Watchdog reveals ‘significant shortfall’ in Housing Agency’s acquisition of units

The Government has been told to consider taking some of the Housing Agency’s €37.7 million cash pile back to the exchequer after it failed to deliver more than 700 social housing units on time.

The Housing Agency was supposed to deliver 1,600 vacant houses and apartments for social housing by the end of 2020 and then had the target postponed for year. Now a report from the State’s financial watchdog has revealed a “significant shortfall” as the agency had completed the acquisition of only 868 units by 2021.

The agency’s acquisitions fund was established with an initial €77.7 million in 2017 under the Rebuilding Ireland housing plan that came before the 2021 Housing for All plan.

The fund had a €37.7 million cash balance at the end of 2021, more than half the total fund investment. “This represents an underutilisation of the fund’s resources,” said the 2021 report on State spending by the Comptroller and Auditor General.

Watchdog reveals ‘significant shortfall’ in Housing Agency’s acquisition of units

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“The Department [of Housing] should, in conjunction with the [Housing] Agency, consider whether at least some of the financial resources available to the fund should be returned to the exchequer.”

The Department of Housing said it had reviewed the scope and operation of the fund and its challenges. This included the possibility of repurposing it to support other Housing for All schemes.

The department said it was “engaged in a process” with the Department of Public Expenditure and Reform on the review recommendations.

“If the outcome of this engagement allows the mandate of the fund to be amended around these proposals, the financial resources will be directed to their implementation.”

At first the fund acquired distressed property assets from banks and investment funds before refurbishing them and selling them on to approved housing bodies (AHBs) and local authorities. Later it bought homes on the open market, which required less work because they were in better condition.

The report cited the Housing Agency and the Department of Housing saying the delivery shortfall was “mainly due” to slower-than-anticipated sales of properties and consequent delayed replenishment of the fund from sales, as well as a reduced stock of suitable available properties.

“The target for delivery was extended to end 2021, but the revised target was not achieved,” the C&AG said, adding that acquisitions had dropped to the “lowest level” in 2021 since the fund was established.

“To the end of 2021, the Housing Agency completed acquisitions of 868 residential units (54 per cent of the target) of which 718 units were sold on to AHBs and local authorities; two units were sold on the open market; and 15 units were transferred to local authorities for no consideration.”

To meet its original delivery target, the Housing Agency needed to acquire and dispose of a housing unit at an average cost of around €175,000 within an average 12 months.

“The average turnaround time achieved was just over 17 months per unit. The agency stated that at the outset of the scheme it had aimed to recycle properties within six months. However, it became apparent for a number of reasons — AHB operational capacity, AHB lender requirements to bundle property sales into larger transactions and conveyancing requirements — that this would not be possible.”