Dáil debates

Tuesday, 24 November 2009

Other Questions

Social and Affordable Housing.

4:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 50: To ask the Minister for the Environment, Heritage and Local Government the number of units acquired under the leasing initiative in each local authority; the size of these units; the cost per unit; the duration of lease agreements; the number of agreements containing a break clause; and if he will make a statement on the matter. [42929/09]

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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To date, almost 1,600 units, across 20 housing authority areas, have been approved by my Department under the social housing leasing initiative. This comprises 1,281 properties in respect of which full funding approval has issued and a further 316 units in respect of which provisional approval has issued. A number of other proposals are also under consideration by my Department.

I will circulate in the Official Report a table showing the breakdown by housing authority of the 1,281 properties in respect of which full funding approval has issued. The average leasing cost in respect of these units is just over €390 per month. However, the majority of these units are unsold affordable dwellings, where the average cost would be less than if they were either leased by housing authorities from the private sector or provided directly by approved bodies. Therefore, the average cost is likely to increase as other projects are progressed. The lease period in respect of the unsold affordable units is five years, while in all other cases the lease is for a minimum of ten years. The 1,281 units involved comprise 193 one bed units, 613 two bed units and 475 units with three bedrooms or more.

The issue of including break clauses in lease agreements is a matter for housing authorities and approved housing bodies to deal with as part of their negotiation process. My Department has, however, issued guidance to authorities advising them to exercise caution in making provision for break clauses and that where such clauses are agreed, the authority concerned must be satisfied that it will be able to rehouse the occupant in the event of the option being exercised.

Overall, I am pleased with the progress being made in rolling out the new leasing initiative. With 1,600 units approved, the initiative which I only introduced in February this year is becoming a crucial delivery mechanism in meeting housing need, particularly in the context of the prevailing constrained fiscal environment. I have recently announced the extension of the leasing arrangements to the voluntary and co-operative sector which will further accelerate activity under the initiative. I am confident the target to source 2,000 units under the leasing arrangements in 2009 will be substantially achieved by year end. Table

Housing authority areaNo of approved with full funding approval for leasing
Cork County Council415
Dublin City Council365
Fingal County Council97
Kildare County Council56
Laois County Council56
Mayo County Council20
Meath County Council74
Offaly County Council21
South Dublin County Council100
Templemore Town Council20
Wexford County Council14
Westmeath County Council43
Total1,281

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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With regard to the breakdown given in the table and the average cost of €390 per unit, the Minister of State has said affordable housing is included. Therefore, the figure is not drawn specifically from privately owned accommodation leased by the Department. Does the figure also include affordable homes?

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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Yes.

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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The figures have been somewhat distorted by a reduction in prices because the State is in possession of the properties. They cannot be included because there is no charge on these properties in the first instance. Is that correct?

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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We expect the cost to increase because we will deal more with the private market. However, a cost is associated with affordable housing because there are loan costs for each local authority. I accept the figure is possibly not the market rent applicable to private properties at this time.

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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That is a significant change. My question referred to vacant properties leased from developers and private entities, not local authorities. I would appreciate it if the Minister of State broke down the figures in this regard. Behind my supplementary question is a belief that a serious examination needs to be carried out of the merits of this initiative. I have written to the Comptroller and Auditor General asking him to undertake this examination and hope the figures provided for that office will not be skewed by the affordable home scheme figures I received this afternoon. In recent weeks we have witnessed a significant drop in rents in the open market. Given the direction to local authorities in this matter that they should a figure of 20% below the current rent payable with regard to when leases were acquired, have further leases been taken out, given that rents are falling further? Are local authorities tied into lease agreements in excess of current rental figures? Is there a break out clause whereby rents can be reviewed downwards? What is the minimum period at which those break out clauses are set?

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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The rental figures run from approximately €550 per month - the maximum - to €299; therefore, there is a variation. Local authorities have an entitlement to a review, both upwards and downwards. We indicated to them that they should look for a 20% reduction in the current market because we are leasing multiple units. It is very important that I achieve the best possible value for the State. I do not make any apologies for asking local authorities to enter negotiations to achieve value for the taxpayer.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
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Did the Minister of State include in his memorandum to local authorities a directive to undertake a rent review every two years in order to ensure value for money for the taxpayer? As the previous Deputy noted, rents can either go up or down.

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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We indicated to local authorities that they should seek a rent review which could be either upwards or downwards. That is only appropriate and what we would expect. The matter of affordability is of benefit to the taxpayer at this time, as the amount we are paying covers loan repayments. We are putting national infrastructure into public use with good value, which is important. Local authorities have the outline and instructions from the Department. We have ongoing contact with them. I am very pleased with the level of activity and for the past two months the provision has been extended to the voluntary sector, which will accelerate the long-term leasing initiative.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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I will take a final supplementary question from Deputy Lynch.

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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Will the Minister of State provide a figure for the leasing costs of these properties, excluding those included in the affordable homes scheme? He has acknowledged that the inclusion of affordable homes in the figure is skewing it and driving down the cost. Given that rents are continuously dropping, is the value of some of the leases entered into in excess of the rental agreement figures that can be acquired currently?

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I will take the last question first. Anybody will accept that the maximum figure paid by any local authority is €550 per month. That compares very favourably on a national basis, including Dublin and Cork. However, the figure can be as low as €299. I will provide the figures for the administrative costs because I do not have them readily available. I will ask my officials to make the information available to the Deputy.