The scheme was initially piloted in Carlow County Council and Waterford City and County Council from 6 October 2016. This pilot is now being extended to all local authorities.
The Department will be working with local authorities, from today (23 February 2017) and over the coming weeks to assist with preparations for the implementation of the new scheme locally. If property owners are interested in the scheme they should contact their local authority for more information.
FAQs
The owner will retain responsibility for structural insurance, structural maintenance and structural repair. The owner will retain responsibility for the payment of the management of company service charge (usually apartments only), and any other charges for which the property owner is liable e.g. Local Property Tax and Non-Principal Private Residence charge.
The local authority or AHB will manage and provide support to its tenants. The local authority or AHB will maintain the property internally for the term of the lease.
Properties will be returned to the property owner in good condition at the end of the lease term, subject to normal wear and tear. In some instances the property owner may agree with the local authority to include an ‘option to purchase’ as a condition of the lease. This gives the local authority the option to buy the property during the term of the lease. Both parties must be in agreement to include this condition and the specific terms can be negotiated.
It will be the responsibility of the property owner to ensure they consult with their finance provider and to get consent to enter a leasing arrangement, if required.
AHBs will be working with local authorities and property owners to identifyproperties and to bring the properties up to the required standard.
AHBs may sign lease arrangements with property owners, on behalf of, and with the agreement of local authorities. These properties will then be managed by the AHBs on behalf of the local authorities. The tenants who will occupy these properties will be social housing tenants.
There are a number of requirements in relation to the scheme:
the property has to be vacant for at least 12 months prior to submission: proof of vacancy will be required
there has to be a social housing demand for the property
the property has to be assessed as being viable to provide social housing
If the property meets these requirements it will be inspected by local authority or AHB staff who will identify the works that are required to bring the house up to the required standard.
If the owner wishes to enter into a lease arrangement to make the property available for social housing with the local authority or AHB the following conditions will apply -
the minimum lease term is 10 years, 15 years or 20 years depending on the cost of the upgrade works;
the lease payments will based on:
the general terms of social leasing which is set at 80% (85% for apartments) of the current market rental rates in the property location
a further adjustment to the lease payment to off-set the cost of the repair/upgrade work until the cost of the work has been repaid;
the scope and cost of the works required to meet the standards, and the recoupment of the works cost through the lease payments, will be agreed between the owner and the local authority/AHB.
Each local authority will set out its own specific requirements for properties. However, the following will apply in all areas:
Properties must be in good structural condition and will be subject to inspection by the local authority or the AHB.
Properties must be compliant with the Housing (Standards for Rented Houses) Regulations 2017
hhhhBER certificates will be required for all properties. Minimum BER criteria may apply in some local authority areas.
Property owners will also be required to prove ownership of the house and tax compliance. It will be the responsibility of the owner to ensure that they consult with their finance/mortgage provider and get consent to enter into a leasing arrangement, if required.
If a property requires repairs to bring it up to standard for letting, a local authority or approved housing body (AHB) will pay for this repair work up-front in return for the property being made available for social housing through a lease for a period of at least 10 years.
The minimum length of the lease is ten years. Depending on the value of the repairs, the local authority/AHB may require the lease period to be up to 20 years. This will ensure that the value of the repairs is repaid in a gradual fashion. See table below.Cost of repairsMinimum duration of leaseOffset to be cleared by
Up to 10,00010 yearsYear 8
Up to 20,00015 yearsYear 12
In excess of 20,00020 yearsYear 15
Under the long term lease arrangement, the lease term will be for a minimum of 10 years.
In all cases a clawback clause will be included in the lease agreement if the property is withdrawn or becomes unavailable before the end of the offset period of the lease. This is to ensure the value of the works already paid for by the local authority/AHB is fully repaid.
Under the long term leasing arrangements the property will be returned to the property owner at the end of the term in good repair order and condition, save for fair wear and tear. The local authority or AHB will be responsible for internal maintenance and repairs during the term of the lease.
When entering into a leasing agreement, property owners accept that, at the end of the lease term, furnishings and appliances may not be returned. Any furniture and appliances that are left in the property will revert to the ownership of the property owner and are not subject to the requirement to have them in the same condition as at the outset of the lease, subject to fair wear and tear.
Rents will be agreed through negotiation with the LA/AHB. The maximum rent to be agreed under the terms of social leasing will be 80% (85% in the case of apartments) of the current market rent. Rent reviews will usually take place every three or four years.
The cost of the repairs shall be offset against the agreed rental payment until the value of the works is repaid. The LA/AHB will agree with the property owner on a case by case basis what the appropriate offset period will be. These arrangements may include scenarios whereby the offset is by way of a rent-free period; a consistent reduction over the duration of the lease or a term which is scaled against the duration of the lease as in the table below.
Cost of repairs
Minimum duration of lease
Offset to be cleared by
Up to 10,000
10 years
Year 8
Up to 20,000
15 years
Year 12
In excess of 20,000
20 years
Year 15
Overall, the benefits of the long-term lease arrangement to the property owner include -
guaranteed rent
Avoid losing rent during vacant periods
No dealing with tenants and day-to-day maintenance
No need to collect rent or finding a new tenant
Avoid advertising costs
