LOCAL AUTHORITIES have spent almost €1.4 billion buying second-hand houses for local authority tenants since 2004, according to figures that have been made available for the first time.
The collated figures were released by the Department of the Environment to Waterford Fine Gael TD John Deasy in response to a parliamentary question.
They show that the purchase of second-hand homes comprised almost one-third of the overall spend of €4.7 billion on local authority housing between 2004 and 2009.
There are massive disparities between local authorities on the amount spent on second-hand purchases. Mayo, with a population of 117,000, has spent less than €4 million during the five-year period. In contrast, Longford, with a population of only 31,000, has spent more than €35 million on second-hand homes during the same period.
There was also a huge spike in second-hand purchases during 2007. The overall figure for that year is €413 million, compared with €251 million in 2006 and €268 million in 2008.
In 2007, Dublin City Council spent more than €83 million on second-hand houses; South Dublin spent €56 million; the two Cork councils spent almost €80 million; and the two Galway councils spent €36 million.
Mr Deasy said yesterday that he was astonished by the figures, which show that local authorities spent three times more on second-hand homes than on purchases under Part V of the Planning Act – the legislative mechanism that was intended as the main vehicle to provide social and affordable housing.
In all, less than €500 million was spent on Part V during the five-year period.
Indeed, Part V spending was matched by the €480 million spend by local authorities on purchasing “turnkey schemes” (new houses and apartments in private developments) during the same period.
Two Fine Gael members of the Public Accounts Committee, Deirdre Clune and Jim O’Keeffe, will raise the issue with department officials at today’s meeting, which will be discussing affordable housing.
Mr Deasy said a Department of the Environment circular from early 2007, issued under direction of the then minister of state for housing Noel Ahern, requested local authorities to “take an active approach to acquisitions”.
The Waterford TD said he wanted the department to disclose why it expressly encouraged local authorities to buy up so many private houses and apartments during 2007, and asked did the huge increase in spending that year have anything to do with the general election.
Both he and Ms Clune said they will pursue the question as to whether local authorities exceeded their capital allocations during 2007. “Why was there a policy to buy up so many houses right at the top of the market in 2006 and 2007 instead of looking at different solutions?” asked Mr Deasy. “And why is there such a difference between the amounts spent by different local authorities on second-hand housing? We need to know if the money could have been better spent.”
The Department of the Environment said yesterday that housing programmes were always achieved through a mix of build and purchases, including second-hand homes. “In order to achieve the targets in their housing programmes, local authorities who had less activity under Part V would have purchased secondhand or turnkey properties to meet their targets,” said a spokesman.
It was also contended that there had “been a good-value secondhand housing market in recent years as prices fell”. The department also pointed out that Part V activity had increased and that second-hand purchases had fallen in recent years.
Ms Clune, a TD for Cork South Central, said that she was doubtful that local authorities got value for money or “bang for their buck” when they bought so many second-hand houses when prices were moving towards a peak during 2006 and 2007.