Monday, 12 April 2010

Council's €27.5m properties may go on sale with reserve tag

DÚN LAOGHAIRE-Rathdown County Council bought properties from developers at a cost of €27.5 million.

They were acquired under the Planning and Development Acts, which stipulates developers must provide 20 per cent of any residential development to local authorities for social and affordable housing.

The 50 one-bed apartments, 52 two-beds and 15 three-beds are in eight developments in Sandyford, Stepaside, Dundrum, Dún Laoghaire, Rathfarnham and Leopardstown.

Some 54 of the apartments are in one development, The Belfry, Enniskerry Road, Stepaside. The Gallops in Sandyford contains 23 of the properties and Belarmine Plaza, also on the Enniskerry Road in Stepaside, contains 21.

The properties had all been offered to the 1,900 applicants on the affordable housing waiting list at prices from €132,000 to €180,000. They were discounted more than once to keep them 20 per cent cheaper than the open market.

However there were no interested purchasers under the affordable housing scheme, which includes a claw-back penalty requiring buyers who sell their properties within 20 years to pay back a percentage of the profit.

The council also carried out a random survey of more than 100 applicants on the waiting list to ascertain why they did not want to buy any of the properties.

Some 20 per cent of applicants were no longer in a financial position to purchase or could not secure a mortgage, while 14 per cent thought the prices were too high. A further 14 per cent wanted houses instead of apartments and 11 per cent had already purchased privately.

Director of housing at the council Charles McNamara has recommended that the properties be sold on the open market “subject to a reserve and with priority being given to first-time buyers”.

He has not yet stipulated what that reserve would be.

In a report to councillors to be debated at a meeting on Monday, Mr McNamara said it was that vital the council reduced the €27.5 million deficit incurred by the purchase of the properties.

“A failure to address this issue will have significant implications for the delivery of the council’s ambitious programme of capital projects, which are dependent on the availability of match funding from the council,” he said.

Other options considered by the council to deal with the unsold properties included introducing a let-to-buy scheme.

This would allow potential purchasers to live in and rent properties for a period before deciding whether to buy them.

However, at a meeting with the Department of the Environment last month, council officials were told that Dublin City Council had been approved for a let-to-buy pilot scheme.

Until that scheme has been assessed by the department and considered successful, no other local authorities will be given permission to initiate such a scheme.

The report also said voluntary housing bodies would not be in a position to purchase the unsold homes because the department had confirmed that no further funding would be made available to the voluntary sector under the Capital Loan and Subsidy Scheme.

Should the council be unsuccessful in selling the properties on the open market, it may be given permission by the department to transfer some of them to social housing under the social housing leasing initiative.

However this has disadvantages for the council; although it will receive rent, the scheme only lasts for five years and the council would have to bear the cost of repairs and redecoration of the properties once the lease period was finished.

Councillors are due to debate the issue on Monday.

Irish Times

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