Council back buying homes.

KOW

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378
A Dail Deputy mentioned to me that the county councils were back buying properties.

I have an apartment rented to SDCC on the long term leasing program. I am 3 years into an 8yr term.

Contact made with the council and not interested because it was not vacant.

The value of the apartment in Palmerstown Dublin 20 is about 240-250k. The same apartment could not be build for 350k. The current rent is 1460pm. (20% lower than going rate because council maintain and pay rent)

1460 x 12 = 17520 p.a.

240000 x 7.3% = 17520.

Should SDCC borrow 240000 at any rate below 7.3% they would be saving money. Over the next 5yrs they will pay me a further 87600 euro. Thousands of properties rented out this way with the CC maintaining them and putting tax payers money down the drain.

Am I missing something here?
 

RedOnion

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4,534
Am I missing something here?
Yes, you're looking at it as any normal person would. Common financial sense doesn't always come into it.

If council buy your apartment, they'll spend 250k this year instead of 17,500, but without any increase in people they've provided accomodation for.
 

jim

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534
On what basis could DCC refuse to consider buying a vacant property without having even looked at it?
 

KOW

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378
There would be no problem currently borrowing from the banks at around 3%. Surely the councils could access funds even at a lower rate than this and in return make huge savings?
 

KOW

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378
Not really. They are paying you a high yield because you bear most of the risk.
NoRegrets I dont understand what you mean by me taking on the risk. The council or any builder could not build an apartment 870sq ft in Dublin for under 350k. They manage maintain choose tenants. After the 8 year lease they have to return the property back to me in original condition bar normal wear and tear.
 

NoRegretsCoyote

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1,467
@KOW

You pay insurance, they don't. If you need a new roof, you bear the risk. You are obliged to keep the property in line with their standards, and are responsible for repairs. If there is no tenant in eight years' time they are not stuck with an empty house, you are.

Cost of finance isn't the issue. It's having the staff skilled in property acquisition and particularly management. That's why they are happy with the HAP system. It's very simple to administer.
 

KOW

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378
The council have in the past and are now acquiring properties for social tenants.
Under the long term rental scheme the council maintain and carry out any repairs.
Unfortunately there has not and most probably will never be vacant properties in central locations for social tenants.
The council between the RAS scheme and now the long term rental scheme have been renting from me for 13yrs.

Quick look at lending at best rates just north of 2%.
Just to make the point if they borrowed at say 2.3% the bill for the year 5520. They pay me 17520. Some difference.

Every single political party is calling for the building of social units. Noregrets take a look at the building costs for 870sq ft in Dublin.
There is absolutely minimal risk to the council on the unit. The cost to build such a unit is north of 350k.


To me its just a ticking the box exercise. The council would buy the unit in the morning if empty. They can then tick a box and show that they have taken another family off the housing list. To date I estimate they have payed nearly 200k on the unit over past 13 yrs.
Unfortunately for me most of this has returned to central funds 52% tax prsi usc.:mad:
 
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