Dublin councils accused of wasting taxpayers’ money by leasing social housing

Department figures show leasing costs significantly more than buying or building units

Leasing arrangements cost significantly more than the average cost of building social housing units directly.

Leasing arrangements cost significantly more than the average cost of building social housing units directly.

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Local authorities in Dublin have been accused of wasting taxpayers’ money by leasing social housing units from the private sector when it would be significantly cheaper to buy them or build them directly.

Figures provided by Minister for Housing Darragh O’Brien, in response to a parliamentary question from Sinn Féin’s Eoin Ó Broin, show the average per unit cost of leasing social housing across the State’s 31 authorities.

The highest figure recorded was in Dún Laoghaire-Rathdown where the local authority paid an average of €18,698 per lease in 2020, which works out at €373,960 over a 20-year timeframe, the typical length of a lease.

This was followed by Dublin City (€18,605), Fingal (€17,840) and South Dublin (€17,751), which work out at €372,100, €356,800 and €355,020 respectively over 20 years.

While these figures were either marginally cheaper or on a par with the cost of buying social housing units upfront, the councils do not own the properties after the lease expires and must enter into another leasing arrangement, making them a much costlier proposition.The leasing arrangements also cost significantly more than the average cost of building social housing units directly.

Local authorities can acquire social housing in a number of ways either by building directly, through acquisitions, or via long-term leasing arrangements.

Despite the questionable costs involved, local authorities have increasingly entered these arrangements in recent years amid increased private sector activity in the social housing sector.

Bad value for money

Dún Laoghaire-Rathdown County Council recently entered a long-term leasing arrangement with German investment fund Realis for 87 apartments in Dundrum, while global asset manager Aberdeen Standard Investments (ASI) just this month announced a similar deal with Dublin City Council for 39 housing units in Smithfield.

The figures come on the back of a report from the Department for Public Expenditure and Reform which concludes that long-term leasing at the height of a rental market in high-demand areas represented bad value for money.

“Long-term leasing particularly in our large urban centres is bad for tenants and bad for the taxpayer and should be discontinued,” Mr Ó Broin said.

“We’re at the height of the market in terms of rents – these leases are set at 80-90 per cent of market rent depending – and represent appalling value for money for the taxpayer,” the Sinn Féin housing spokesman said.

“Local authorities should be either building their own stock or acquiring stock through turn-keys [properties ready for habitation],” Mr Ó Broin said.

The figures supplied by the Minister also include the cost to councils of leasing Part V units – those which developers must set aside as part of their social housing obligation.

While this option is seldom used by local authorities, the cost was again significant. Dún Laoghaire-Rathdown entered into a long-term leasing arrangement in 2019 – under the Part V provision – at a cost of €28,310 per unit, which works out at €566,200 over 20 years.

Several local councils have found themselves in the spotlight over the prices being paid to developers for Part V acquisitions.