International investment funds are “having a laugh” at the Government over its housing strategy and its social housing policy is a “shocking mismanagement of public funds”, according to businessman Dermot Desmond.
The Business Post first published the letters, obtained under the Freedom of Information Act, on Sunday.
In private letters sent last December and February, Mr Desmond criticised Government policy on housing and the over-reliance on international institutions and the private rental sector for social housing.
Mr Desmond told Minister for Housing Darragh O'Brien that the State’s treasury agency was borrowing at an average of 0.02 per cent when the State is paying 5 per cent on average to international institutions to fund publicly owned housing.
“In such a low interest environment, the current policy of buying and leasing social housing from private developers and investment funds is a criminal waste of public money,” the businessman told Mr O'Brien in a letter dated December 15th, 2020.
“The international funds are having a laugh at the Irish Government and making a lot of money in the process.”
Social housing policy
Mr Desmond's letter to Taoiseach Micheál Martin in February included criticism of social housing policy, describing the Part V legislation where developers provided at the time 10 per cent but since increased to 20 per cent of any project for social housing as “one of the worst pieces of legislation ever passed and clearly not fit for purpose”.
He called price tags of €600,000-€960,000 for apartments for social housing a “failure in policy and a criminal waste of public funds”.
Leasing from the private sector and subsidising rents to private landlords was “not good policy and it is not in line with the social housing policy in most other countries,” Mr Desmond said.
He described this as a “misguided strategy” which has left housing in Ireland “prey to greedy developers and international investors”.
“Allowing the private market to dictate the price of social housing is a shocking mismanagement of public funds – you might as well hand out blank cheques,” he wrote.
“It is astounding that Government cannot see this and persists in pursuing what is clearly a deeply flawed national housing model to the detriment of all.”
'Unwieldy and complicated'
In a meeting between Mr Desmond and Mr O'Brien on April 1st, the businessman said the Part V legislation was “unwieldy and complicated”.
He added that foreign investors get the benefit of guaranteed lease returns and that the properties should belong to local authorities.
A minute of that meeting states that Kevin Dillon, one of Mr O'Brien's advisers, “accepted the point that the State was losing out somewhat”.
He said this had occurred “due to the requirement for off-balance sheet accounting, the temporary lifting of which was due to Covid”.
In his December 20th letter to Mr O'Brien, Mr Desmond said that the State should be innovative when the State’s National Treasury Management Agency was “almost being paid to borrow money”.
“You have the opportunity to make home ownership affordable and to make money for the State,” he said.
Mr Desmond said he was a strong advocate of home ownership, but “policy making is your purview, not mine,” he told the Minister.
“What I do understand is finance and what is happening at the moment from an Ireland Inc perspective is insane,” he wrote.