Some local councils are paying private developers up to €400,000 for social housing units when the councils themselves can build them directly at half the price, Department of Housing figures suggest.
The figures provided by Minister for Housing Darragh O’Brien in response to a parliamentary question from Sinn Féin’s Eoin Ó Broin show how much local councils paid last year for so-called turnkey purchases, which are bought directly from private developers for social housing tenants.
In several areas, the average cost of these acquisitions was nearly double the cost of the social housing units developed directly by the council. The figures do not contain detail about the size or spec of the units.
In Fingal County Council, the average cost of turnkey acquisitions in 2019 was €412,000 compared with €209,300 for the new builds delivered directly by the council. A similar differential was recorded in Dublin City Council where the average cost of turnkey purchases was €382,200 compared with€181,500 for its direct builds.
Cork City Council paid an average of €306,800 for its purchased units while those it built directly cost €266,300.
In Galway City, the average cost of turnkey acquisitions last year was €352,700 but there was no figure recorded for its direct builds.
The cost of Dún Laoghaire-Rathdown’s direct builds in 2019 was €201,700, but there was no figure for the cost of its turnkey purchases.
In 2018, they cost on average €396,900 compared to €239,900 for its direct builds that year.
In some local authority areas, such as Donegal, Kildare and Cork County, however, the difference in cost was only marginal and not financially significant.
Typically councils procure about two-thirds of their social housing needs from the private sector as turnkey acquisitions.
The department cautioned “that a range of dwelling types at various price ranges” were covered by the figures while noting that the cost of delivery can vary greatly depending on the type of development and the area involved.
However, Mr Ó Broin said the figures clearly showed that where the council was the lead developer it was much more cost effective.
“Therefore Government policy should focus on increasing the direct delivery of social homes by local authorities,” he said.
He said the reason why councils were choosing turnkeys over direct development was because of the Government’s “overly bureaucratic approval, tendering and value-for-money requirement” on local authority-led projects, which made it a much slower process.
“If we want more local authority-led developments we have to streamline the approval, tendering, value-for-money exercises that the departments impose [on local authorities],” he said, noting it was taking councils 18-24 months to begin construction on proposed developments.
The figures come as plans to build more than 850 homes, including 253 social housing units, on one of the largest sites owned by Dublin City Council collapsed earlier this week after councillors refused to approve the deal with developer Glenveagh Homes.
The deal would have seen 853 homes built on the site at Oscar Traynor Road in Santry, 428 of which would have been sold privately by Glenveagh with 253 bought by the council for social housing. The remaining 172 were to be sold to low- and middle-income workers qualifying for the upcoming affordable purchase scheme.
In Budget 2021, the Government set aside €3.3 billion for the delivery of housing programmes, which includes funding for 12,750 social homes next year, 9,500 from direct builds.
The build target includes the delivery of 5,250 new homes by local authorities, 2,950 by approved housing bodies and 1,300 new homes through Part V acquisitions, where developers set aside 10 per cent of their developments for social housing.
Several local councils have found themselves in the spotlight over the prices being paid to developers for Part V acquisitions. Donnybrook Partnership on Eglinton Road in Dublin 4 plans to sell 14 apartments – as part of its Part V obligation – to Dublin City Council for €9.18 million. This puts an indicative price tag of €762,916 on each of the nine two-bedroom apartments and €469,177 on each of the five one-bedroom apartments, and for what should be substantially discounted housing units.
The Minister’s figures show the average costs of direct social housing builds in several local councils fell between 2018 and 2019. In Dún Laoghaire, they decreased from €239,900 to €201,700 while in Limerick they fell from €212,500 to €209,100.