Fears for future delivery of social housing unless funding model changed

The ICSH believes that the traditional capital investment programme for providing social housing is no longer available and has proposed a new mixed funding model as an alternative method of financing to ensure that much needed homes can be provided for the poor and unemployed.

In its pre-Budget submission to the Minister for Finance, the ICSH says that 1,400 units of accommodation can be sourced for €14m p.a. using the following model:

• Housing Associations borrow money from financial institutions to purchase homes on the market.
• The Government will provide an equity stake up-front and enter into a long-term lease agreement with the Housing Association for the units.
• This lease payment will help the housing association repay the mortgage and rent collected from tenants will be used for management and maintenance of the stock.
• Finance borrowed from private institutions by housing associations is not deemed to be exchequer spending for the purpose of Government borrowing and so this is not a constraint on the Government.

Speaking at the AGM of the Irish Council for Social Housing today (Wed), Mr Donal McManus, Executive Director, said: “Housing associations are making a unique offer to Government by proposing that we take on private borrowing to provide vital public services. This is a real radical change in Irish public policy and demonstrates that housing charities are ready to play our part in a national recovery. We recognise the reality that public money is in short supply and are making innovative proposals rather than just seeking to protect existing budgets”. “Investing in social housing provides a real economic and social return to the state through providing employment, utilising vacant homes and taking people off waiting lists” he added.

The ICSH is also recommending a number of other measures in its submission including:

• €150m allocation for the Capital Assistance Scheme which will deliver 1,100 homes for people with disabilities, the homeless and elderly.
• Access to up to 10,000 housing units in the NAMA portfolio.
• Expanded role for the Housing Finance Agency to fund the voluntary housing sector. This would allow housing associations to draw down loans at lower interest rates than in the commercial market.

At the AGM, delegates were told that the total budget for social housing has been reduced by €500m since 2008 and that the Capital Loan and Subsidy Scheme which provides homes for low-income families was being wound down, with a knock-on impact on the number of units being made available to those seeking housing, including the vulnerable and disadvantaged.

Output for housing associations for the first nine months in 2009 was 1,330 units and local authorities delivered 2,703 units, however the pipeline figure was down to 5,117 units which is significantly less than the 7,465 social housing units in progress at the end of 2008. These are the most up to date figures available from the Department of the Environment, Heritage & Local Government.

Ends

For further information contact Donal McManus or Karen Murphy on 01 6618334 .

Notes: AGM, 11am, 20th October 2010 at the Ashling Hotel, Dublin 8.