The Sunday Independent reported yesterday that deals struck with developers at the height of the housing boom could bankrupt county councils.  The example they give is of Dun Laoghaire-Rathdown who signed up for 63 ‘affordable’ units and 80 ‘social’ units on the old Dun Laoghaire Golf Club site for a cost of €35.6m.  The Council already has €27.5m of affordable and social units purchased at the height of the boom.  Assuming that the social housing will get used for that purpose, rather than being sold-on, it seems as if the council is the owner of c.€25-30m of ‘affordable’ property that it is presently unable to sell-on because its purchase/sale price is more than its present value.  Clearly potential purchasers do not see the properties as either affordable or a sound investment given present market conditions. The piece suggests that this issue exists across the country, and clearly it poses a significant problem for DLR.  At the minute it seems that they have only a limited set of options – sell on at a significant loss but reduce their debt, use the affordable housing as social housing using rent received to try and cover debt payments, rent the properties privately, or sit on them and hope the market value and demand rises.  Whichever option is chosen, it seems that properties are going to be costly problem in the short term.  It would be interesting to find out the extent to which this might be a problem across the country and what kinds of solutions councils are using to tackle it (and might be transferable across the system).  The last thing needed right now is local authorities, already under enormous fiscal pressure, having to divert resources from local services to facilitate housing related debt, thus mirroring what’s happening at the national level with bank recapitalisation and NAMA.

Rob Kitchin