A range of housing options are necessary to ensure a supply of accommodation to meet different types of 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 my 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 new Enhanced Long Term Social Housing Leasing Scheme has been developed by my Department, together with the National Development Finance Agency (NDFA), the Housing Agency and local authorities, in order 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. The Scheme is targeted at new build or new to the market properties to be delivered at scale and will complement the existing long-term leasing arrangements, which will continue to be available.
The scheme is governed by my Department and operated by local authorities. The Housing Agency manages and administers the scheme on behalf of my Department and acts as a national co-ordinator. The rollout of this scheme will result in no additional costs to the Exchequer, with costs being met from existing budgetary allocations for Rebuilding Ireland. The lease term available to private investors can be up to a maximum of 25 years, with the asset remaining with the proposer at the end of that term.
The new Enhanced Lease and related technical documents have been developed and tested to ensure there is no negative impact arising from how are they are viewed and treated in respect of the State’s General Government Balance Sheet. In order to ensure that the Scheme remains “off-Balance Sheet” the CSO has advised that the lessor should be responsible for management and maintenance and that the lessor must be free to decide whether to continue to rent the homes or to sell them to whomever they wish at the end of the term of the lease. The automatic reversion of the asset to the lessee (i.e. the local authority) may have a detrimental impact on this classification. My Department has also made changes to the existing standard Long Term Leasing arrangements in order to provide for a lease term of up to 25 years.
With respect to the delivery of affordable housing, I have commenced the relevant provisions of the Housing (Miscellaneous Provisions) Act 2009, the effect of which is to place a new scheme for affordable purchase on a statutory footing. It is intended that the income thresholds will be the same as for the Rebuilding Ireland Home Loan, and other criteria will be set out in regulations. The elected members of each local authority will be responsible for determining the order of priority to be accorded to eligible households, in line with the framework of the national scheme.
In order to deliver affordable housing in the areas of the country most affected by a lack of affordable housing supply, a three-pronged, targeted approach is being pursued. The Government has committed €310 million to support this programme of work, under the Serviced Sites Fund (SSF), as part of Budget 2019. The Exchequer contribution is €275 million with €35 million to be contributed by local authorities. In 2019 funding of €100 million will be available under the Fund with a further €142 million in 2020 and €68 million in 2021. The funding is available for key facilitating infrastructure on local authority sites to support the provision of affordable homes to purchase or rent.
I envisage a maximum amount of SSF funding of €50,000 per affordable home and on this basis some 6,200 affordable homes could be facilitated.
In terms of the type of affordable housing that will be delivered on local authority sites it may be affordable housing for purchase, under recently commenced provisions of the Housing (Miscellaneous Provisions) Act 2009, or cost rental, which is being advanced on a number of pilot sites before being rolled out more generally. Under the 2009 Act, the maximum discount is 40% of the market value of the home and the local authority takes a charge, equivalent to the discount, against the property. The scheme applies to new homes, and is targeted at single applicants earning up to €50,000 per annum or €75,000 for dual applicants.
Acknowledging that renters in Dublin and other urban centres are currently facing significant access and affordability challenges, the Government is committed to the introduction of a not-for-profit, cost rental sector in Ireland. Together with delivering more affordable and predictable rents, cost rental will make a sustainable impact on national competitiveness and the attractiveness of our main urban centres as places to live and work.
Under the cost rental model, minimising retained earnings, land and other delivery costs, while securing very competitive European Investment Bank (EIB) financing, means that affordable rents can be achieved. The final rents, for any given project, will be set after all associated costs are determined, following on from the competitive construction and management tender processes. Cost rental homes will be targeted at households earning up to €50,000 for single applicants and €75,000 for dual applicants.
Cost rental is new to Ireland and in order to drive delivery, a number of important early mover projects are being advanced, delivering important lessons in terms of cost rental in an Irish setting. There are two pilot cost rental schemes being advanced: one at Enniskerry Road, in Dún Laoghaire-Rathdown, and one at St Michaels Estate in Inchicore. It is expected that 50 cost rental units and 105 social homes will be made available on the Enniskerry Road site. While the final tenure-mix on the Inchicore site will be decided by Dublin City Council, informed by the detailed site development process, it will likely include 140 social housing homes, with the remaining 330 homes predominantly provided by the City Council under cost rental arrangements.
My Department is also engaging with the National Development Finance Agency and the new Land Development Agency to examine the optimum funding and delivery options to support cost rental delivery at scale.
