The Department of Housing has defended a new Public Private Partnership for social housing following criticism of the cost of the 25-year contract.

Construction began last month under a PPP agreement which will see the State paying €301m for the construction and management of 534 homes.

Investment company Comhar Housing will build and operate the properties across six sites in Dublin, Kildare, Wicklow and Louth.

Sinn Féin's Housing Spokesperson, Eoin Ó Broin, who obtained details of the contract through a Parliamentary question, has described the cost as an "obscene waste of taxpayers’ money," - a contention strongly rejected by a spokesperson for the Minister for Housing Eoghan Murphy. 

Sinn Féin Housing Spokesperson Eoin Ó Broin

The State will pay €1m a month for 25 years, which is an average monthly payment of €1,900 per unit. At the end of the contract the homes are handed over to the relevant local authority.

€181m of the total spend will cover operational overheads such as financing, building management, security and tenancy management.

Mr Ó Broin said the PPP model was six times more expensive than a not-for-profit structure such as an Approved Housing Body.

He contends that while the PPP's operational costs will be €13,500 per unit, per year, an agreement with an AHB is €2,400.

"If our figures are right and theses houses are costing six times more to manage and maintain, that means over the 25 years for the 1,500 units it will be an extra €420m going to the private sector."

A spokesperson for Mr Murphy said Sinn Féin's comparisons were "wholly misrepresentative" and that Sinn Féin was "not comparing like with like".


How does the PPP social housing model work?

The model is known as an "availability-based" PPP model and has been previously used to build roads and schools.

Unlike previous PPP housing models, where ownership of the land was transferred to the developer, these sites will stay in State ownership and a developer will be given a licence to build.

The developer will get payments from the State for a 25-year period, after which the houses or apartments will return to the relevant local authority.

Previous PPP housing schemes included private homes, however in this initiative only social housing will be built on the six sites. Tenants will be allocated from local authority housing lists.

Construction company, Sisk will build this first tranche of the PPP bundle while non-profit organisation Choice Housing will provide facilities management services, and its Oaklee Housing subsidiary will act as tenancy management provider.


The spokesperson continued: "The PPP figure accommodates costs that would not feature in an Approved Housing Body operational cost. For example, the capital cost of build spread over 25 years, the financing cost of that capital, projected inflation over 25 years, payment an assumed rental income equivalent and ancillary works such as community facilities."

Mr Ó Broin disputed the suggestion that AHBs do not incur financing or inflation costs adding: "If the Minister is confident that I am wrong he should publish the Public Sector Benchmark exercise in the interest of transparency and full accountability."

In a statement, Comhar Housing said its tender was lower than the Public Sector Benchmark and added that management and maintenance, which is one part of the operational fee, is being done by a non-profit organisation, Choice Housing.

Orla Hegarty Assistant Professor at the School of Architecture in UCD, said the collapse of Carillion in the UK had led to growing concerns over the reliability of the PPP model and that the UK Government had "abandoned PPPs".

"The value for money should be questioned on this. If it is about cost certainty and keeping the money off the Government balance sheet obviously it (the PPP model) is effective for that. But, if it is about doing the most houses possible with the money available this is a poor method of doing it."

The sites included in the first PPP bundle are: Ayrfield, Malahide Rd with 150 units including 50 for senior citizens; 70 in Scribblestown and Finglas, both in Dublin City Council's area; Corkagh Grange in south Dublin with 109 units; Dunleer, Co Louth with 80 units; Convent Lands, Wicklow Town and Craddockstown in Naas, Co Kildare.