Written answers

Thursday, 22 April 2010

Department of Environment, Heritage and Local Government

Social and Affordable Housing

5:00 pm

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 32: To ask the Minister for the Environment, Heritage and Local Government the methodology used to calculate local market rents which are used in establishing leasing costs under Social Housing Leasing Initiative; and if he will make a statement on the matter. [15949/10]

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Question 60: To ask the Minister for the Environment, Heritage and Local Government the number of existing agreements under the Social Housing Leasing Initiative that have achieved, or failed to achieve the targeted 20% discount on market rent; and if he will make a statement on the matter. [15946/10]

Photo of Michael FinneranMichael Finneran (Roscommon-South Leitrim, Fianna Fail)
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I propose to take Questions Nos. 32 and 60 together.

The leasing cost of a dwelling provided under a long term lease or availability agreement to a local authority or an approved housing body is determined by a variety of factors, including type and size, location and the market rent of comparable properties in the area. These costs can also be subject to rent reviews, which my Department has advised should follow market conditions.

Housing authorities and approved housing bodies are expected to negotiate a discounted rent based on the elements of risk, such as who is responsible for vacancies and management and maintenance, assigned to the different parties. In a standard lease the benchmark figure for the discounted rent is 20% below market rent.

Of the total number of standard leased units for which funding approval has been issued by my Department, 74 have achieved 20% or more below market value and 42 between 16% and 20%.

Funding approval for unsold affordable units are based on the costs of meeting outstanding interest charges on the properties. Approval for units owned by approved housing bodies where they are responsible for management and maintenance of the properties are based on an 8% discount on market rent. A wider discount range may also apply in the case of apartment complexes where the owner has retained responsibility for service charges.

With regard to the calculation and verification of market rents, as part of the application for funding, local authorities and, where applicable, approved housing bodies must submit formal valuation evidence verifying rent levels for properties in the area and setting out the basis for the discount.

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