Repair and Leasing Scheme (RLS): Further information
From Department of Housing, Local Government and Heritage
Last updated on
From Department of Housing, Local Government and Heritage
Last updated on
Owners of houses or apartments/bedsits that have been vacant for at least one year and which require repairs to bring the property to the required standard for rented properties should contact their local authority and express an interest in the scheme.
The Repair and Leasing Scheme (RLS) is targeted at owners of vacant properties who cannot afford or who do not have access to the funding required to bring those properties up to the standard for rental property.
However, on a pilot basis, the requirement that property owner is unable to fund or to access funding does not apply to the following categories of properties:
A lease payment of 70% is recommended for units that fall within this category.
If a property requires repairs to bring it up to standard for letting, a local authority or approved housing body will pay for this repair work up-front in return for the property being made available for social housing for a period of between 5 and 25 years.
There are two options for property owners who are considering making their properties available to a local authority under RLS – Rental Availability Agreement (RAA) or a direct lease:
Term: 5 to 10 years
Rent: 92% / 95% of current market rate less RLS offset
Tenant Management: Property Owner is the landlord
Maintenance: Property Owner's responsibility
Term: 5 to 25 years
Rent: 80% / 85% of current open market rate less RLS offset; in the case of the pilot scheme 70% of market rents is recommended
Tenant Management: Local authority / AHB is the landlord
Maintenance: Local authority/AHB responsibility
There are a number of requirements in relation to the scheme:
If the property meets these requirements it will be inspected by local authority or Approved Housing Body staff who will identify the works that are required to bring the house up to the required standard.
If the owner wishes to enter into a RAA or a direct lease arrangement to make the property available for social housing with the local authority or Approved Housing Body the following conditions will apply:
the general terms of RAAs which are set at 92% (95% for apartments with a significant service charge) of the current market rental rates in the property location
the general terms of leasing which are set at 80% (85% for apartments with a significant service charge) of the current market rental rates in the property location; or for owners who can access the funding required, 70% of market rent.
The scope and cost of the works required to meet the Standards for Rented Houses Regulations 2019, and the recoupment of the works cost through the RAA/lease payments, will be agreed between the owner and the local authority/ AHB.
Each local authority will set out its own specific requirements for properties.
However, the following will apply in all areas:
Property owners will also be required to prove ownership of the house and tax compliance. It will be the responsibility of the owner to ensure that they consult with their finance/mortgage provider and get consent to enter into a leasing arrangement, if required.
Approved Housing Bodies (AHBs) will be working with local authorities and property owners by both identifying properties and working with property owners to bring the properties up to the required standard.
AHBs may sign lease arrangements with property owners, on behalf of and with the agreement of local authorities. These properties will then be managed by the AHBs on behalf of the local authorities. The local authority is responsible for nominating the tenants.
If the property is deemed to be suitable for social housing and in an area where there is demand for social housing, the local authority or AHB will arrange for a site visit of the property to determine the condition of the property and asses the level of repairs that may be required to bring the property to the required standard.
At the end of the site visit, the local authority or AHB will provide the property owners with a checklist list based on the Standards for Rented Houses.
There are two options for the completion of the necessary works.
A: Property owner arranges a contractor
B: Local authority/AHB engages a contractor
Following the initial site visit by the LA or AHB, the property owner will be responsible for the preparation of a schedule of works and must then arrange for a quote for the works and this must be agreed with the Local authority/AHB before work begins. The works of repair and refurbishment are to be carried out by an approved contractor who is fully tax compliant and has furnished all necessary evidence of same to the LA or AHB as required.
On completion of the works, the property owner should arrange for an invoice from the contractor and present this to the local authority/AHB. The local authority/AHB will arrange for a site visit to the property and if all works have been carried out to the standard required, the local authority/AHB will provide the property owner with the agreed amount to settle the invoice. Proof of payment to the contractor must be provided to the local authority/AHB within 10 working days.
For property owners who may not be in a position to engage a contractor, the repair works may be carried out by, or on behalf of, the local authority/AHB. In advance of the works commencing the property owner will be required to complete a Homeowners Agreement and License which gives authority to the local authority/AHB to conduct works on the property.
The purpose of the initiative is to restore suitable properties to the required standard for rented accommodation. The local authority or AHB will agree with a property owner the specific works and associated costs on a case by case basis having regard to the condition of the property. Not all properties will require significant works to bring them up to standard. However it is recognised that others, especially those that may have been vacant for a longer period, may require more extensive repair. The maximum costs of repairs allowable under the initiative for houses/apartments will be €60,000, including VAT. As the property owner is paying for these repairs through an offset against rental income, it is in the interests of the property owner that repair costs are not excessive.
All properties that are leased under the Social Housing Current Expenditure Programme (SHCEP) must be furnished and include certain appliances. Market rent is typically agreed on the basis of a furnished property. The furnishings and appliances provided within a property are a factor in agreeing the market rent level. The cost of providing the necessary furniture may be included, subject to agreement with the local authority on what furniture is required, appropriate costs and evidence of purchase receipts. In some cases where works are being carried out by a contractor it may be possible to request a "furniture pack” as part of the contract.
The list below is an indicative guide to the furniture that is required:
Rents will be agreed through negotiation with the LA/AHB. The maximum rent to be agreed under the terms of RAAs is 92% of market rent (95% in the case of apartments with a significant service charge); under direct leasing the rate is 70% / 80% (75% / 85% in the case of apartments with a significant service charge) of the current market rent. Rent reviews will usually take place every three or four years, to be agreed with the Local Authority. Rent review periods of less than 36 months should not be considered.
The cost of the repairs shall be offset against the agreed rental payment until the value of the works is repaid. The local authority will agree with the property owner on a case by case basis what the appropriate offset period will be. These arrangements may include scenarios whereby the offset is by way of a rent-free period; a consistent reduction over the duration of the lease or a term which is scaled against the duration of the lease, as set out in the examples in the table below:
This table is for illustrative purposes only:
|Cost of repairs||Duration of lease||Offset to be cleared by|
|€12,000||5 years||Year 5|
|€26,000||10 years||Year 8|
|€35,000||15 years||Year 12|
|€60,000||25 years||Year 20|
The minimum length of the lease is five years. Depending on the value of the repairs, the local authority/AHB may require the lease period to be up to 25 years. The cost of the repairs shall be offset against the agreed rental payment until the value of the works is repaid. The local authority or AHB will agree with the property owner on a case by case basis what the appropriate offset period will be.
It is important that property owners have regard to the level of funding sought, the level of repayments and the duration of the agreement in order to ensure that the lease payments are of a level that will ensure repayment of the original funding over the term. The owner will also need to take any tax liability into account when considering the level of repayment. It may be that shorter term agreements are only suitable in areas with higher levels of market rent or where the cost of repairs is at a lower level.
The owner will retain responsibility for structural insurance, structural maintenance and structural repair. The owner will retain responsibility for the payment of the management of company service charge (usually apartments only), and any other charges for which the property owner is liable, for example Local Property Tax.
In the case of a RAA agreement, the property owner will be the landlord to the tenant and will manage and provide support to their tenants and maintain the property internally for the term of the agreement. Under a lease agreement, these responsibilities will be managed by the local authority or AHB. Properties will be returned to the property owner in good condition at the end of the lease term, subject to normal wear and tear. In some instances the property owner may agree with the local authority to include an ‘option to purchase’ as a condition of the lease. This gives the local authority the option to buy the property during the term of the lease. Both parties must be in agreement to include this condition and the specific terms can be negotiated.
It will be the responsibility of the property owner to ensure they consult with their finance provider and to get consent to enter into a RAA/leasing arrangement, if required.
Where a RAA is used, property owners sign an availability agreement with the local authority. Under the terms of this agreement, the property owner agrees to make the property available for a specific period for nominees of the local authority and to maintain the property in a lettable condition. With RAA, the tenancy agreement will be between the property owner and the nominated tenant. The property owner is the landlord and retains landlord responsibilities.
Under a lease agreement, the property will be offered to the local authority or the AHB as accommodation to households who have been approved by the local authority for housing. Tenants will sign a tenancy agreement with the local authority or AHB. The local authority or AHB is the landlord and retains landlord responsibilities.
In all cases a clawback provision is included to ensure full repayment of the capital funding provided, plus interest, if the property is withdrawn or becomes unavailable before the end of the offset period of the lease. Local authorities may set the interest rate inserted under the clawback clause; however, the rate applied will be no less than 4%.
Under a long term leasing arrangement the property can be sold by the property owner during the term, on the condition that the lease agreement is transferred to the new owner and the local authority or AHB has provided written consent.
Under a direct leasing arrangement, the local authority or AHB will be responsible for internal maintenance and repairs during the term of the direct lease. At the end of the term the property will be returned to the property owner in good repair order and condition, save for fair wear and tear.
At the end of the term, any furniture and appliances that are left in the property will revert to the ownership of the property owner and are not subject to the requirement to have them in the same condition as at the outset of the lease, subject to fair wear and tear.
Under a RAA, the property owner is responsible for internal maintenance and repairs.
Housing for All has the following targets for delivery by RLS: