DLR Council To Pay More In Rent Than The Purchase Price Of Dundrum Apartments
In the last twenty-four hours it has been reported that Glenveagh Properties has sold all 90 apartments in the Herbert Hill development in Dundrum to the German investment fund, Real IS. The purchase price was in the region of €56,000,000 (€56m). Real IS, which is headquartered in Munich owns property assets worth over €9,000,000,000 (€9bn).
Real IS bought the apartments on the basis of Dún Laoghaire Rathdown County Council entering into a 25 year deal to rent all 90 apartments for use as social housing. A prospectus which has been circulated by Davey Corporate Finance in recent months states that DLR will pay a minimum of €2,100,000 (€2.1m) in rent per year for the next 25 years, with regular inflation-linked rent reviews.
This amounts to an average rent per apartment of €23,300 per year. Over the lifetime of the agreement DLR will pay a minimum of €583,300 in rent for each apartment. And then hand them back to Real IS.
The Davey prospectus also states that DLR will pay for all repairs, maintenance and management of the apartment complex for the next quarter century before returning it to Real IS in turnkey condition.
The three owners of Glenveagh Properties received €23m in pay and shares in 2018. The Herbert Hill deal will fatten up their bank accounts a bit more.
In total DLR will pay an absolute minimum of €52,500,000 in rent to Real IS. With even the most modest of inflation-linked rent increases the end figure will easily exceed the €56,000,000 that Real IS paid for Glenveagh.
Speaking in relation to the Herbert Hill deal, local Éirígí representative Brian Leeson said,
“If the media reports about Herbert HIll prove to be accurate, it represents an extremely good deal for both Glenveagh and for Real IS, but an appallingly bad deal for the taxpayer.
I’ve been closely following the Herbert Hill development from when it was granted planning permission in 2016. Given the scale of the corporate takeover of housing in the greater Dundrum area, it was always highly unlikely that Herbert Hill would be available for local people to buy as owner occupiers.
But the news that DLR is now going to rent the properties with our money from a German investment fund is hard to believe.
DLR are going to end up paying more in rent over the next 25 years than Real IS paid for Herbert Hill in the first place. And if inflation climbs rapidly at any point in the next quarter of a century the rental income could far out-pass the original purchase price.
This deal is going to see public money effectively buying Herbert Hill for a German investment fund. Real IS are exposed to zero risk in this deal. All of the risk lies with DLR and ultimately with the taxpayer.
Under any normal rental agreement the landlord is responsible for repairs and maintenance to the property, but for some unknown reason DLR have agreed to pay extortionate rents AND take responsibility for all repairs, maintenance and management. This makes a bad deal even worse.
One obvious question that needs to be answered by DLR management, our local Councillors and central government is why did DLR not bid to buy the entire building as opposed to renting it?
This would have given the council a permanent asset that could provide affordable homes for local families for far many decades to come. And when the apartments came to the end of their useful life, the council would have owned a prime site in the heart of Dundrum.
Purchasing these apartments outright would also have avoided the risk of rents rapidly increasing in the event of a future inflation spike.
Brian Leson and Éirígí in Dublin South have led the campaign for the Central Mental Hospital site to be used for universally accessible public housing. The fear now is that the cost of renting Herbert Hill will be used as an excuse to stop the building of public housing in the DLR area.
For the last three years I’ve been calling on DLR to build universally accessible public housing on public land at the Central Mental Hospital site, at the Central Bank site, at the Mount Anville site and on other publicly owned sites. Houses on those sites could be built for well under €200,000 per home instead of the insane rent that DLR are going to pay for Herbert Hill.
Three years later and nothing has happened on these sites. The only logical conclusion that can be reached is that the entire apparatus of the state is ideologically incapable of supporting any plan that doesn’t enrich the private sector with public monies.
I have not doubt that the gross overpayment that DLR have made to rent these apartments will mean that there is less money available to actually building public housing in the area.
The only positive aspect to this story is the fact that 90 families will have housing security for the forseeable future in the heart of Dundrum. I’ll be there to wish whoever gets allocated these homes the very best of luck. The only pity is that thousands more will still be left on the DLR waiting lists. “
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