Improvements to the Repair & Leasing Scheme Announced

In line with his continuing commitment to tackle the key issue of vacant houses, Eoghan Murphy T.D., Minister for Housing, Planning and Local Government, recently reviewed the operation of the Repair and Leasing Scheme, working with local authorities and approved housing bodies in recent months to develop and improve its operation. On foot of that review, a range of improvements to the existing scheme were announced on 22 January 2018 following the second Housing Summit with Local Authority Chief Executives.

Some of the key changes to the scheme, which will take effect from 1 February 2018, involve:

• a reduction in the minimum lease term required from 10 to 5 years;
• increasing the proportion of market rent / rent  payments available to property owners where they take on more responsibilities under the tenancy, meaning that up to 92% of market rent will be available and
• provision of additional funding for property owners, over and above the current €40,000 limit, where the dwelling is a bedsit type dwelling being brought into compliance with the Standards for Rented Houses Regulations and made available for social housing.

Significant funding is available under the Repair and Leasing Scheme in 2018 with funding of €32m being made available in 2018.

What is the Repair and Leasing Scheme (RLS)?

• The RLS has been developed under Pillar 5 of Rebuilding Ireland and is targeted at owners of vacant properties who cannot afford or access the funding needed to bring their properties up to the required standard for rental property.
• The scheme provides upfront funding for any works necessary to bring the property up to the required standard and in return the property owner agrees to lease the dwelling to the local authority to be used as social housing.
• The cost of the repairs is repaid by the property owner by offsetting it against the rent.
• The maximum cost of repairs allowable under the scheme is €40,000 including VAT, or €50,000 (including VAT) where the property is a former bedsit being brought into line with the Standards for Rented Houses.

What are the changes to the scheme announced by the Minister?

The changes to the scheme will take effect from 1 February 2018 and are set out below:

1. Extension of the scheme to Rental Availability Agreements

• The scheme as originally launched only permitted a property owner to enter into a long term lease agreement with the local authority, with a minimum term of 10 years. From 1 February 2018, the type of lease agreement permitted under the scheme will be extended to include Rental Availability Arrangements (RAAs or RAS type arrangements). As such, a property owner under RLS may now choose whether to enter into:

1. a direct lease, or
2. a Rental Availability Arrangement with a local authority.

• Under a direct lease, the local authority takes on the landlord responsibilities and the owner is paid up to 80% of market rent (or 85% for apartments). Under a Rental Availability Arrangement, the owner is paid up to 92% of market rent but takes on landlord responsibilities and is the landlord to the tenant. This option will appeal to owners who are prepared to take on landlord responsibilities in return for the additional rent compared to the rental rates for direct leases – i.e. 92% compared to 80% of market rent.

2. Reduction in the minimum lease term from 10 to 5 years

• The minimum lease term required under RLS has been reduced from 10 years to 5 years. This minimum term will apply both where an owner chooses to enter into a direct leasing arrangement or a Rental Availability Arrangement. This change to the scheme will appeal to property owners who are interested in the scheme but who are deterred by the minimum lease term of 10 years.

3. Additional funding permitted where the property is a former bedsit

Where the vacant property being brought into the scheme is a “bedsit” type dwelling being brought into line with the Standards for Rented Houses Regulations, the funding available may be increased from the current limit of €40,000 to €50,000. Significant works may often be necessary in respect of these units and additional funding will be made available in these circumstances.

4. Extension of the RLS scheme to unfinished properties in limited circumstances

Local authorities may use now RLS funding where applications are made in respect of new, vacant (for minimum 12 months) but unfinished dwellings. The funding may be used for the purposes of bringing the dwelling into line with the Standards for Rented Houses Regulations only and may not be used for other development works such as common areas, entrance roads etc.

5. Apportionment of funds between one or more dwellings

Where a property owner is bringing more than one dwelling into the scheme, the funds available i.e. €40,000 per dwelling, may be apportioned between a number of dwellings once total funding for all dwellings doesn’t exceed €40,000 per dwelling. So for example, if 6 dwellings are being brought into the scheme, total funding for the 6 properties may not exceed €240,000. This will allow owners to bring multiple dwellings into the RLS scheme even where the cost of repairs on one of these units exceeds the funding limit of €40,000.

• There is no change to the requirement that a property must be vacant for a period of 12 months or more to be accepted into the scheme.

What funding is available under the scheme for 2018 and how many homes will the scheme deliver?

• Funding of €32m is available under the scheme in 2018, with the potential to bring 800 empty homes back into use this year.
• Provisional figures indicate that a total of 9 dwellings were delivered under the scheme in 2017, with Agreements to Lease signed for 31 dwellings. A total of 820 applications under the scheme were received in 2017.