Cian O'Callaghan (Dublin Bay North, Social Democrats)
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29. To ask the Minister for Housing, Planning, and Local Government the action he has taken to ensure that an independent valuation of rents has been carried out in cases in which rents are set for long-term leasing contracts; and if he will make a statement on the matter. [22884/21]

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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With respect to the growth in long-term leasing in recent years, what action has the Minister taken to ensure independent valuations of rent levels are carried out when leases are agreed?

Darragh O'Brien (Dublin Fingal, Fianna Fail)
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I thank the Deputy. While the Government's objective is to focus strongly on local authority-led build activity, long-term leasing is an important option available to authorities to supplement delivery and secure high-quality social housing on a long-term basis. Lease payments are paid to the property owner based on a discounted market rent, with the level of discount reflecting the variation in maintenance and management responsibilities taken on by the owner. The maximum lease is 25 years and rents are reviewed every three years, linked to the harmonised index of consumer prices.

The standard long-term leasing programme has been in operation for over ten years and has a well-established assessment protocol. Local authorities have that delegated sanction to lease up to four dwellings. All proposals to lease five or more dwellings must be submitted to my Department for approval. These proposals must be accompanied by an independent valuation of the market rent for the properties carried out by or commissioned and paid for by the relevant local authority. The enhanced leasing scheme was launched in 2018 and all potential proposals are submitted by the proposers to the Housing Agency for initial assessment and co-ordination with local authorities. The proposal is then submitted to my Department for approval. As with all long-term leasing, enhanced leasing proposals submitted to my Department must be accompanied by an independent valuation of the market rent for the properties carried out by or commissioned and paid for by the relevant local authority in the area in which those properties are located.

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I thank the Minister for the answer. The question refers to long-term leases involving five or more dwellings. Documents released to me under the Freedom of Information Act show that, at least in some instances, multimillion euro long-term leases were signed, having effectively gone through that process, without independent valuation. Incredibly, the valuations provided by the developer and the developer's agents were relied on. Has the Minister investigated this? How did this happen? Is he confident it will not happen again? What action has he taken to ensure it does not happen again? In how many cases were the market rents submitted by the developer not accepted by the Department or a local authority?

Darragh O'Brien (Dublin Fingal, Fianna Fail)
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The Deputy is probably referring to the Herbert Hill development. That was the first enhanced leasing project approved by the Department. Following the approval, a standard review took place on all application procedures. As a result of the review, it was decided that an additional requirement for approval under the scheme would be that a local authority would, in addition to any red book valuation provided by the proposer, also provide a valuation on its own behalf. The purpose of this was to provide an additional safeguard to help local authorities achieve maximum value for money in their negotiations and to harmonise requirements under the standard long-term and enhanced leasing. This change was made in December 2019 and the second development approved was the Millrace development in Ballinasloe. An independent valuation was requested and furnished for that application.

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Is the Minister confident this practice is no longer happening and there are no other instances of it? I would be grateful for an answer on that. An investigation by Killian Woods in the Business Post found evidence of institutional landlords and investment funds advertising and recording artificially high market rents that do not reflect the rents being charged. The practice of rent-fixing has serious implications for long-term leasing, which is based on discount off-market rents. Have the Minister and Department investigated the extent to which rent-fixing or artificial market rents could be influencing market rents agreed under long-term leasing?

Darragh O'Brien (Dublin Fingal, Fianna Fail)
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To answer the Deputy's first question, I am not aware of any other issues with regard to valuations and independent assessments. If the Deputy is aware of any, I ask him to bring it to my attention. We have made abundantly clear to local authorities what the procedure is. We have had instances where properties have lain vacant for a long number of months, which is not something I support. With Covid, some properties were kept back for contingency reasons to house people in the event that they needed to isolate.

The Deputy's second question is not part of his written question but it is a valid one and I am happy to respond to it. I have read the report to which he referred, which was brought to my attention. I have asked my officials and the Residential Tenancies Board, RTB, to look at this matter in the round. I have made clear that I want rent transparency. It is important. It is also important that, where reasonable landlords provide deals or cut rents for tenants, we need to make sure that happens. In this instance, it appears an institutional investor artificially left the rent price higher than it actually was. I have asked my officials with the RTB to look at that matter.