Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Question 292: To ask the Minister for the Environment, Heritage and Local Government if his Department has carried out a cost-benefit analysis of long-term leasing of housing for social purposes; if not, if he intends to carry out such a study before investing in long-term leases; and if he will make a statement on the matter. [47894/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
Link to this: Individually | In context

A number of economic studies carried out over the past few years, rather than a single cost-benefit analysis, provide the economic rationale for the provision of social housing through mechanisms such as the leasing and renting of privately owned accommodation. These studies include the Interim Value for Money and Policy Review of the Rental Accommodation Scheme (RAS), which is due to be published shortly. A further Value for Money and Policy Review will commence shortly which will provide additional information on and quantification of the economic and social benefits from the leasing of properties to meet housing need. The objective of my Department is to maximise the delivery of social housing to cater for the greatest level of need at good value. The leasing initiative offers one of the most effective and efficient responses in terms of meeting this objective, which takes account of the availability of resources, market conditions and also provides for a greater level of flexibility than the traditional methods of social housing provision.

While the State will not necessarily gain an asset through the leasing arrangements there are a number of factors which ensure that leasing is good value in the long term for the State. One of the biggest factors affecting cost to the State in terms of local authority owned dwellings is management and maintenance. While management and maintenance for the first 10 to 20 years on a new dwelling is relatively low, thereafter the dwelling can require major renovation or upgrading, resulting in a substantial capital cost to both local authorities and my Department. In leasing, it is proposed, firstly, that the responsibility for structural matters would remain with the property owner and not the local authority. Secondly, even taking this into account, it is not intended that lease agreements would be for durations longer than 20 years. Therefore the longer term costs to the State associated with traditional social housing delivery mechanisms should not accrue.

It must also be recognised that, while under the traditional supply mechanisms of construction and acquisition, the State gains an asset, the economic value of this asset to the State is limited to the extent that properties are purchased by tenants at subsidised rates. It should, of course, also be noted that in the current environment and having regard to the number of households in need of social housing support, the Social Housing Leasing Initiative offers the opportunity to house significantly more households than would otherwise be possible by relying solely on construction and acquisition programmes.