Senior Associate | Legal
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12 June 2020
3 min read
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In a country faced with a housing crisis, the development and delivery of social housing stock is imperative. One of the ways in which local authorities in Ireland obtain social housing units is through Part V of the Planning & Development Act (“Part V”).
Part V is a mechanism by which Local Authorities can obtain up to 10% of land zoned residential at the “existing use value” at the date planning permission was granted. Part V applies to any planning application submitted for a residential development of 9 or more housing units or where the development is on a site which exceeds 0.1 hectares in size.
An agreement outlining the conditions which must be met in order to satisfy the developer’s Part V obligations will be negotiated between the developer and the Local Authority. Negotiations can often be protracted, and it is advisable that developers engage with Local Authorities to discuss Part V options prior to lodging a planning application. Pricing and unit details are often the subject of considerable negotiation and some Local Authorities are fasted than others in getting deals concluded. We have been involved in negotiations ranging from two months to a full year on similar sized projects.
The aim of Part V is to promote social integration and avoid a return to the traditional “council estate”. It has however, been reported that social housing units are being clustered within larger developments at the request of local authorities in order to cut back on maintenance costs.
The options available to local authorities include:
Although relatively new to the landscape (and not without controversy), long term leasing is an initiative providing an alternative acquisition option to local authorities and which is becoming more common as a means of satisfying Part V obligations. The leasing model can reduce capital requirements, mix public/private risk and return and keep housing units off balance sheet for the local authorities.
There are two leasing models available and recently the Enhanced Long Term Social Housing Leasing Scheme, which operates similarly to a service level agreement, has been promoted by local authorities as a method of attracting institutional investors and property managers - promoting greater gross returns on their investment while maintaining a steady covenant and management structure. The leasing documents vary in detail and complexity and require a clear understanding of the social housing model and relationships.
Watch this space in 2020 for many more Enhanced Lease transactions as local authorities outsource management to specialists and investors become more comfortable with the business model.
Ogier Leman has extensive experience dealing with a wide range of real estate matters, including provide strategic legal advice to property developers, investors and approved housing bodies on all aspects of social housing development. Please do not hesitate to contact Aoife O’Dea by emailing email@example.com.
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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