Dublin City Council paying 40% more for housing than private developers

Dublin City Council has been paying 40 percent more for the construction of social housing than private sector developers, a new report has found.

According to a report by management consultancy firm Seán Ó Riordáin and Associates Ltd and Trinity College economics professor Ronan Lyons, DCC has been “severely restricted” in controlling costs due to Government and EU procurement processes.

The study was commissioned by the local authority after concerns were raised in 2021 that it was paying a “premium” for the development of housing.

The report found that the council was paying 23 percent more than Approved Housing Bodies (AHBs) for housing and 44 percent more that private developers for a similar sized home.

Overall, 28 housing schemes across three sectors and 1,023 homes were analysed.

All were built between 2019 and the end of last year.

When all variables factors were accounted for, the audit found one-bedroom apartments provided directly by the council cost €335,000, 11 percent more than AHBs and 34 percent more than Part V developments.

Part V schemes require developers to provide a certain number of units to local authorities for social housing.

For two-bedroom homes, the council construction costs of €514,000 were 23 percent above the AHB average of €418,000 and 44 percent above the Part V average €358,000.

The report says that the difference in costs can be partially attributed to the size of the developments with council schemes averaging 43 homes compared to the private sector of 180.

Council-led projects are also usually on “brownfield” sites which are more expensive to develop than “greenfield” sites typically used by developers.

However, “it would not be appropriate to conclude that cost differentials between public and private delivery can be explained entirely by scale… and wider project nature”, the report said.

“Issues such as the application of public procurement rules and the impact of policy shifts, application of differing standards in the use of construction materials, etc, can and do impact upon the cost environment for both public and private delivery of construction.”

Sinn Fein councillor Daithí Doolan says the report is “damning” and that the “practise is unacceptable.

“Immediate steps must be taken to prevent it happening in the future,” he says.

“The procurement process benefits the few large developers here so there is no competition for the market and developers can simply charge City Council what they want.

“This is proving to be a financial barrier to the delivery of social housing and very costly for the public purse.”

Fine Gael councillor James Geoghegan said it was a “serious concern” and that “proper accounting and cost control measures” should be put in place.