Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

I assume the Deputy is referring to the new long-term leasing scheme I announced recently. Some €20 million has been set aside by my Department in 2009 to support the leasing of at least 2,000 houses by local authorities for social housing purposes. The cost of the scheme in future years will be dependent on the number of homes leased, the rental payments involved and the length of time for which leases are procured. It is intended that authorities will procure dwellings for periods of ten to 20 years.

The cost to a local authority of a leased unit is determined by a variety of factors, including type and size, location and the average rent of properties in the area. Costs can be also influenced by rent reviews, which my Department has advised should follow market conditions.

The primary focus in negotiating leasing costs will be the delivery of value for money and I expect that authorities should be able to secure leasing costs of at least 20% below market value. This reflects the element of risk, such as the vacancies, and management and maintenance responsibilities, being transferred to the housing authority. The property owner will remain responsible for any structural matters.

On that basis, by way of illustration, a Dublin authority might lease a dwelling at €1,000 per month, assuming a current market rent of €1,250 for a 3-bedroom property. Over a 20-year period, on a fixed-price basis, this would cost the authority approximately €240,000 as compared with the current average cost of €330,000 to purchase a new home in the Dublin area. This of course excludes the financing cost to purchase such a unit. When this is factored in, the total cost to the State would be more than €520,000, which would be more than double the cost of leasing the unit.

Social housing tenants accommodated in leased properties will be charged a differential rent in the normal manner. This rent will be used by the authority to defray the costs of management and maintenance of the property.

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