Some 25 sites acquired for social or affordable housing at a cost of €37 million have since been deemed unsuitable for residential development, according to the Comptroller & Auditor General’s annual report.

This emerged from its scrutiny of the land aggregation scheme, which was set up by the State in 2010 to ease the financial burden of these schemes on local authorities after the economic crash.

The C&AG also found that in the case of 37 sites accepted for transfer under the scheme, the entire original site did not transfer over. In addition, there were “significant delays” in effecting the transfers of many sites and some were not revalued before being approved for the scheme.

Three valuations were subsequently obtained by the Department of the Environment, Community and Local Government and showed that the land was worth just 20 per cent of the amount paid 12 years previously. When financing costs were taken into account, this figure dropped to 15 per cent.

Some interest payments on the scheme are set to continue until 2038, with local authorities drawing down €2.68 million a year based on current rates. The C&AG said 259 sites covering 775 hectares with a loan value (capital and interest in 2010) of €500 million were deemed suitable for inclusion in the scheme.

Up to June 2012, the department had approved the inclusion of 47 sites, with an aggregate area of 173 hectares. It paid €111 million to redeem these loans – €86.6 million in capital cost and €24.5 million in accrued interest.

The terms of the scheme then changed, and the loans were converted into a 25-year mortgage. Another 25 sites were approved on this basis with a value of €53.2 million, including €12 million in interest. The scheme was closed last December. Local authorities funded land purchases for social and affordable housing with loans from the Housing Finance Agency. These were redeemed from the exchequer when the schemes were developed.