Dublin City Council has sold 90 council homes at cut rates to tenants since January 2016, council figures show.
More than two and a half years ago, the Department of Housing brought back the tenant purchase scheme, which allows some people who live in council homes to buy them at a discount.
Of those sold, 51 were sold at a 40-percent discount from market prices, while 21 were sold at 50-percent off, and 16 at 60-percent off.
Thirty-five were sold in the south central part of the city – the area with the most sales. Meanwhile, 29 homes were sold in the north-west area, and 22 in the north-central area. Just 1 was sold in the south-east area, and 3 in the north-east inner city, according to a council spokesperson.
When Labour Housing Minister Alan Kelly brought the tenant purchase scheme back, it was pitched as a way to “promote sustainable communities and enable the state to share in profits made from house resales in a reasonable period after purchase by tenants at a discount”.
It was a “win-win”, said Kelly at the time. Tenants become homeowners. Local authorities won’t have to cover maintenance costs, so they “will have resources freed up which can be directed towards the delivery of new social housing units”.
So far, the council got a little more than €9.08 million from the sales of those 90 homes, an average of €100,951 for each.
That money has been spent in several ways. But not on new homes, which is “fully” funded from grants from the Department of Housing, said a council spokesperson.
“These are two separate transactions and separate funding processes it was never intended that there would be a direct connection between the two,” they said.
Instead, the money from sales has been used “to fund improvement works to existing Dublin City Council housing stock”.
That includes €3 million on refurbishing vacant properties, €1.4 million to knock bedsits into bigger apartments, and €650,000 on general maintenance work.
It also includes €199,000 on putting in safety systems on roofs to stop people walking off the edges, €115,000 to refurbish the Crampton Buildings flat complex in Temple Bar, and €100,000 on energy efficiency.
Local authorities have to use the money they make selling homes for capital spending, says Michelle Norris, who is head of the school of social policy at University College Dublin. But not necessarily to replace sold housing.
Capital spending is defined by the Department of Housing as money spent to create an asset, beyond the year in which the asset is provided. So it could go on replacement housing, refurbishment, or grants for disabled and older people to adapt their homes, says Norris.
Her study with her UCD colleague Aideen Hayden, “The Future of Council Housing“, found that there is “significant dependence by local authorities on their income from sales to fund council housing management and maintenance”, which creates an incentive “to sell council housing at a loss”.
It costs “a lot more” to provide a new home than the council gets from selling homes under the tenant purchase scheme, said a council spokesperson.
Norris said one senior civil servant told her “it was like filling a bucket of water with a hole at the bottom”.
“The market value may be €400,000 so you’re selling it off at half that which is €200,000,” said Norris.
That €200,000 might be what it cost to build years ago, she says. “But the thing is […] if you want to go out and buy a dwelling or build a dwelling, you’ve to do that at current market value.”
Norris and Hayden say in their study that the scheme should be suspended until the current housing crisis eases. Many councillors, however, disagree with that idea.
“It’s a very beneficial scheme,” says David Costello of Fianna Fáil. It means there are both homeowners and renters in neighbourhoods, which is known as “tenure mix”, and it also prevents a “brain drain” in local communities.
Norris disagrees. It’s a case of two competing rights, she says: the right to buy a home over the right to a home.
It’s set up differently to past tenant purchase schemes – with a “clawback” mechanism to stop tenants from flipping their homes after buying them at a cut price, he says. So there is little incentive for people to move on and sell.
Putting people on low income all in one place “can cause stigma”, says Dunne. This changes that – as would mixed-income rental, he says.
The Department of Housing has looked at how the tenant purchase scheme is playing out, said Fine Gael Minister for Housing Eoghan Murphy in July this year. He said at the time, that he expected to publish the findings, shortly.