I thank the committee for the invitation to address it on behalf of Mr. O'Connor, outgoing chair of Tuath Housing - this is his last act as chair of that association - and Ms Cosgrove, CEO of Oaklee Housing.
The Housing Alliance is a collaboration between six of Ireland’s largest not-for-profit housing bodies. The alliance was formed to promote the delivery of social and affordable housing, to address barriers and challenges to delivery and to promote strong professional approaches to housing management. We collaborate and work in partnership with other stakeholders to build better communities. Collectively, members provide almost 30,000 homes, delivered in partnership with Government at local and national level. While the pandemic has impacted construction activity, the Housing Alliance provided over 3,750 new homes last year. Members currently have plans in place to deliver a further 4,350 homes this year. Development AHBs have long advocated for the introduction of cost rental in Ireland. Three Housing Alliance members have developed the country’s first cost-rental homes and are eager to develop this new sector at scale. In addition, two Housing Alliance members manage PPP bundles providing approximately 1,000 new homes.
AHBs are not-for-profit housing organisations, which are approved by Government to provide and manage social and affordable homes for people in need. The most recent regulation report indicates the sector provides more than 43,000 social and affordable homes. It is a diverse sector, with a small number of larger providers and a large number of smaller providers. Some 80% of AHB homes are provided by just 8% of AHBs and approximately two thirds of all AHB stock is provided by members of the Housing Alliance. All AHBs have a singular mission in common, namely, to provide high-quality, secure and affordable homes for people in need.
This mission is reflected in the legislation governing the sector. By law, all approved housing bodies must provide and-or manage homes to alleviate housing need as their primary purpose; prohibit distribution of profit, surpluses, bonuses or dividends; and they must use all property solely to provide and-or manage homes to alleviate housing need. Providing homes for people who need them is what we do. It is all that we do. All our property must be used to address housing need and for no other purpose.
Housing Alliance members, in common with other AHBs, allocate their tenancies to people on the social housing waiting list. Local authorities have exclusive nomination rights to the social homes we provide. Our tenants do not have the right to buy their homes, meaning that our stock always remains within the social housing sector and is available to meet future housing need. Our tenants pay the same differential rent as local authority tenants. Regardless of the size of the home, our social tenants pay a rent determined by their household income to ensure that rent is always affordable.
Not-for-profit housing bodies are regulated by three statutory regulators, which are the Charities Regulator, the Residential Tenancies Board and the new Approved Housing Bodies Regulatory Authority. This makes AHBs distinctive. No other housing provider in Ireland is subject to this range of statutory standards.
As Mr. Curran mentioned, the target for new build social housing under Housing for All is 47,600 homes. AHBs are to provide 45%, or almost 21,500 of these homes, an average of nearly 4,300 homes per annum. Housing Alliance members have plans in place to deliver 4,350 homes this year. Local authorities are developing housing delivery action plans, including detailing existing land holdings and land acquisition required to deliver the targets. From the Housing Alliance perspective, this is a particularly important aspect. Access to low cost land is one of the critical enabling factors that will allow us to reach the level of output both we and Government desire. The Housing Alliance looks forward to working in partnership with Government at national and local level to realise the goals of Housing for All. Implementation will be challenging and will require the right policy and practice framework to be put in place by Government.
Eight in ten new homes developed by the Housing Alliance use the capital advance leasing facility-payment and availability, CALF-P&A, funding mechanism, which requires members to borrow 100% of the costs. This makes the AHB sector in Ireland unique. No other European state has asked not-for-profit housing bodies to meet such a significant proportion of housing need without any state grant provision, particularly at such an early stage in the sector’s development. Consequently, Housing Alliance members face gearing ratios much higher than, for example, their peers in the UK. These high gearing levels are the primary limiting factor for future housing development by larger AHBs. Members are reaching a point where they will be unable to add further debt to their books to develop new homes.
Analysis conducted by Savills social and affordable housing consultancy concluded that reintroducing an element of capital grant alongside the CALF-P&A model would extend the ability of AHBs to develop new homes in the long term. Accordingly, the Housing Alliance calls for CALF and cost rental equity loan, CREL, schemes to be converted from a loan to a grant in order to release capacity within the sector to deliver more homes. We remain committed to ensuring our housing stock is always available to address housing need. Providing good homes for people who need them is what we do, and it is all we want to do.
Access to serviced land at a low cost is critical to delivering affordable housing. Strategic land management capacity is, in our view, critical to ensuring the supply of social and affordable housing that Ireland needs, both now and in the future. There is a risk that competition for land could exacerbate the growing housing affordability challenge. The role of the Land Development Agency in improving the functioning of the Irish housing market by providing a sustainable supply of land for housing will be important in this regard. There is significant development capacity within the Housing Alliance if we have access to land at an affordable cost. Access to publicly-owned land on which to develop new homes is critical. As our primary funding mechanism is 100% debt financed, the Housing Alliance cannot increase the supply of land by taking on further debt. Grant funding would be required.
An obvious challenge will be ensuring an adequate supply of skilled labour to develop and deliver these homes, alongside retrofitting targets and the need to remedy construction defects. Brexit, Covid and the war in Ukraine have impacted supply chains and increased the cost of materials. In this regard, we are all price takers, and need to recognise that these factors will increase the cost of delivering new homes, notwithstanding due diligence in relation to cost control. A further challenge is achieving the right housing mix. Over half of the social housing waiting list is comprised of single adult households. Likewise members’ experience of cost rental indicates that demand is strongest for smaller homes. In general, these homes are more costly to deliver than larger homes. We need to recognise that delivering the appropriate mix is likely to increase the average cost of delivery. Planning delays can also slow down new supply. The phenomenon of NIMBYism is not unique to Ireland, but in our view is grounded in a misconception about social housing and the people who live in it. Housing Alliance members work hard to manage and maintain homes to a high standard, and to build inclusive, sustainable, and mixed communities. Political leadership at local and national level is important, we believe, in addressing these concerns.
The Housing Alliance has made a significant contribution to increasing the supply of social and affordable housing. Providing high quality, secure, and affordable homes to people who need them is what we do. Our homes will remain available to alleviate housing need as long as there are people in need of social and affordable housing. The Housing Alliance is keen to increase our contribution to addressing Ireland's housing needs, and we have the skills, experience and expertise to do so. To release that potential, we need a stable and sustainable system of funding that addresses the level of debt members now carry, and access to land on which to develop housing at an affordable cost.