Ciarán Lynch (Cork South Central, Labour)
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Question 2: To ask the Minister for the Environment, Heritage and Local Government the anticipated overall cost over a 20-year period of the scheme for local authorities to lease new houses for social housing; the anticipated cost per unit of a 20-year lease; the mechanism that will be used to determine the rate at which property will be leased; the way the rental income from such property will be used; the anticipated cost of maintenance and upkeep of leased properties; the way this cost will be provided for; and if he will make a statement on the matter. [18432/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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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.

Ciarán Lynch (Cork South Central, Labour)
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I thank the Minister of State for his response, which indicates that the average lease arrangement will cost €10,000 per year, which works out at €200,000 over the 20-year lease period and that the rent accrued during this period will be offset against the maintenance of the properties. Based on a rent of €100 per week on the differential, this goes into sums of nearly €100,000 over the period of the property lease. The sums involved in the Minister of State's proposal amount to approximately €300,000 per unit on a lease basis over 20 years, after which time the property will be handed back to the developer at an increased market value. The maths do not add up.

Will the Minister of State review the situation? He has confirmed my suspicion that the rents being accrued by the properties will, instead of going to local authorities, be ring-fenced in the leasing arrangements. The market and cost values of the properties are significantly different. The Minister of State would have spent less had he chased their cost value. He might even have got them for below the €200,000 he cited, perhaps for €150,000 or €140,000. Is this a proposal to help people on social housing lists or is it a bail out for developers who cannot get rid of properties? Is the State stepping in to stand over them?

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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There are two points. The Deputy contradicted the figures made available to me.

Ciarán Lynch (Cork South Central, Labour)
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No, I stated-----

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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They are clear, in that the cost for the number of years in question will be approximately €240,000 for the provision of a house to someone on a local authority housing list. To purchase and finance a house over the same period would require €520,000. These are the figures on today's costs, which are available on the website.

The old hairy chestnut of bailing out builders has been pegged out time and again. Were we to buy houses tomorrow morning, who would provide them other than builders? This year, builders will provide the houses my Department has supplied €1.2 billion to construct and acquire. This is the long and the short of it. There is no bail out. My job is to try to get as many houses as possible for the 55,000 people on our housing lists. Were I to take the road mentioned by the Deputy, I would need €4 billion to deal with 20,000 houses.

Ciarán Lynch (Cork South Central, Labour)
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That amount is for 20,000 houses, but we are only discussing 2,000 houses.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I do not have that kind of money.

Ciarán Lynch (Cork South Central, Labour)
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The Minister of State has been flogging that figure for quite some time, but his sums are wrong.

Charlie O'Connor (Dublin South West, Fianna Fail)
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Only 17 seconds remain.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I have an opportunity to get value for money and to reduce the numbers on our housing lists through long-term leases at a price that has not been seen in years. This is what those on the lists want. I would not be doing my duty were I not to examine options to deal with our major housing lists.

Charlie O'Connor (Dublin South West, Fianna Fail)
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Deputy Ciarán Lynch must be brief.

Ciarán Lynch (Cork South Central, Labour)
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Will the Minister of State confirm in the House that he will spend €400 million in the next 20 years to lease 2,000 houses and that the rent accrued during that period will be ring-fenced for those properties' maintenance?

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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The scheme is for 2009. As the Deputy probably knows, I have been open to new ideas since taking over responsibility for housing. My Department is examining the possibility of an extension to the-----

Ciarán Lynch (Cork South Central, Labour)
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That is not the question that I asked.

Charlie O'Connor (Dublin South West, Fianna Fail)
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The Minister of State should finish.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I cannot say whether the Deputy's figure will turn out to be exact, as the scheme may vary come 1 January 2010. For example, we might decide to move to rent to purchase. Today's options allow us to avail of properties on the market, in respect of which I have set aside €20 million. People can rest assured that this option will be supported over the ten or 20 years. Since we are in discussions, I may vary the scheme. For example, I could include the incremental purchase scheme. These are some of my considerations and I will inform the House as soon as I make decisions on them.

Ciarán Lynch (Cork South Central, Labour)
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The leasing arrangements have no opt-out clauses. They are ten year or 20 year leases. Other schemes are different, but the Minister of State is committing the taxpayer to paying €400 million over 20 years. It is unbelievable and inexplicable that the properties' rents will not be held by the local authorities. Rather, they will be ring-fenced so that the developers can maintain their profits.

Charlie O'Connor (Dublin South West, Fianna Fail)
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The Minister of State can say just one word because we must move on.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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This year, I will provide a minimum of 2,000 extra houses for families on local authority housing lists. This is where the €20 million will go. It is good value for money. The uptake from local authorities is excellent, as is the general public's support.