do not exist from the owner’s perspective.