COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL

MEETING OF SOUTH DUBLIN COUNTY COUNCIL

Monday, December 13, 2021

QUESTION NO.3

QUESTION: Councillor Carly Bailey

To ask the Chief Executive to explain why councillors are often told that it is 'too risky' for this local authority to directly build out larger social and/or affordable housing projects. This reason has been given to explain the reluctance to self-build and the preference to allow private developers to purchase public land and for local authorities to then buy back social & affordable housing from the developer when such housing would be cheaper if built directly, as is stated by a significant number of architects, housing social policy experts and housing academics.

REPLY:

The identification and progression of large Council owned sites with the potential for accelerated mixed tenure development has been endorsed by the Elected Members at various significant milestones (inception, procurement, land disposal) in conjunction with the ongoing direct management of our social housing construction programme for sites generally of 100 homes or less.  There are no construction sites built-out by the Council’s own limited direct labour resources within our Housing Department - all sites on the social housing construction programme involve the procurement and contract management, either directly by the Council or by Approved Housing Bodies, of building contractors to carry out the construction work.

Construction of large mixed tenure developments such as Kilcarbery and Killinarden that include considerable private and/or affordable purchase homes involves significant labour, funding and risk management that local authorities are better positioned to manage through development agreements with joint venture partners rather than procuring and managing all aspects of the development directly.  The scale of these developments and the need to accelerate delivery means that there only limited top tier developers, or consortia of medium sized developers, with the capacity required to deliver such developments at significant pace to significantly address current housing demand.  Such developments form a key part of the proposed housing delivery action plan for this County over the next five years and without such an option, in conjunction with the aforementioned social housing construction programme and AHB delivery, Part V, leasing and turnkey opportunities, the level of housing delivery required would simply not be met in the timeframe required.  Any additional costs through that delivery mechanism thus have to be offset against the considerable benefit of delivering homes quicker but in such developments (e.g. Kilcarbery for example) the cost of the social homes can be very competitive against any Council procured and managed construction project.

While social housing elements of mixed tenure projects are eligible for funding directly by the Department of Housing, Local Government and Heritage, affordable purchase and/or cost rental development are only funded in respect of the subsidy necessary to deliver affordability (generally 15% discount on market purchase price or 25% discount on market rent) and so, if delivered directly by the Council, the cost of building would have to be financed and carried by the Council until the return on this investment was achieved through the sale of the property or through the rental yield.  The required borrowing for this approach would have to be approved by the Elected Members and then sanctioned by government in the context of overall state borrowing limits.  As well as such a debt burden impacting on potential borrowing for other key service requirements (e.g. local authority home loans for purchasers) the risk of having unsold affordable homes is also a significant factor - there are many such properties that local authorities throughout the country were unable to sell during the last affordable housing scheme for which ongoing debt servicing is required.

Therefore, as outlined above, there are many factors influencing the decision to include joint venture mixed tenure developments as part of the Council’s range of housing delivery options to address the housing need in the County.