Housing & Planning

Social housing lease deals making ‘bumper profits for property funds’, Dáil told

Taoiseach rejects Sinn Féin’s claim of ‘expensive U-turn’ on phasing out of long-term leases

Taoiseach Simon Harris said long-term leases will be phased out by the end of 2025 and that they have been used so far 'because in an emergency, you use every tool at your disposal'. Photograph: Brian Lawless/PA Wire

Marie O'Halloran
Tue May 14 2024 - 19:10

The Government has agreed 9,000 social housing leasing deals with property funds that will cost a “whopping” €3.24 billion, last for 25 years and the funds will own the properties at the end of the lease, the Dáil has heard.

Sinn Féin leader Mary Lou McDonald accused the Government of performing a “big and very expensive U-turn” on its promise in 2021 to phase out long-term leasing by 2025. “Far from phasing out this wasteful policy you’ve turbocharged it with bumper profits for property funds”.

Her comments were echoed by Social Democrats leader Holly Cairns who said that “all of these deals come with upward-only rent reviews, which are not subject to caps in rent pressure zones. You couldn’t make it up. Quite literally if you wanted to design a worse way to provide social housing, you couldn’t”.

Ms Cairns said “every single aspect of the deal is bad for the State and investment funds are loving it. These sweetheart deals are cash cows for them. There’s literally no downside. They lock in sky-high rents, include upward only rent reviews and ensure they retain ownership of the asset at the end”.

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She said houses costing €3,200 a month would cost €900,000 by the end of the lease, and ownership of the house would go back to the property fund.

But Taoiseach Simon Harris insisted that the Government’s policy to end long-term leasing “has not changed. Long-term leasing will be ended by December 31st, 2025. But leasing does enable a portion of social housing needs to be addressed in the short run”. It has been an element of housing provision “because in an emergency, you use every tool at your disposal”.

He said that in return the State gets a roof over the head of some vulnerable citizens needing a house today because “housing policy can’t just be about ideology and emergency”.

He added that it was only a very small part of overall housing provision, with the largest output in decades last year of social homes. Work is starting on 337 new houses every working day, there is an extension of the rent pressure zones until the end of December 2025 and every week 500 individuals or couples are buying their first homes, Mr Harris said.

Ms McDonald said Fine Gael had been in government for 13 years but has “the wrong priorities and the wrong policies”, with a 25-year lease on one Dublin property for €3,200 euros per month and many costing €2,500.

She claimed a “defining feature” of Fine Gael housing policy “has been the enrichment of the private players, the big corporate landlords, the cuckoo funds, the vultures”.

Asking Mr Harris how many more such leases were in place, she said the Government in 2021 committed to phasing out these long-term leasing deals for social housing by 2025. “But instead you have performed a big and very expensive U-turn. You’ve locked the taxpayer into this madcap policy for the next 2½ decades.”

Ms Cairns said the Taoiseach had spoken a lot recently about common sense. “Can I ask you do these long-term leases sound like common sense to you? Do they sound like value for money?”

The Taoiseach said long-term leasing would end as the Government pledged in 2025. He added that more than 32,000 homes were constructed last year alone. “We’re at the point now where later this year we’ll be in a position to revise housing targets upwards for the years ahead. We live in a country where 500 individuals or couples are buying their first home every week in the 12 months to February of this year.”

Just under 2,600 applications were approved for the first-home scheme, the scheme that he said Sinn Féin opposed. “So you’d like to talk about failure but the statistics actually show very significant progress made for very many homeowners.”

Marie O'Halloran

Marie O'Halloran

Marie O'Halloran is Parliamentary Correspondent of The Irish Times

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