Thursday 19 October 2017

Councils face bankruptcy over deals struck on housing during the boom

Jim Cusack

Jim Cusack

LOCAL authorities across the country could be facing bankruptcy or severe financial difficulties over deals which were struck with developers at the height of the property boom to buy social and affordable homes.

With prices of more than €200,000 typically paid or agreed for apartments and more for houses, county and urban councils are facing huge deficits with the collapse of the residential property market. And prices could fall further with the release of properties now controlled by the National Asset Management Agency (Nama).

A letter seen by the Sunday Independent shows that Dun Laoghaire-Rathdown County Council alone is facing a total bill of more than €60m for social and affordable homes. In one development, on the former Dun Laoghaire Golf Course, the council entered into a deal with developers Cosgrave Brothers to buy 63 "affordable" units valued in 2007 at €16,173,490 and 80 "social" units at €19,480,028.

Cosgraves have forged ahead with the social and affordable element of their proposed massive residential and office development on the 67-acre site, though no development of the private element has begun.

When the social and affordable element is completed, Dun Laoghaire Council will be faced with a bill of €35,653,518. Council sources have privately admitted that this will cause a financial crisis that could lead to severe cuts in services.

At a meeting of the county council earlier this month, the county manager Owen Keegan informed councillors that the council had already acquired social and affordable homes at other sites in the county at a cost of €27.5m and has so far been unable to sell any on. On top of the golf course housing, this represents a total cost of €63m worth of unsold property.

Government sources said the same situation was occurring around the country and represents a crisis for local government services which have been told there will be no bailout from central government.

Dun Laoghaire independent councillor Victor Boyhan said: "It's clear to me that if these apartments were real value for money, and banks were prepared to provide loans, these residential units would be purchased. The fact is the prices sought by the council are unrealistic in the current market.

"Any first-time buyer would be mad to commit to purchasing these apartments given what we all know will be fire sales of similar apartments which lie empty on developers books or in Nama.

"I am certainly not going to encourage young people to sign up to what's termed 'affordable housing' when in fact it's over the current market price. I have asked the council to have all residential units for sale and on its books assessed to ascertain the current market values.

"Speaking to political colleagues in other local authorities across the country, I am hearing of similar problems of vast numbers of affordable housing left empty. This issue is now a national crisis and needs to be addressed by government. I am calling on the Minister for the Environment and Local Government John Gormley to carry out a national audit of housing stock, empty or on council books, and a review of all Part V agreements in place in terms of value for taxpayers' money."

Former Green Party councillor Gene Feighery, who opposed the large-scale development of the golf course, which is proposed to have some 1,200 units in all, said: "At the time this scheme was being pushed through, the council said it would be a 'shot in the arm' for Dun Laoghaire. A shot in the head would be more accurate."

Sunday Independent

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