Business Irish

Sunday 11 December 2016

Nama proffered "rent-free" social housing, but deal was too costly

Published 14/08/2016 | 02:30

A new property bubble caused by a lack of affordable homes and Central Bank lending rules is seeing the cost of houses rise in areas outside Dublin’s commuter belt. Stock photo: PA
A new property bubble caused by a lack of affordable homes and Central Bank lending rules is seeing the cost of houses rise in areas outside Dublin’s commuter belt. Stock photo: PA

The then Department of the Environment and Local Government turned down an offer to go "rent free" for two years on hundreds of social housing units leased from Nama.

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The Department rejected the 2014 offer because the deal would have cost the State more over the long term, according to documents obtained from a Freedom of Information request.

Notes prepared by the Social Housing Reform Section in July 2014 state that Nama chief executive Brendan McDonagh wrote to the Department in April of that year, offering a proposed rent deferral on social housing units leased from a Nama special purpose vehicle, from January 1, 2015 on.

However the terms of the deal meant that the State would lose most of the rent discounts it was otherwise entitled to on the units as soon as the rent freeze ended. Rent discounts on apartments (83pc) and houses (88pc) would be adjusted to 95pc and 100pc from 2017.

The Department would ultimately suffer a net loss, it was determined. The exact loss was redacted in the documents.

"As in all issues associated with housing at the moment, the supply of units is the greatest difficulty, not supply of funding," the Social Housing Reform Section wrote.

The documents also suggest that it was the Department of Finance, rather than the former Department of Environment and Local Government, that took the lead on housing policy in relation to Nama at that time. The Department of the Environment was disbanded this year and replaced with a Department of Housing, with other responsibilities shared across other departments.

Speaker notes prepared for then Minister Alan Kelly in advance of a meeting with McDonagh stated: "I know that you are already working closely with Minister Noonan and the Department of Finance in relation to delivering a large proportion of the housing requirement for the Greater Dublin Area over the next five years. I don't want to cut across that work, I want to find ways where we can both assist you in and benefit from that work."

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