Kathleen Lynch (Cork North Central, Labour)
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Question 74: To ask the Minister for the Environment, Heritage and Local Government further to Parliamentary Question No. 43 of 22 April 2010, the manner in which capital costs are repaid; the payment that is made by the approved housing body to the local authority in respect of the leased property; the proportion of the funds allocated to leasing in 2009 and to date in 2010 that has been drawn down; and if he will make a statement on the matter. [37427/10]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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Under the leasing initiative housing authorities can lease vacant and unsold affordable units to approved housing bodies where they feel that these units cannot be sold in the current market conditions. During the lease period my Department recoups to the authority the interest payments liable in respect of the loans taken by the authority to fund the affordable property in the first instance. My Department does not fund the repayment of the principal of the loan (i.e. the capital cost).

Lease agreements in respect of unsold affordable units must not exceed 5 years. At the end of the lease agreement the authority must review the arrangement and make a determination about its future use. The authority then has a number of courses available to it, including sale on the open market, or to those eligible for affordable housing or incremental purchase or taking the units into social stock. It is hoped that many of these properties would be viable for sale at this point and therefore the capital monies can be repaid from the proceeds of the sale.

It is a matter for the relevant local authority, where it has engaged an approved housing body in the process of letting unsold affordable housing units, to negotiate payment terms directly with the approved housing body concerned. However, in most lease agreements the approved housing body pays the local authority a nominal fee and the body collects and retains the differential rent from the tenant to support their costs in managing and maintaining the dwelling.

In 2009, €20 million was made available for use under the Social Housing Leasing Initiative (SHLI). By the end of December 2009 just over €642,178 had been recouped. In 2010 a further €25 million was made available for the leasing initiative of which, €2,365,158 had been drawn down by the end of September 2010. However, my Department would anticipate that activity and expenditure patterns under the leasing initiative will increase over the final quarter to compensate somewhat for the slower than expected progress during the year to date.