Dáil debates
Wednesday, 5 May 2021
Ceisteanna (Atógáil) - Questions (Resumed) - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Social and Affordable Housing
7:40 pm
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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28. To ask the Minister for Housing, Planning, and Local Government his views on whether costs of between €18,000 and €28,000 per unit per year for 25-year long-term leases represent value for money for the taxpayer in view of the rising cost of long-term leasing and Part V long-term leasing and given that building or buying social homes by local authorities and approved housing bodies is cheaper and provides tenants with lifetime security of tenure. [23276/21]
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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As I am sure the Minister is aware, 48 leasing projects have been approved by his Department so far this year, totalling approximately 603 leased units. The average cost of those leases is €18,000 per year. That is €451,000 per unit over the lifetime of the lease. Does he believe that represents good value for money and the best way to deliver long-term social housing to social housing applicants?
Darragh O'Brien (Dublin Fingal, Fianna Fail)
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I thank the Deputy for his question. As he will know, the Government's stated objective is to focus strongly on new build activity and, in particular, local authority-led new build activity. The latter will comprise 9,500 of the target of 12,750 set down for this year. The new ambition under the programme for Government is to deliver 50,000 new social houses primarily through new build. That is what we want to see.
Leasing is one of a range of options available to supplement delivery, particularly at a time of acute housing shortage. It helps to supplement delivery, particularly under local authority and approved housing body build and acquisition programmes. It is a means of delivering additional social homes in an off-balance-sheet way, freeing up much-needed fiscal space for other spending requirements, including the housing capital programme that I want us to focus on in a very particular way.
My number one priority is the delivery of houses for the households on social housing waiting lists. In many cases where leasing is assessed to be a viable option, local authorities may not have access to adequate land or build pipelines to cater for demand in their area. That needs to change. I am working with local authorities on that issue and we will see some measures in the national development plan, NDP, review to address it.
While relative cost efficiency is always an important consideration in terms of the mix of delivery, it is not the only consideration and must be viewed in the overall context of the wider delivery issues. This is particularly important in the current climate, where it is essential to ensure the highest possible level of supply in the shortest time possible. All present wish to ensure we can continue to drive down homeless numbers and move people out of emergency accommodation.
The Deputy referred in his question to the most expensive of the leasing arrangements, the cost of which is influenced by the units' location in Fingal, Dublin and the size of the units. For his information, the average cost of new leases across all the leasing streams in 2020 was €13,850. I am happy to give the Deputy a full breakdown of that figure.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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I thank the Minister. The data to which I referred is from this year. He is absolutely correct about the average cost last year. The difficulty is that the origin of leasing is back in 2008, 2009 and 2010, when there was no capital funding. We know from a report published by the Irish Government Economic and Evaluation Service, IGEES, in 2018 that long-term leasing represents very bad value for money, particularly in high demand areas such as cities or when compared with the low cost of borrowing to build and buy now. In addition, it does not provide lifetime security of tenure for tenants because after 25 years they either have to renew the lease and pay again or terminate the lease and rehouse the household elsewhere.
One of my big concerns is the dramatic increase in the number of Part V leases so far this year. There have been more than 100 such leases, the highest number to date. Some of those Part V leases are exceptionally expensive and, to me, make no sense whatsoever, given that Part V is meant to ensure permanent social housing and social tenure mix in private developments.
Given that IGEES has said this is bad value for money, and as we know it is bad for tenants, will the Minister commit to undertaking a value-for-money exercise, particularly in respect of Part V leases, and using this money more wisely?
Darragh O'Brien (Dublin Fingal, Fianna Fail)
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It is a fair question. It is timely in the sense that tomorrow evening the House will take Second Stage of the Planning and Development (Amendment) (Repeal of Part V Leasing) Bill 2021 brought forward by Deputy Cian O'Callaghan. I have indicated that the Government will support that Bill moving to Committee Stage. To be frank, Part V leasing has been up to now a very small part of overall provision, with 16 such leases in 2020. That said, it is not a mechanism that should be expanded much further than that. I know that more have been approved this year. There can be particular reasons for that to happen but it should be, in my view, a last resort. I have given a commitment to review it and it is being reviewed in the NDP review.
I will be publishing the Government's housing for all plan in July. The focus must be on new build. The predominance of what will be delivered will be new build. Part V leasing in particular is an issue for me, to be frank. Leasing does have a role in other areas. We need to look at how we interact with approved housing bodies as well. The predominance of what we will do will be to focus on new build and, in the context of Part V delivery, to purchase them.
Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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Part of my concern is that, as we know, the Government's previous targets for leasing were always significantly behind. For example, 2,000 were to be delivered last year according to the target set the year before but, of course, only half of that figure was delivered. What has changed, however, is market sentiment. There has been a significant increase in the desire of institutional investors to diversify their property portfolios. We know from speaking to local authority managers that there is far greater interest in that regard. That makes sense because the yields are much higher, they are secure and there is less risk compared with activity that is more in the private sector.
All I am urging the Minister to do, not just with respect to the Part Vs but also with leasing more generally, is to seriously consider phasing out leasing where it does not represent value for money and does not provide lifetime security of tenure for tenants, unless there is a clear case that it makes sense. The 25-year cost of the most expensive Part V lease, albeit an outlier in Dún Laoghaire-Rathdown from 2019, at €28,000 per year per unit, is €700,000. That simply makes no sense and surely is not something the Minister could support.
Darragh O'Brien (Dublin Fingal, Fianna Fail)
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It is being assessed and evaluated. I want to review it. As the Deputy will know, we have just over 20,000 tenants in leased properties. The cost of that to the Exchequer is €250 million per annum. They are secure homes for people right now and we have to ensure that continues to be supported through the social housing current expenditure programme, SHCEP. There is a distinct change in the programme for Government in terms of housing targets. We want to move toward direct build and to empower local authorities to build, which I have done already by setting out their targets this year on an individual basis so that they are clear on what they need to deliver.
There is a role for leasing in other areas, such as the repair and lease scheme. I have seen where that has worked really well, particularly in the regions, such as in Waterford, Fermoy and Limerick in particular. There is also the mortgage-to-rent scheme, which is a mechanism for people with systemic mortgage arrears issues and failures that cannot be recovered in the medium or long terms. I am working with others to seek to expand that programme. I can give the Deputy a commitment that we are reviewing it. I will see when we publish our-----
Catherine Connolly (Galway West, Independent)
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Go raibh maith agat, a Aire.
Darragh O'Brien (Dublin Fingal, Fianna Fail)
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We will come back to it. It is being reviewed.