Minister Damien English launches Enhanced Long-term Social Housing Leasing Scheme
Minister of State with Special Responsibility for Housing and Urban Development, Damien English T.D., launched the new Enhanced Long-term Social Housing Leasing Scheme in Dublin today, 31 January 2018. The Minister indicated that “This important initiative is just one of a large number of actions being taken to implement Rebuilding Ireland, the Government’s Action Plan for Housing and Homelessness.”
At today’s launch, Minister English outlined details of the enhanced scheme for long-term leasing of private dwellings for social housing, which will contribute in a significant way to meeting the Government’s ambition to secure 10,000 leased units over the course of Rebuilding Ireland. It will allow the private sector to invest in providing properties that can be leased to local authorities for use as social housing on a long-term basis for up to 25 years. This new leasing arrangement will be in addition to existing lease arrangements which are more suited for smaller-scale providers of existing properties. There will be no additional costs to the Exchequer as costs will be met from existing budgetary allocations for Rebuilding Ireland.
This new scheme emerged from discussions with a variety of stakeholders that were undertaken as part of the Social Housing Investment Proposals Clearing House Group. A critical requirement in the consideration of these proposals was that any new funding model would be off-balance sheet or neutral in respect of the General Government Balance. At the time advice was sought from the Central Statistics Office on the possibility of these proposals providing an off-balance sheet source of funding, and it is from these discussions that this new Enhanced Long Term Social Housing Leasing Scheme has been developed.
The Department of Housing, Planning and Local Government, together with the National Development Finance Agency (NDFA) as financial advisers to the Department, and the Housing Agency, have worked together closely in order to finalise the details of this new scheme. Minister English noted that initial market testing by the NDFA among potential investors prior to the launch of the scheme has received a favourable response. The initiative will target newly built or yet to be built houses or apartments for leasing to minimise competition with existing stock.
Minister English stated that he was delighted to be able to officially launch another important initiative under the Rebuilding Ireland Action Plan. He emphasised that this was only one of a wide range of mechanisms being used to achieve the social housing targets in the plan. He added: “Combined with other recently announced initiatives; the additional measures announced under Budget 2018; and those announced just last week; Rebuilding Ireland continues to provide a robust framework to address the housing and homelessness challenges we face. Our focus will remain firmly on implementation and delivery to ensure that the range of objectives and targets set out in Rebuilding Ireland are achieved.”
Notes to Editors
Full details of this scheme can be accessed on the Housing Agency website at www.housingagency.ie
The main objective of the scheme is to target property developers and investors who are in a position to deliver social housing on a reasonable scale, with a required minimum of 20 units available within a single local authority area.
The Housing Agency will administer the scheme on behalf of the Department of Housing, Planning and Local Government. It will assess proposals from prospective providers and their capacity to deliver the required number of properties. Following the assessment, the Agency will act as the point of contact between the provider and the Local Authorities. The 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.
Leases signed, with Local Authorities, under the scheme will be for a period of up to 25 years. Tenants will be nominated by the appropriate local authority and the Local Authorities will be the landlords to the tenants. The objective is to have 2,500 units leased under the scheme over the period to 2021.
One of the main priorities in the development of this new scheme was that it would be considered to be off-balance sheet or neutral in respect of the General Government Balance.
Among the factors that were identified in order to meet this target were that the private or institutional investor should finance 100% of the cost of purchasing or constructing residential units. This includes the site cost, building or acquisition cost, professional fees, planning and design costs, as well as legal and conveyance, and arrangement fees. In addition, the private or institutional investor must retain ownership of the property both during and after the term of the lease.
The main differences between this and the existing leasing scheme, which will also remain in place, are that the provider is responsible for the maintenance of the units as opposed to the local authority, which is currently the arrangement. The provider is paid 95% market rate as opposed to the current 80%; this differential reflects their responsibility in relation to maintenance. Unlike the existing scheme there is no option for the local authority or an Approved Housing Body to purchase the property after the term of the lease ends. These features have been specifically included on the advice of the Central Statistics Office so as to ensure the scheme remains off-balance sheet.
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.