DUBLIN CITY COUNCIL has signed 25-year social housing leases for 124 new apartments behind the former Regency Hotel in North Dublin.
Roseberry Investments Ltd was granted planning permission by An Bord Pleanála for 124 build-to-rent apartments in September last year at lands adjacent to the Bonnington Hotel in Dublin 9.
The development would see 48 one-bed and 78 two-bed apartments in blocks up to six storeys tall on the site of the current car park at the back of the hotel in Whitehall.
The Department of Housing recently signed off on a leasing deal between the Council and the investor of the development and it is expected that the apartments will be completed within the next 18 months. However, the Council will not own the apartments at the end of the lease.
The move comes amid criticism of the State’s reliance on expensive social housing leases where local authorities do not own the properties after the lease expires.
Local Social Democrat councillor Patricia Roe described the deal as “bad value for money”.
“To not to own them at the end of the lease just doesn’t make any economic sense,” she said.
Roe has criticised the Council for not being transparent about the deal, saying the decision was not brought before local representatives. “They didn’t announce it and the reason this one went under the radar is because the other [long-term leases] they’ve taken are ready-built developments but this one hasn’t even started.”
A spokesperson for the Council declined to say how much the local authority would pay for each unit over the 25 years citing commercial sensitivity.
Issues relating to the purchase and leasing of new developments by state agencies and authorities have been in the news recently after it emerged earlier this month that investment firms would not have to pay stamp duty on bulk-house purchases if they leased them to local authorities.
At the time Housing Minister 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.
Taoiseach Micheál Martin previously described the bulk-buying of houses by institutional investors as “unacceptable” but said families on the housing list could lose out if the Government “turned off the tap immediately” on long-term leasing.
Martin said the State would transition to different models including one where it would end up owning leased properties.
The Bonnington development does not fall under this same category, but critics of the long-term leasing policy have said it is poor value for money and helps maintain artificially high rents.
The Business Post reported earlier this month that the government’s plan to lease 2,400 homes from institutional investors this year will cost close to €1 billion over 25 years.
It comes as the Government’s Housing for All plan was delayed this week until late August. It’s believed the policy of leasing social housing from the private sector will be phased out under the plan.
The Long Term Leasing Initiative was introduced in 2009 to allow local authorities to enter into leases paying 80% 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% of market rates with index-linked reviews every three years.
Dublin City Council currently has 494 long-term leases on units with property owners but estimates this could increase to more than 1,600 over the next three years.
Figures released released to Sinn Féin’s housing spokesperson Eoin O’Broin this month show that 918 homes have leased for social housing so far this year with over 1,000 leased across 2020.
The average cost per-unit of the leases was €17,000.
O’Broin has questioned why Dublin City Council has signed leases for the 124 apartments instead of purchasing them.
“It’s very unusual for the Council to be signing up to the lease before construction has even started,” he said.
“These kinds of expensive long-term leases are bad for social housing tenants, bad for the taxpayer and bad for prospective home buyers,” said O’Broin.
The council’s head of housing Brendan Kenny said in a report to councillors in May that construction of houses at a Council level is “very slow and complex”.
He said long-term leasing “is a very important and welcome addition to the range of social housing delivery methods.
“It has made a reasonable contribution towards our significant waiting lists so far and while the leasing scheme exists it is incumbent on us the maximise the opportunities that it presents.”
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