No plan to close 'lease loophole' allowing developers get around social housing obligations

Catherine Murphy raised concerns over local authorities leasing homes from developers rather than acquiring them outright — but the housing minister said he does not intend to stop the practice. Picture: Leah Farrell

Darragh O'Brien, the housing minister, has no plans to close a loophole which allows developers to lease out properties instead of providing permanent social housing.

Social Democrats co-leader Catherine Murphy has raised concerns that developers are getting around Part V planning obligations by entering 25-year leases with local authorities.

"I am increasingly seeing new builds being long leased," said Ms Murphy. "Instead of the State acquiring housing under Part V agreements, it is in some cases accepting 25-year leases on a 90% of market rent on a four-year review basis." 

Ms Murphy said, at the end of the 25 years, the properties revert to developers, which she said is "the most expensive way of delivering social housing with no asset at the end".

A spokesperson for Mr O'Brien said the issue of long leasing "is not something that we see as commonplace", adding that there are "no plans at the moment" to change the regulations.

Part V of the Planning and Development Act sets down the requirement that up to 10% of new housing developments be reserved to meet the need for social and affordable housing. Changes to the act in 2015 added leasing as an option.

However, guidelines issued in 2017 by then housing minister Simon Coveney stated that the option which should normally be pursued by local authorities is the acquisition of social housing on the development site, by means of transfer of ownership.

A spokesperson in the Department of Housing said this remains the case, but that the decision is one for the local authority.

The spokesperson added that in the context of overall social housing provision, the number of social homes being delivered through Part V leasing arrangements is "incredibly small".

In 2019, a total of 14 Part V units were delivered through leasing, with nine properties delivered through leasing in 2018. The Department said that none had been delivered up to June this year.

However, Ms Murphy said these figures are at odds with what she is seeing and hearing on the ground. "We can name the estates," said Ms Murphy.

She said the way the department presents figures is "hugely frustrating" and can be confusing due to the myriad pathways through which social housing is now delivered.

"We have to do a piece of work in the Public Accounts Committee to decode some of it," said Ms Murphy, who is vice-chair of the committee.

"I see this as being really significant in terms of the mix, this year and into the latter half of this year.

"What they're doing is they're differentiating between a contract, where there's a contractual obligation, and where there is actual delivery. When you get into a trend like this and you're starting to see it, if you don't address it, essentially it gets embedded."