Saturday 14 December 2019

Councils paid out €37m for land that's 'unlikely' to ever see a house

The group, one of the country's largest construction companies, yesterday reported turnover of €306m, along with a profit before tax of €7.5m.
The group, one of the country's largest construction companies, yesterday reported turnover of €306m, along with a profit before tax of €7.5m.
Paul Melia

Paul Melia

HOUSES are "unlikely" to ever be built on more than two dozen sites purchased for social and affordable housing at a cost of €37m.

The Comptroller and Auditor General (C&AG) says the sites are "unsuitable" for building homes, and in some cases are not even zoned for housing.

The State spending watchdog also revealed that land bought by city and county councils for housing has plummeted in value by up to 80pc.

The sites were also not valued prior to loans attached to the land being taken over by the Department of the Environment.

In 2010, the Government established the so-called Land Aggregation Scheme allowing local authorities to take loans, which had been drawn down to buy housing land, and transfer them to the department.

The land had been bought over a period of years to allow construction of social and affordable units, but the economic collapse meant that house-building programmes effectively ceased and councils were struggling to repay the money.

Under the terms of the scheme, councils could transfer land to a special agency called the Housing Agency. Only land with "reasonable development potential" and which was not due to be built out in the short or medium-term qualified, and the department made funds available to the local authority to repay the loan.

Some 47 sites over 173 hectares, with loans totalling €111m, were initially deemed suitable for the scheme. The cost per hectare varied from €38,000 to €750,000, but one site purchased by Dun Laoghaire/Rathdown County Council in south Dublin cost €2.8m per hectare.

A revised system was put in place in June 2012, where the loans - due to be repaid over seven years - were converted into 25-year mortgages. Some 25 sites, with loans totalling €52.1m, were included in this revised scheme. The cost per hectare ranged from €58,000 to €1.63m. But a report into public spending said the Department of the Environment has not taken legal ownership of many sites, despite repaying the loans drawn down to purchase them.

It also said that land was not valued prior to, or after, being transferred to the Housing Agency, and that some sites had plummeted in value.

"Three sites in the scheme were recently valued and show a reduction of around 80pc from the purchase cost per hectare paid 12 years ago," the C&AG report said.

Some 25 sites with loans totalling €37m were rejected for inclusion in the scheme because they were not zoned, were land locked, were illegally occupied or had "limited development potential".

The C&AG also found the entire site did not transfer in 37 of the 72 cases, because it had already been developed, was zoned for recreation or the council wanted to retain it.

Irish Independent

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