Housing has been turned into a commodity for investors and social housing has been turned into a commodity for investors. Part V long-term leasing is part of this problem and I seek to address it in this Bill. The aim of the Bill is to improve the provision of affordable and social homes. It does this by revising the Part V arrangements and seeks to repeal provisions introduced by the Urban Regeneration and Housing Act 2015 under the then Minister with responsibility for housing, Deputy Kelly, which allowed Part V obligations to be met through leasing. The reason for removing leasing as a Part V option is to ensure affordable and social homes are secured for long-term use by the State, which is a much better use of resources and much better value for money.
I am bringing forward this Bill because until recently, the number of Part V homes that were being leased was very low but over the past year we have seen a very considerable increase in that. Those numbers will not show up in the official figures for another two to three years, when the Part V delivery is concluded but we are currently seeing them show up in planning permissions and deals being concluded and agreed. Analysis done on Part V by the Business Post show that in 11 different deals, 384 homes are going for long-term leasing instead of acquisitions under Part V. These homes will be rented to the State by developers for between 20 and 30 years at an average rent of more than €20,000 per year and the annual cost of these 384 homes will be €7.8 million in rent or €181.6 million over the course of the 20 to 30-year deals. The State is in line to pay an average of more than €490,000 to rent each of these homes over the lifetime of the deals, a price significantly above the market value of each home. Documents released to me under freedom of information, FOI, showed that in some cases, developers have been getting the State to sign up to these leases without independent valuations taking place. Last weekend, analysis was published, again by the Business Post, showing that market rents are being recorded at artificially high levels rather than the actual levels of rent being paid. It is of course these artificial valuations which are being relied upon when long-term leases are being signed. This, therefore, is bad value for money. Analysis and commentary from Mr. Dermot Desmond estimated these long-term leases are using an outlay of about four times what would be done with direct build, so we could be getting four times the amount of social homes for a similar outlay.