Social Democrat TD calls ‘sweetheart deals’ with developers ‘exceptionally bad value for money’
The State is set to double its spend on leasing social housing in the space of two years despite the Housing Minister promising to end the practice after criticism from Dermot Desmond that it was a “criminal waste of money”.
Figures obtained through a parliamentary question from Social Democrats housing spokesperson Cian O’Callaghan, show the State’s spend on leasing social housing for the first half of 2022 was €36.6m, while it was €37m for the whole of 2020. The total spend in 2021 was €55.37m.
He said while the Government pledged to end long-term leasing, the State is “signing up for more and more of these sweetheart deals with developers” which he called “exceptionally bad value for money”.
"Long-term leasing sees the State paying for a property over a 20 to 25-year period. At the end of the lease, the State has no asset and the tenant is at risk of eviction”.
The practice of leasing social housing from private investors was sharply criticised by billionaire businessman Dermot Desmond in 2021 in a letter he wrote to Housing Minister Darragh O’Brien. Mr Desmond described it as a “criminal waste of money" and said investment funds were "having a laugh at Ireland and making a lot of money in the process”.
Mr Desmond said no other countries had such a strategy, which he said left Ireland "prey to greedy developers and international investors".
"Allowing the private market to dictate the price of social housing is a shocking mismanagement of public funds — you might as well hand out blank cheques," he wrote.
At the time, Mr O’Brien said he did not need Mr Desmond to point out the problem as he had opposed leasing social housing since his opposition days. He promised the practice would be phased out by 2025.
The Dublin Inquirer reported last week that Dublin City Council (DCC) said the huge glut of build-to-rent apartment buildings that have been built or given planning permission in recent years has driven the rise in its use of leases for social housing.
The publication reported DCC had bought just one social home from developers of big schemes in 2022 while it had leased 48.
In Dublin city, the percentage of residential units given planning permission that are build-to-rent, which are mainly one-bed and two-bed apartments, has risen from 15pc in 2018 to 82.8pc in 2020.
Owen Keegan, DCC’s chief executive, has expressed concern that “the emergence of very large schemes solely comprising build-to-rent, with a lack of housing mix is considered inappropriate and will not contribute to the creation of long-term viable and stable communities”.
Figures provided by the Department of Housing show that seven councils, Leitrim, Offaly, Wicklow, Galway City, Mayo, Kildare and Dún Laoghaire-Rathdown, have spent more on leasing social housing in the first six months of 2022 than in the whole of 2021. Offaly’s spend has jumped from €21,900 last year to €319,000 for the first six months of 2022. Wicklow council’s spend is the next highest jump, with €271,980 spent in 2021 but €1.224m spent in the first six months of 2022.
A spokesman for the minister said: “Housing for All is the Government’s plan to increase the supply of housing to an average of 33,000 homes per year over the next decade.
“Over 300,000 new homes will be built by the end of 2030, including a projected 90,000 social homes, 36,000 affordable purchase homes and 18,000 cost-rental homes. This includes the delivery of 47,600 new-build social homes in the period 2022-2026.
“As new-build supply of social housing ramps up, there will be reducing reliance on long-term leasing. It is envisaged that 3,500 social homes are to be delivered through long-term leasing over the lifetime of the Housing for All plan, tapering down from 1,300 social homes in 2022 to 200 social homes in 2025. Under the Housing for All plan, long-term leasing will be ended by 2025.
“Long-term leasing spend on social housing is cumulative spend for both existing stock of social homes and new stock being signed under long term lease agreements. An increase in long-term leasing spend for 2022 on 2021 spend is therefore to be expected.”
Asked if it knew which companies were making the most from leasing social housing, the department said the details of the entities from whom the houses are leased is a matter for the local authorities.