Wednesday, 21 March 2018

Ceisteanna (326)

Eoin Ó Broin

Ceist:

326. Deputy Eoin Ó Broin asked the Minister for Housing, Planning and Local Government if he will address a series of matters relating to the enhanced leasing scheme (details supplied). [12008/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Housing)

A range of housing options are necessary to ensure a supply of accommodation to meet different types of social housing need. Harnessing the off-balance sheet potential of private investment in social housing is an important contributor to meeting this objective and the social housing targets set out in Rebuilding Ireland over the period to 2021 reflect the ambition in that regard. Of the 50,000 social housing homes to be delivered under Rebuilding Ireland, 10,000 will be leased by local authorities and Approved Housing Bodies (AHBs) under leasing arrangements from a range of different sources and funded under the Department’s Social Housing Current Expenditure Programme (SHCEP). High quality secure properties which represent value for money and are available on a long-term basis are being targeted by local authorities around the country to accommodate people on local authority waiting lists.  

The Government has increased significantly the delivery expected from local authorities through their social housing build programme, but it remains the case that more homes can be provided through leasing than could reasonably be expected to be delivered under construction and acquisition programmes alone. In addition, 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, the dwelling can require major renovation or upgrading resulting in a substantial capital cost, which under leasing is borne by the owner rather than the local authority.

On foot of a wide variety of interest from developers, investors, financiers and others in being involved in the provision of social housing, a structured, formal process was put in place to facilitate engagement with such parties. The Clearing House Group (CHG) was established to examine and consider proposals and to meet with the companies, groups and institutions involved. This was set out in the Clearing House Protocol published in March 2015.The CHG comprised representatives from:

- Department of Housing, Planning and Local Government;

- Department of Finance;

- Department of Public Expenditure and Reform;

- Dublin City Council;

- The Housing Agency;

- The National Economic and Social Council (NESC).

The Chairperson was assigned by the National Asset Management Agency on a temporary basis at the request of my Department. The CHG was a sub-group of the Finance Work Stream, one of the governance structures of the Social Housing Strategy 2020.

The examination of proposals was a complex task and despite a high level of engagement with potential providers, none of the proposals met the criteria that would enable them to be considered off-balance sheet.  The following summary table details each of the 25 proposers who made submissions to the CHG. Included also are the dates on which the proposers met with the Clearing House Group:

Proposer

Date   of Meeting with CHG

Barclays

29/06/2015

Trinity IM

27/03/2015

Menolly Homes

N/A

Home Grown Home

28/08/2015

Richard Mc Cafferty/ Rampart Capital

N/A

Investec

21/04/2015

McGarrell Reilly Group

N/A

Centrus

30/04/2015

Lex Risk Solutions/ RK Harrison

04/06/2015

AIB

04/06/2015

BOI

04/06/2015

Dublin Artisan Dwelling Fund

17/04/2015

Tuath Housing Association

27/03/2015

Tuath Housing Association – “Rent and Save”   proposal

23/09/2015

Apex Housing Association

29/06/2015

IRES REIT

29/06/2015

Bartra Capital Limited

13/07/2015

28/08/2015

Clyde Capital Partners/Tom Barry

04/06/2015

New Ground

28/08/2015

Cluid – Local Authority Void Units

13/07/2015

Cluid – Cost Rental Pilot

13/07/2015

NABCO

13/07/2015

Asset Backed Investment

28/08/2015

O’Cualann Co Housing Alliance

28/08/2015

Irish League of Credit Unions

Proposal received 24/11/2015

Taking account of the work and analysis of the CHG, it was considered more constructive to use the existing social housing funding mechanisms, with appropriate adjustments in the form of a new enhanced long-term lease arrangement, to provide a framework to harness private investment in an off balance sheet manner. 

In the period since the CHG concluded its work, my Department, together with the National Development Finance Agency (NDFA), the Housing Agency and local authorities, have been working to develop a new set of long-term leasing arrangements. This work culminated in the launch last month of  the new Enhanced Long-term Social Housing Leasing scheme.

The scheme will be governed by my Department and operated by local authorities. It will be funded through my Department's SHCEP. The Housing Agency will manage and administer the scheme on behalf of my Department and will act as a national co-ordinator. It is intended to target property developers and investors who are in a position to deliver housing on a reasonable scale as well as fulfilling management and maintenance responsibilities and this is reflected in the changes to the existing lease terms. It will complement the existing long-term leasing arrangements, which will continue to be available for leasing existing properties; new properties delivered at a smaller scale; or properties made available for leasing where a housing provider is not in a position to provide management services as required under this new arrangement.

The provider will be paid up to 95% market rate as opposed to 80% (85% for apartments) currently, which reflects the reduced responsibility of the local authority in relation to maintenance of the property under this type of contract as compared to standard long term leasing. The market rent must be evidenced by a valuation prepared by a qualified valuer and each valuation must refer to 3 comparable properties in the locality as evidence of the market rent for the property.

Local authorities will determine the suitability of the proposed properties, having regard to the standard of the properties, the requirement for social housing in the area and the criteria set out in each authority’s Development Plans, including in particular sustainable communities considerations.

The new scheme may be used by local authorities in arrangements for Part V of the Planning and Development Act 2000. However, the enhanced lease is specifically targeted at providing housing units in addition to any targets set for Part V arrangements; i.e. any units that are leased under this scheme must be additional to normal Part V obligations on any specific site. If the new lease is used for a Part V arrangement, the appropriate net monetary value discount will apply and the provider would, therefore, not receive the maximum 95% of market rent.

A call for proposals is currently open and the Housing Agency is accepting submissions from interested parties until 12 April 2018.  All proposals are subject to a range of criteria as set out in the “Calls for Proposals for Enhanced Long Term Social Housing Leasing Scheme” and the proposals will be assessed and marked in accordance with the terms set out therein. The Call for Proposals is available on the Housing Agency website at the following link: https://www.housingagency.ie/News/Current-News/Enhanced-Long-Term-Social-Housing-Leasing-Scheme.aspx.