Almost 1,000 homes across Dublin have been leased from investment funds and property developers for social housing in deals of up to 25 years brokered by the four Dublin local authorities.
The spotlight has fallen on the long-term leasing system after it emerged last week investment firms would not have to pay stamp duty surcharges on bulk-house purchases if they leased them to local authorities.
The Government earlier this year announced plans to clamp down on house purchases by large investors by increasing stamp duty to 10 per cent on the purchase of more than 10 houses.
Opposition parties accused the Government of incentivising "cuckoo funds" by granting the latest tax exemption. Taoiseach Micheál Martin and Minister for Housing Darragh O'Brien insisted the exemption was necessary to avoid risking new lease deals that had been agreed with investment funds for up to 2,400 homes nationally.
However, the four Dublin local authorities alone are already leasing close to 1,000 homes under such long-term leasing arrangements. While the national average cost of social housing leases is just above €15,000 per home annually, in Dublin, where rents are higher, the local authorities pay more. In 2020, Dún Laoghaire Rathdown County Council paid an average of €18,698 per lease, followed by Dublin City Council (€18,605), and Fingal (€17,840) and South Dublin county councils (€17,751).
The Long Term Leasing Initiative was introduced in 2009 to allow local authorities to enter into leases paying 80 per cent of market rates for 10-20 years as a means of meeting social housing needs.
In 2018 a new 25-year “enhanced” leasing scheme was introduced, which saw the rents increased to 95 per cent of market rates with index-linked reviews every three years. The scheme has proved popular with pension and other investment funds due to the guaranteed long-term returns.
Dublin City Council has the largest number of 25-year leases with property owners, at 587. The council said just under a quarter of these had been agreed with “private individuals” but the remaining 447 were with “limited companies, Icav’s or investment/pension trusts”. The vast majority of the leases are for homes in Dublin 7 and Dublin 8, with 124 homes in the former and 118 in the latter. The next largest number is in the north inner city, where 47 have been leased with smaller numbers across the rest of the city and suburbs.
South Dublin County Council leases 232 properties from investment funds for social housing. The largest number is in Tallaght, where 86 home are provided through long-term leases, followed by Clondalkin with 84, Lucan with 28, and Rathfarnham-Templeogue with 26. Just seven are leased from such firms in the Palmerstown area and one in Firhouse.
Fingal County Council leases 213 properties "for social housing purposes from investment firms", with these homes leased "across the county", it said.
Dún Laoghaire Rathdown County Council said it had entered into “nine long-term leases with investment firms, which have delivered a total of 95 properties”. The leases are in “various location” but all are for 25 years.