€37m spent buying sites ‘unsuitable’ for housing
Some of the 25 sites in question were found to be in areas that were not zoned for residential development, while others were land-locked or had an illegal halting site or building on the land.
The revelation comes following the Comptroller and Auditor General’s & report on the Land Aggregation Scheme, a “mini Nama” established to relieve local authorities of the burden of loans taken out to develop social and affordable housing prior to the collapse in the property market.
Councils had secured financing, typically seven-year loans, for the purchase of land for social and affordable housing once it had received the green light to apply from the Department of Local Government. These loans could be redeemed when the land was later used for a social housing project.
However, following the collapse in land values and falls in the housing markets, councils found it difficult to repay the loans and the sites subsequently had little resale value.
In 2010, the department established the Land Aggregation Scheme in response to this problem. Under the scheme, councils would transfer the sites to the new Housing and Sustainable Communities Agency for the nominal fee of €1. The department would in turn pay to redeem the loans.
The councils submitted audits in 2010 identifying 259 sites covering 775 hectares with a loan value of €500m that they deemed suitable for the scheme.
In the period to June 2012, the department approved 47 sites for inclusion in the scheme at a cost of €111m, some €24.5m of which was accrued interest on the redeemed loans. A further 25 sites were included under a different arrangement, before the scheme closed in December 2013.
However, 25 sites were deemed ineligible by the Housing Agency because they were considered unsuitable for residential development, despite having been purchased by the councils with the expressed intention of developing social and affordable housing.
