Why did the State not seek independent valuation for €2k social housing rents?

State housing authorities have signed up to 25-year long-term leases for social housing without undertaking any independent valuation.

This is according to records released to Social Democrats TD and party Housing Spokesperson Cian O’Callaghan, following a freedom of information (FOI) request, which revealed housing authorities carried out no independent valuation on €2,000 monthly rents proposed as part of a deal to lease 87 apartments for social housing in Dundrum in 2019.

Deputy O Callaghan says he is now calling on Minister for Housing Darragh O’Brien to explain how this happened.

“With the approval of the Department, Dún Laoghaire Rathdown County Council signed up to a long-term lease for 87 homes without undertaking any independent valuation of market rents in the area,” Deputy O Callaghan said.

“Instead, the council relied entirely on valuations supplied by the developer.

“At Herbert Hill in Dundrum, rents of more than €2,300 per month per unit are being paid out by the State based on market rents calculated by the developer’s agents.

“I cannot understand why the Department of Housing gave the green light to this multi-million euro contract without insisting on an independent valuation of market rents.

“The lack of due diligence is indefensible.

“The State should be using its bulk purchasing power to drive down rents – not support high rent levels sought by developers.”

Back in November 2019, when the State agreed the long-term lease with German real estate fund Realis for the Herbert Hill apartments, many argued that rent the council will pay over the duration of the lease will end up exceeding what Realis paid for the complex.

“The Minister must explain how widespread the practice of signing leases without independent valuations is and what measures he has put in place to ensure this never happens again,” Deputy Callaghan said.

“The use of long-term leasing of social housing from developers instead of purchasing or building homes has grown significantly in recent years.

“Long-term leasing is poor value for money for the State, which is left with no asset at the end of the lease period, while providing a win-win deal for developers.”