Laois County Council is to call on Minister for Housing James Browne to review and reduce the Department’s reliance on Approved Housing Bodies (AHB) for the construction of housing.
This is following a motion by Independent Councillor Aisling Moran which was seconded by fellow Independent Caroline Dwane-Stanley.
Cllr Moran wants the government to instead ‘support first time buyers and middle-income families by increasing the supply of affordable houses’.
According to Cllr Moran, when houses are built without the use of AHBs, the cost is much less, dramatically so in some cases, and she says that this money could be used to bring down the cost of houses.
Cllr Moran says that she sourced all of her figures from Laois County Council and has put them out over a 30 year period which is the length of time that they would have the contract or mortgage for.
She set out five scenarios of how houses are currently built in Laois. The first two involve AHBs and the last three do not.
According to the figures presented by her to the meeting, it is costing the state far less to build houses without AHBs than it is when they use them.
Also in the first two scenarios, the AHB ultimately owns the property while in the final three, the council does.
She began by giving the example of a housing estate in Laois the comprised of 54 houses under CAF funding.
Cllr Moran said: “It was done by CAF funding, which is Capital Advanced Leasing Facility, which is a 30% mortgage payable at the end of the agreement for 30 years.
“So that means that they don’t pay a penny until the end of the 30 years.
“In most cases, the AHB owns the land with the developer or themselves, but sometimes the council provides the land to them.
“Now the AHB pays no planning fees, no development levies, no disability access cert, no clerk of works fee, no birth certificate fee, no structural guarantee fee, no cert of existing planning and no fire cert. So they pay none of these fees, which on a development of 54 houses comes up to over €300,000 that the council now have lost out on.
“So how do they get funded? So this particular one got a mortgage of €21,194,051. That’s from the state. Then they get rent, it’s a P&A agreement, which is where the council then pays the market value rent over the 30 years.
“So the market value, as an average, I put it down at about €1,500 a month. That comes in at over €29 million. And then they get the rent from the tenant, the extra rent.
“That can range from €20 to €105, so I’ll average it out on €50. The total of all of that comes to €54,869,000, which is a cost per house of €1,016,097. That’s what the state is paying and the AHB owns the house.
“After the 30 years they have to repay the mortgage, so they more than likely will either sell this on the private market or they will sell it to the council.
“Again, probably doubling the cost of the mortgage, probably getting double the mortgage, but they’ll still make another €20 or €30 million on that as well.
“So the cost to the state, if they buy the house afterwards, we’re talking about over €1.5 million for a two or three bedroom council house.”
The second example that was provided by Cllr Moran was in relation to the Capital Assistance Scheme (CAS).
This provides up to 100% capital funding to AHBs for constructing or acquiring social housing for priority groups, including the elderly, homeless, and people with disabilities.
It is a non-repayable, long-term loan administered by local authorities for special needs housing.
Cllr Moran said: “So there’s no P&A agreement, which means there’s no differential rent being paid by the council. But the tenant can pay a higher rent than would normally.
“So again, they get that through the Rental Accommodation Scheme (RAS), which could be €20 or €30 a week. So again, I’ve used all figures, so what they get is the mortgage. In this case as well, usually the council owns the site.
“So they get the site sometimes for free, sometimes they don’t, they have to pay a small fee. Again, I’ve added all of those up and the cost comes in at nearly €700,000 a house, is what it averages out.
“And again, at the end of 30 years, the AHB can sell the houses and make more money.
“So you’re talking well over €1.2 or €1.3 million or more even, is what the state would be paying into the housing balance.”
The third example given by Cllr Moran related to where the council owns their own land and they employ a builder to build the houses.
The example she gave here is on 26 houses and SHIP funding (Social Housing Investment Programme) was used for this.
Cllr Moran said: “Their budget was €9.9 million and the total of that was roughly €390,000.
“But if you take away the rent that the tenant would pay, it brings the cost of the house over 30 years down to €281,000.
“So if the council build their own houses on their own land, it costs them €281,000.”
The fourth example that Cllr Moran gave is where the council buy turnkey properties directly from the builder.
She said: “The example I used here is for 49 houses and eight of them were under Part V (this is a mandatory arrangement under the Planning and Development Acts 2000–2024 where developers must allocate up to 20% of residential development land for social and affordable housing).
“And again, the rent from the tenant, I’ve included that into it, so to take the rent off it, etc. And over the 30 years, it would cost the state €236,000.”
The final example that Cllr Moran gave relates to is the second-hand acquisitions programme.
This is where Laois County Council get money from the government to purchase homes for disabilities, tenants in situ, or vacancy or dereliction of people exiting homeless.
Cllr Moran said: “So over the period of 2023 to 2025, Laois delivered 34 properties.
“So I’ve based it on the figures that we got on these properties, so this again is an average.
“And again, over the 30 years, with the tenant paying back the money, the average house was coming in around €250,000.
“And if you take the rent off, and the maintenance and everything off it, it works out that it’s costing about €121,000 for the house that’s on their site.
“Now, bear in mind, some of these houses might come in and cost only €120,000, some could have cost €350,000. This is an average price.”
Cllr Moran was keen to stress that although the figures she presented related to Laois, she was not having a go at Laois County Council.
She said: “Laois County Council has one of the best housing teams, I would say, in the country. We are top of the league for housing delivery. So this is not a problem to do with the council.
“This is national policy. This is coming from the government. This is a directive.
“You’re talking about the government spending over €1 million on a house to an AHB. AHBs are the middle man. They don’t build the houses, they hire the developer.
“So the state is paying AHBs to bring in a developer to build the houses and then they’ll manage them. And we all know they’re not maintaining those houses.
“We’ve got nothing only hassle with them. We can’t reach them. We can’t talk to them.”
Cllr Moran pointed out that the reliance on AHBs for state funding means that if the country went into a recession again, we may not be able to build houses.
She said: “If you look at the European model like the Netherlands, Denmark, any of those countries, they’re not reliant on state funding.
“So if they went into a recession again, we’d still build houses because they’re privately funded as well. We’re not.
“We’re state funded. So if there was another recession, we’re going to have the same problem again. We’re not going to be able to build houses.
“I just think state money should be used to build state houses.”
In summary, Cllr Moran believes that if Laois County Council built houses themselves without AHBs, they could save a considerable amount of money.
Cllr Moran said: “If Laois County Council were able to withdraw their money, say that €1 million for arguments sake, and they go to the developer in Laois that’s charging €400,000 for a house, and they were able to use €200,000 of that fund for five houses, that would mean that the house price would be an affordable house of €200,000 for a first-time buyer or someone in middle-income families that are trying to afford housing.
“If we want our children and our grandchildren to be able to afford housing, housing has gone off the Richter scale at this stage.
“There’s billions of euros there for housing, but it’s going in the wrong direction. And I think we need to stop the reliance on AHBs.”
Councillor Moran’s fellow Councillors were stunned by the figures with Independent Ollie Clooney calling for a ‘public inquiry’ if the figures were correct.
Independent Aidan Mullins said: “I’m taking the face value of what Ashling has put together here.
“She’s got these figures from the council staff and says she got professional help with them so she can stand over them. So if those figures are accurate, you’re in mad territory.
“Over a million quid, unless it’s disputed by council officials. In some circumstances, that’s what we’re handing out for a house. I mean, Homer Simpson wouldn’t dream up something as mad as that.
“It’s really crazy. I think it’s not regulated enough, the whole AHB. It’s run off in all directions with no regulation.”
Speaking on the matter, Laois County Council CEO Michael Rainey says that the county would not be in the position it is today if it was not for AHBs.
He said: “When I was housing officer way back when, and it was quoted earlier by Councillor Paschal McEvoy about why there was so little delivery in this county back in 2012, 2013, and we were desperate to get homes off the ground.
“We would have went out to meet a lot of those AHBs to get them active in this county. And that was successful and that’s why, if you look at neighbouring counties, they wouldn’t have the same level of activity we have from the AHB sector.
“And a lot of that goes down to the housing team, we’re very good at doing the allocations, we’re very good at the enablings, we’re very good at giving commitments to them that we support projects.
“So there’s a lot of back work the housing team do in the background that makes this county attractive for AHB development and that helps us deliver homes, which is our function as a local authority, is to make sure we’re putting keys in people’s hands no matter what way we do it.”
As regards to the figures outlined by Councillor Moran, Mr Rainey said he couldn’t say if they were 100% accurate or not because he hadn’t seen them beforehand.
He said: “There are nuances to what you’re saying, even from me, because you’re quoting a figure for a fully maintained home for 30 years against a local authority home, and the maintenance comes from a different source of funding if you know what I mean.
“Wrapped up in that one million figure is the maintenance cost and the refurb costs for the whole 30 years, where you’re looking at from the local authority, you’re only looking at the actual capital acquisition cost.
“But anyway, when I get into numbers of it we would have to do next days before we could back up those numbers.
“And even if the numbers are backed up, to be honest from a council perspective my focus is about keys in people’s hands, so that will be delivering as many social houses and affordable and cost rental houses as we can through our own funding pipelines, also getting the AHBs to come in and deliver homes, deliver cost rental homes as much as they can, and also supporting private housing.
“So it’s not a one or the other in my mind, there’s enough housing demand in this county that will meet AHB demand, satisfy AHBs, satisfy private and satisfy ourselves.”
He suggested that the issue go before the Housing Strategic Policy Committee where it could undergo further examination.
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