Tuesday, 21 May 2019

Questions (643, 653)

Catherine Martin

Question:

643. Deputy Catherine Martin asked the Minister for Housing, Planning and Local Government if his Department has conducted a review of the enhanced long-term social housing leasing scheme; if so, the details of the review; and if he will make a statement on the matter. [21541/19]

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Catherine Martin

Question:

653. Deputy Catherine Martin asked the Minister for Housing, Planning and Local Government if a cost-benefit analysis of the enhanced long-term social housing leasing scheme has been conducted; if so, the details of same; and if he will make a statement on the matter. [21540/19]

View answer

Written answers (Question to Housing)

I propose to take Questions Nos. 643 and 653 together.

The new Enhanced Leasing Scheme has been developed by my Department, together with the National Development Finance Agency (NDFA), the Housing Agency and local authorities, following market engagement. It has been designed to harness the potential of private sector interest in social housing delivery in a new set of long-term leasing arrangements, in a manner designed to leverage off-balance sheet funding opportunities in accordance with Rebuilding Ireland objectives.

Following the launch of the Social Housing Strategy 2020, a wide variety of developers, investors, financiers, Approved Housing Bodies and others expressed an interest in being involved in the provision or financing of social housing across the country. A structured, formal process was put in place to facilitate engagement with these bodies. A body called the Social Housing Investment Proposals Clearing House Group - or the Clearing House Group - was established in 2015 to examine and consider proposals and to meet with the companies, groups and institutions involved. Arising from the workings of that group, Government took the decision in February 2016 to develop a new enhanced leasing scheme, which would provide lessors with a longer-term contract with a greater proportion of market rent available, in exchange for more responsibility with regard to management and maintenance and greater risk transfer from local authorities. The Government decision at that time was informed by a consideration of indicative costs including comparative costs with other delivery schemes.

In the period after February 2016, the Clearing House Group concluded its work and my Department, the National Development Finance Agency, the Housing Agency and local authorities worked to develop a new set of long-term enhanced leasing arrangements that met the requirements of that Government decision.

A further set of costings were undertaken to inform the decision of Government to move forward and launch the enhanced leasing scheme in January 2018. These costings were undertaken using information on average lease costs, at that time, and the expected level of take-up of the scheme, which is targeted at 2,500 units by end 2021. The costs of the Enhanced Lease are included in the Government's commitment to multi-annual funding to deliver on the targets set out in Rebuilding Ireland.

There are a number of factors, which ensure that leasing is good value in the long term for the State. The cost of delivering social housing units under the traditional construction and acquisition model is not adequately captured by the up-front capital expenditure, as each unit will carry a stream of ongoing costs over the long-term including management, maintenance and remediation. Furthermore, during the term of the lease, the responsibility for structural matters remains with the property owner and not the local authority. At the end of the lease term – 25 years is a substantial period - the dwelling can require major renovation or upgrading resulting in a significant capital cost, which under leasing is not borne by the local authority but by the owner.

To date, there have been two Calls for Proposals, where interested parties were given the opportunity to make qualifying submissions to the scheme. The first Call for Proposals ran from 31 January 2018 and the Housing Agency accepted submissions from interested parties until 12 April 2018. After that Call for Proposals, my Department carried out a review of the submission process, to reflect on the nature of the submissions made, and amendments were made to the scheme, including the introduction of a Pre-Planning Suitability Assessment process, in order to allow proposers that have yet to obtain planning permission for their lands, an opportunity to gauge the interest of the relevant Local Authority in any proposals for housing that might come forward with planning. Other amendments included stricter submission quality control measures, to improve the quality of the submissions.

The launch of the Second Call for Proposals, in August 2018, reflected this process review. The scheme is the subject of ongoing monitoring by my Department, as is the case with all social housing delivery programmes.