Speech at Launch of Advanced Leasing Arrangements, Mont Clare Hotel

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Introduction

Good morning ladies and gentlemen.

I am delighted to be here this morning to officially launch the new enhanced arrangements for long term leasing of private property, to provide additional social housing homes. 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.

As I am sure you are aware, Rebuilding Ireland is the Government’s Plan to deal with the housing shortage in this country. Taken together, it comprises a €6 billion, multi-annual action plan, which seeks to increase the overall supply of new homes to 25,000 per annum by 2020; deliver an additional 50,000 social housing units in the period to 2021; and meet the housing needs of some 87,000 households through the Housing Assistance Payment (HAP) scheme.

Strong progress on the implementation of this plan is already being made. On the social housing construction front, we have a programme of works on 770 sites that will deliver over 12,300 new homes, with the number of schemes in the programme continuing to grow on a weekly basis.

Clearly, we want to see a greater emphasis on direct building of social housing than was envisaged originally under Rebuilding Ireland. In this regard, we will see almost 5,000 new social homes built in 2018, including 3,800 by local authorities and Approved Housing Bodies (AHBs).

In addition to the established Local Authority and AHB direct-build programme, activity continues apace across a range of other measures. These include social housing homes through local authorities and AHBs; the Housing Assistance Payment scheme; and the Rental Accommodation Scheme.

Recognising that measures introduced to date are beginning to have an impact, and will have a greater impact in time, on 22 January my colleague Minister Murphy announced a further package of initiatives to help alleviate affordability pressures faced by households, particularly in areas of high housing demand and high accommodation costs. This included the Rebuilding Ireland Home Loan, along with an Affordable Purchase Scheme, and an Affordable Rental Scheme.

Background to Enhanced Leasing Scheme

It is among these broader efforts that the Enhanced Long Term Social Housing Leasing Scheme must be viewed. As the latest element of Rebuilding Ireland housing policy, I am delighted to launch the scheme this morning.

The enhancements made to the Leasing programme represent a strategic policy approach, signalled in Rebuilding Ireland, to harness the capacity of institutional investment, and the increasing activity in the wider construction market, in order to achieve the delivery of high quality social housing homes, in places where people want to live.

Over the course of Rebuilding Ireland, 10,000 new social homes are targeted for delivery using a leasing model. We don’t expect all of the 10,000 new units to be delivered using the new leasing arrangements but the Government is committed to providing the resources necessary to achieve our ambition in that context.

The existing Social Housing Current Expenditure Programme (SHCEP), administered by my Department, already provides a means whereby properties can be leased by Local Authorities from private providers. However, we would all acknowledge that there are limitations to the scheme as it currently exists, particularly if we are looking at targeted new build units and delivery at scale. It is for this reason that we been working on improvements to make the leasing scheme more attractive to private investors, who can provide social housing for leasing to local authorities on a larger scale. A core necessity as part of the development of these new arrangements is to ensure that the contracts that underpin the security of these units do not have a negative impact on the General Government Balance. In other words, that we are actively benefitting from the institutional investment in such a way that does not limit our ability to continue to invest in our local authority and approved housing body building programmes.

Officials from my Department, together with the National Development Finance Agency (NDFA), the Housing Agency, representatives of the local authorities, and their legal advisors Eversheds Sutherland Solicitors, have worked closely to finalise the details of the scheme. Through their work in bringing the initiative to the market and undertaking the market testing of outline provisions of the lease, the NDFA has established that there is a demand among potential investors for what is being proposed.

Objectives & Operation of the Scheme

The main objective of this scheme is to have about 2,500 units leased for social housing by the end of 2021.

It will mainly target newly built or yet to be built houses and apartments for leasing. Private or institutional investors will finance 100% of the cost of purchasing or constructing residential units and they will retain ownership of the property during and after the term of the lease. The lease will be for a period of 25 years.

The scheme will be governed by my Department and operated by Local Authorities. It will be funded through the Department’s Social Housing Current Expenditure Programme (SHCEP), which provides financial support to local authorities and Approved Housing Bodies for the long-term leasing of houses and apartments from private owners and developers. The Department will recoup to local authorities the cost of meeting the contractual costs of each leased unit. Properties made available under the scheme will be used to accommodate households from local authority waiting lists on a long term basis.

The Housing Agency will administer the scheme on behalf of the Department. 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.

Providers will be invited to indicate their capacity to fund the purchase or construction of a minimum of 20 properties in a Local Authority area for the purposes of scheme. Alternatively, they may propose vacant properties in their existing portfolio if these units are either new to the housing market, or have not been leased or rented in the previous two years.

The Local Authority will retain their important role as landlord to the tenants, an area in which they have decades of experience. Tenants will be nominated by the appropriate Local Authority in accordance with their accepted allocation scheme.

The provider will be required to assist the Local Authority in managing the tenancy, and they may engage a property management company or Approved Housing Body to provide facilities management services to the tenants on their behalf.

Conclusion

The delivery of this project has involved the cooperation of a range of State bodies and agencies. The role of the NDFA as financial advisor to my Department in this work has been an important one. The Housing Agency has also had a major input into developing the scheme, in consultation with the local authorities. I would like to take this opportunity to thank them for their involvement and expertise in this process, as well as Eversheds Sutherland, and also my Department’s officials, for their work in bringing this scheme to fruition.

I believe that the changes being unveiled today in this Enhanced Leasing scheme will allow potential investors from the private sector to assist in the delivery of housing services and supports. The details of the scheme are now on the Housing Agency’s website which contains the Call for Proposals and the related legal documents. Jim Baneham, who is here today on behalf of the Agency, will give you the details in his presentation.

This initiative is another important policy instrument that will help us to meet our ambitious goals for improving the delivery of social housing as set out in Rebuilding Ireland.

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 are achieved.

Once again, thank you all for coming, and I hope you find the material presented at this morning’s event informative.

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