Cork City Council owed €5m rent as half of tenants in arrears

Cork City Council is owed almost €5m in rent arrears, with more than half of its tenants behind in their payments.

The council has provided for €2.5m in bad debts after figures from the Local Government Audit Service show City Hall was owed €4.7m in rent arrears at the end of 2015.

It is the latest spike in the city’s rent arrears which have been rising steadily in recent years — from €2.7m in 2012 to €3.3m in 2013 and €4m in 2014.

The figures were revealed just weeks after the council had to raise commercial rates during its 2016 budget meeting in December to plug a €1.6m funding shortfall.

The detail is contained in the Statutory Audit Report on Cork City Council for 2015 which shows the city had a rent collection level of 81% for the year — down 2% on the previous year.

The council had 8,913 active rent accounts of which 5,730 (64%) were in arrears at the year end.

A total of 2,897, or almost a third, had arrears of four weeks or more, which accounted for €2.7m of the arrears’ total. And 446 tenants, or 5%, were in arrears for more than one year, accounting for €2m of the arrears total.

The auditor said the council embarked on an extensive global rent review during the year, and the application of back-rent, where undeclared income was identified in certain households during the review, contributed significantly to the increase in rent arrears.

The auditor said the council needs to ensure adequate procedures and controls are in place for the timely identification of undeclared income and to ensure the income stream is properly managed.

Council chief executive Ann Doherty, in a response, said the collection of rental income continues to be challenging.

“Initiatives have been taken to strengthen debt collection including the allocation of additional resources and this will lead to an overall reduction in rent arrears,” she said.

The audit also showed a decline in the council’s collection performance in relation to housing loans, from 74% to 71%, with arrears rising by 17% to €167,000.

Of the 717 accounts, 300 were in arrears, with 90 (30%) in arrears of less than one month, 50 (17%) in arrears between one and three months, and 160 (53%) in arrears over three months.

However, only 10 accounts had, by the end of the year, entered a special mortgage arrears process.The total debt owed on housing loan repayments at the end of 2015 amounted to €1.1m against which the council made a bad debt provision for €900,000. “A more proactive approach is required,” the auditor said.

Cork County Council is to raise its rent rates by up to 3% next month, an average rise of €1.50 a week.