Housing (Regulation of Approved Housing Bodies) Bill 2019: Discussion

Members and visitors in the Public Gallery are requested to ensure that their mobile phones are turned off completely or switched to flight mode for the duration of the meeting.

I welcome Mr. Paul Lemass, Ms Catherine Rawson and Mr. Rory O'Leary from the Department of Housing, Planning and Local Government, .

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I call Mr. Lemass to make his opening statement.

Mr. Paul Lemass

On behalf of the Department of Housing, Planning and Local Government, I thank the Chairman and members for inviting us to attend today's discussion on the Housing (Regulation of Approved Housing Bodies) Bill 2019. I am assistant secretary for the housing policy, legislation and governance division of the Department. I am joined by Mr. Rory O'Leary and Ms Catherine Rawson from the approved housing body, AHB, policy and regulation unit within this division. I intend to keep my opening remarks brief in order to dedicate as much time as possible to addressing questions members may have on the Bill.

It is fair to say that this Bill has been in development for a significant period, and it is welcome that is has now been advanced to this point. In September 2015, the then Government gave its approval to the drafting of the Bill. Pre-legislative scrutiny was undertaken in December 2015 and the report of the committee was laid before the Oireachtas in February 2016. The Bill was published in July this year and Second Stage was completed in the Dáil on 25 September.

The Bill aims to safeguard public and private investment in the social housing provision sector, to enable increased supply from the voluntary and co-operative housing sector and to ensure that the assets built through investments are managed sustainably. The statutory regulatory framework will provide further assurances to investors, tenants, the Government and to the sector itself that social housing providers operate in a well regulated and stable environment. The Bill intends to establish an independent regulator to oversee the effective governance, financial management and performance of AHBs. The regulator will be responsible for approving and registering housing bodies and the setting of regulatory standards. The Bill provides for powers to the regulator in respect of the undertaking of inquiries, investigations and assessments. The regulator will also have enforcement powers.

Briefly, some of the functions of the regulator will be to establish and maintain a register of AHBs; prepare draft standards for approval by the Minister, publish the approved standards, and monitor and assess compliance by AHBs with the approved standards and with the legislation more generally; carry out investigations in accordance with the Bill; to protect the assets of AHBs and in certain circumstances to cancel their registration in accordance with Part 6. where appropriate; to encourage and facilitate the better governance, administration and management, including corporate governance and financial management, of AHBs by the provision of information and advice; with a view to promoting awareness and understanding, to make available to the public information about the operation of the legislative arrangements being introduced under the Bill; to collect information concerning AHBs for the purposes of the performance of the functions conferred on it by or under this Bill; and to publish such information (including statistical information) concerning AHBs as appropriate.

A limited number of Government amendments to the Bill are being considered. These amendments are broadly technical in nature and relate to the substance of the Bill. I hope this provides a helpful summary and we are happy to take questions and provide any additional clarification. I thank the committee.

My questions are about the standard setting function that is proposed and some other issues.

I was on the board of the Irish Council for Social Housing, ICSH, for many years, and a very large number of its membership and approved housing bodies are very small-scale housing providers. They are local providers of social housing responding very flexibly to local need, for example, to older people or people with disabilities. The boards of those bodies are largely made up of volunteers. Can we be reassured that the standards will reflect the scale of the approved housing body and be duly appropriate and proportionate to these very small-scale housing bodies, which we want to encourage, because they are extremely responsive to local need and we would want to see them flourishing as well as being compliant and so on?

Will regulation help or hinder approved housing bodies' ability to respond to the housing crisis where, according to the official figures, 10,000 people are in emergency accommodation, 3,840 of whom are children, and 72,000 households are on local authority waiting lists? I would like to hear from Mr. Lemass on the flexibility being balanced with the regulatory requirements, particularly for small bodies. Will there be fees for the regulation and, if they are going to be fees, will they be proportionate to the size of the approved housing body? Will the standards be reflective of the type of housing? There is a difference between general needs and special needs housing. What are Mr. Lemass's thoughts on how to make those distinctions?

I suppose one of the questions I find very concerning is around the protections tenants will have if the regulator refuses to register or cancels the registration of an approved housing body. Who in law will be that tenant's landlord? That is an important question and clarification is needed. Are the Minister's powers relating to the proposed regulator, as proposed in the Bill, in line with the powers of other regulators, for example, HIQA, or are they over and above what is envisaged for other regulators in the area? Will the proposed regulator have any impact on the classification, the reclassification or the re-reclassification of approved housing bodies being on balance sheet, or attempts to change this?

The proposed regulation of approved housing bodies is on top of an existing regulatory compliance regime for approved housing bodies, which is very demanding, particularly for small organisations. These other regulatory regimes include those of the Residential Tenancies Board and the Charity Regulator and local authority requirements. Today, for example, we saw a new circular in regard to the capital assistance scheme, CAS, the Housing Finance Agency, Companies House and HIQA. Will the requirements of the approved housing body be mindful of these other requirements and pressures? Will there be any functions for the regulator in streamlining all the regulatory requirements for approved housing bodies, because that is an awful lot of regulation? I am very supportive of regulation, but it needs to be proportionate and manageable, particularly in the case of small bodies, and they need to be able to continue to operate and flourish.

What is the proposed timescale for the approved housing body regulation coming on stream? Are there any things that approved housing bodies, small or large, can be doing now to get ready for regulation so that they are using the time to get their houses in order?

Thank you very much, Senator. I call Mr. Lemass.

Mr. Paul Lemass

I thank Senator Kelleher for those questions. I will try to take them as much as possible in the order that they were asked but there might be a bit of an overlap. On the question of standards, the three broad areas of standards that are currently in operation in the voluntary system are a governance standard, a financial standard and a performance standard, and the provisions of the Bill provide for the regulator to adopt new standards, which frankly I would expect to be broadly in line. The fact that we have had a voluntary system for five years means that there would be a very gradual transition from where we are now to a statutory system.

The way we deal with the individual AHBs is that they are classified according to three tiers, where tier three is the largest 19, tier two is the mid-ranking ones and tier one is the smaller ones. At present, the compliance requirements of the voluntary system are graduated. The more money, the more growth plans one has, the more the compliance burden is on one. The Bill provides that one can treat different categories or groupings in a similar manner, so there is an intention that smaller AHBs will not have the same burden as the larger ones in terms of the performance, financial and governance standards.

On the ability to respond, it is absolutely our intention that this regulation will enhance the sector's ability to respond. The experience would show that well-regulated sectors attract investment more easily and there is generally a higher level of public confidence when a sector is well regulated. The sector is already responding very well to the housing challenge, and the expectation is that it will do more and more.

As regards the provision of fees, we have one or two amendments in development around section 35(5), where we would propose, subject to the Minister's approval, to delete the provision for an annual registration fee that is contained therein. There are other provisions for fees. Part of them are around where somebody requests a report and where there might be a cost associated with producing a report and putting a fee on that.

So there will be no registration fees.

Mr. Paul Lemass

The proposal is to delete section 35(5). There would be a general provision that they could charge fees, but it is the kind of thing we put in the Residential Tenancies (Amendment) Act 2019 last year as well. It is just a safety net in the event of fees. There is a provision for funding from the Government for the regulator, so we are satisfied that the operation is funded adequately.

On standards regarding types of housing, I would have to come back to Senator Kelleher on the precise standards for different types of housing, including housing for older people. I would imagine that much of that is covered by building standards more than necessarily by the regulation of AHBs, but I will undertake to come back to Senator Kelleher on that.

On the question of tenant protections if the regulator cancels an AHB, there is a provision in the legislation that the regulator would seek to transfer assets, ideally by consent, if an AHB feels that it wants to secure its legacy through transfer, and I know the ICSH has been active with certain AHBs on this. Consent would be an ideal way where someone recognises their time in this area has come to an end and they want to transfer. If there is a concern regarding the performance of an AHB, and the regulator feels that it is necessary to transfer assets, there is an obligation to go through High Court procedures to make that happen.

Could we be reassured that they will stay within the approved housing bodies rather than transferred out to say, for example, a private provider?

Mr. Paul Lemass

The provision in the Bill is either for another registered approved housing body or a housing authority, which would be a local authority.

Mr. Paul Lemass

Those are the two that are provided for.

On the question of other regulators, we accept that it is a crowded regulatory space, and what it is going to require is memoranda of understanding, which are also provided for in the Bill, to enable the AHB regulator work with HIQA, the RTB and others to make sure that they are not stepping over each other's areas. By way of example, the RTB is very clear what areas of tenancy-landlord relationships are governed by the RTB legislation, and the AHB regulator would be very clear that it did not have a role in that. Memoranda of understanding would be the way to proceed, and that is the clear expectation and it is provided for in the Bill.

On the question of the impact of this on reclassification, to be clear, this Bill is about the regulation to protect tenancies and to protect assets. Reclassification is a separate accounting exercise. However, this issue has been discussed at length in the interim regulatory committee, and the view of that committee, of which I am a member, is that there is nothing in this which would hinder reclassification, and indeed, it would probably strengthen reclassification to be able to say that we have a well-regulated sector on a statutory basis.

The timescale for legislation is more in the committee's hands than in ours, but we would be very keen to get this legislation adopted as quickly as possible. It is in gestation now for four or five years. We would hope to get this through before Christmas, but we are in the committee's hands on that.

On how to prepare, in general AHBs have been very good. They have engaged with the voluntary regulator, and they have worked to comply with the standards. I think we only have 11 AHBs which are working through an engagement process, and all of the others that have registered with the regulator are in a satisfactory assessment. Obviously, for those which have not registered with the regulator, we prefer if they registered, but once the legislation is enacted, they are all deemed to be registered - all 500 plus of them and not just the ones that are co-operating with the voluntary code.

Thank you, Mr. Lemass. I call Deputy O'Brien.

On his last point, is Mr. Lemass saying the 500 plus will all be deemed registered on the date, whether they have actually engaged or not? I have a more general question. I have heard before at a committee that there is a breakdown of the AHBs. Mr. Lemass mentioned, in response to Senator Kelleher, a type of tiered regulation, along the lines of the Financial Regulator, where insurance brokers have a tiered regulation based on their size. Has Mr. Lemass looked at that? Is he giving a different category of approval, for want of a better phrase? We have AHBs which do not have properties. They are not paper AHBs but how are we going to deal with them?

I would support Mr. Lemass in trying to bring this legislation in as promptly as possible. The timeframe he gave was before Christmas, and I welcome that. When is he looking to publish the Government amendments and what type of data is he looking at in terms of bringing it to Committee Stage? Mr. Lemass might have a look at that.

I want to ask about the appointment of the board. The board of members will consist of between five and 11 members. I have looked through the explanatory memorandum. In regard to the type of people who will be appointed, it says they are all ministerial appointees. From what sectors will they be drawn? I am particularly thinking of tenant advocates or tenants themselves, or a tenant representative. Has that been thought about?

I refer to the disability sector, which is crucially important. The committee has heard about the difficulties people with disabilities have in accessing housing and the longer waiting times. There has been a good initiative at local authority level in relation to the housing disability committees - the implementation committees in local authorities. Not all of them have yet met. We asked for an update on that to see how the local authorities are getting on. Maybe Mr. Lemass could enlighten us on the thinking in the Department on which sectors would form part of that board to make sure it is representative of the sector and those who are living in approved housing bodies. That is the main area.

I refer to the inspection, appointing inspectors, standards and that type of thing. Does Mr. Lemass see any type of interaction with the RTB or the local authorities? There may be an issue with standards and the regulator will have the right to appoint inspectors. Who will those inspectors be? Would Mr. Lemass see that as being the local authorities or what is the view there?

A very basic question is on whether we have gone down the line in relation to resourcing. We know the number of board members. The regulator will appoint the chief executive. What type of resources will the office have staff-wise? I know it will be organic and will grow with the sector, but does Mr. Lemass have an initial plan and an initial cost? With the establishment of the office and as it moves into this area, do we have an idea of the cost of this?

I assume the regulator would fall under this committee and that there would be no restrictions vis-à-vis parliamentary questions, freedom of information, FOI, and all those types of things should Deputies and Senators wish to engage because AHBs are becoming a larger part of our housing sector and will continue to grow.

Thank you very much, Deputy O'Brien. I will go back to Mr. Lemass unless he wants to pass over to a colleague.

Mr. Paul Lemass

I thank the Deputy. I will try to take those questions in the order they were asked. The first question was on the different categories of approval. As things stand in the voluntary code, the assessment is satisfactory or still in engagement or unsatisfactory. I think there is an unsatisfactory with a caveat of some kind of an improvement plan. It will fall to the regulator to set up what the new assessment code is, but my expectation would be that there will not be a different marking, shall we say, for tiers one, two and three, if that is what they opt for. I would be surprised if they did not go for something similar, so one will either be satisfactory or not, regardless of whether one is tier one, two or three or whether one has no properties or lots of properties. I would expect that that would be the case, but obviously the first thing the regulator will need to do is adopt standards, codes and policies in areas like that. That would be the expectation.

As regards Government amendments, we have requested that we come back for Committee Stage on 11 November, and obviously today's exercise will inform that and the committee's decisions thereafter. That is the kind of timeline, and we would aim to get amendments out reasonably well in advance of that. I am not sure if it will be next week. It may be the following week, a week in advance.

They are only technical amendments.

Mr. Paul Lemass

Yes. I am not expecting a huge range of amendments from the Government side.

As regards a board of five to 11 members and the Public Appointments Service, PAS, what is provided for is that the board will be competency based. Members should have experience and the relevant expertise. I could foresee a situation where somebody has experience in the disability sector and in the provision of housing and would have expertise which would be relevant. However, the State's appointment system will be used to fill the membership of the regulator.

The Department is not proposing to set down the types of individuals and types of experience it wants to have on the board. I am particularly focused on the disability piece. Mr. Lemass might have a look at that because I firmly believe that we need to have someone from that sector and a tenant advocate, which is an absolute must. Could I get that commitment? I know it will be ministerial appointees. I do not necessarily want to have to bring in an amendment as it might be difficult if we are going to become prescriptive - I understand that. I do not want to do that and I strongly urge that those people, in particular, be included as well as others. I would be a bit worried if it was just left at appointing between five and 11 people.

Mr. Paul Lemass

I would expect that in general, there are certain requirements around the kinds of expertise required, but we will undertake to raise that with the Minister with a view to pursuing it. Deputy O'Brien mentioned local authority disability committees as an aside, and that they had not all met. I will undertake to follow that up, because we had a meeting with the national steering group not so long ago. I had understood that there was quite a good level of engagement.

There is but my understanding is, and I know it is not pertinent to this necessarily, that there are some that still have not met.

Mr. Paul Lemass

I will undertake to follow up on that.

On the question of inspections, there is a provision that inspection reports would be shared, as appropriate. It is not that they would be shared unnecessarily, but, for example, if it was felt that one of the other agencies needed to know what was in the contents of an inspection report, they would share that report, and that is provided for. As regards the inspectors and where they come from, it would be similar to the RTA legislation, where some might have come from within the staff of the organisation and where it may have been necessary to recruit some. I would not have seen them coming from the local authority unless there was a secondment or something. It would be a recruitment exercise.

On the resources of the office, the office currently has in the order of 16 staff. Its fund is voted through the Housing Agency, so it is provided for through that. The regulator is satisfied that she has sufficient funding and headroom to grow in the immediate term. It is in quite good shape in that regard.

The organisation would be subject to FOI in the normal way. Likewise with parliamentary questions tabled, we would answer them. However, there is a provision where Members of the Oireachtas can raise queries directly with individual State bodies, and I would expect that the AHB regulator would fall under that. I think a direct line for those kinds of issues could be provided. The regulator would appear before this committee in the normal manner.

I thank Mr. Lemass and Deputy O'Brien. I call Deputy Ó Broin.

I thank Mr. Lemass for the information so far. I am interested to know more of the thinking behind how the Bill is framed at the moment. I suggest that Mr. Lemass might think through some of the issues between now and when amendments are tabled because I am not so sure technical amendments will deal with some of them.

We talked the last time about section 38 and in particular the issues around tenancy management and nominations and allocations. When we met the last time, I asked whether there was any kind of regulatory conflict or overlap between the Residential Tenancies Board and the AHB regulator. On the basis of Mr. Lemass's answers, I am satisfied that there is not; they are quite distinct.

I am concerned, however, that the Department and the local authorities currently take that responsibility in terms of ensuring that Government policy is properly adhered to. I am interested to hear more about the thinking behind giving those functions to the regulator and how that relates to the roles as they are currently constituted by the Department and by local authorities in their engagement with the AHBs.

The second point is the really big one and it relates to section 54. I urge committee members to think about this one quite carefully. I hear what Mr. Lemass said about the transfer of dwellings being voluntary. As Senator Kelleher outlined, however, we have a very large number of very small tier 1 AHBs, often involving only a handful of properties. Many of those have voluntary boards and over the next ten to 20 years it is highly likely that they will start to drift away due to age of members and so on. One could have a situation where significant numbers of properties fall under the radar with the regulator at a particular point. Who will look after those properties in the future?

This also gives rise to the question of a proper resolution process with a proper fund. I raised this matter previously. When certain banking legislation was being debated during the lifetime of the previous Oireachtas, an issue arose in the context of the resolution of credit unions that were in difficulties. There is quite an elaborate process in the legislation to work out what one does with an entity and its assets when its board is no longer in a position to adequately manage them. This also includes a fund, because if we are to transfer properties - either to another AHB or a local authority - who will cover the costs, what happens if there is significant cyclical maintenance that needs to be done and what happens if there is no sinking fund? These are not small matters. I say this because in my constituency we had a significant case where relatively new properties had to be handed back to the local authority. This was through no fault of the AHB that was managing them, it was more to do with building control failures. It was a significant volume of units. The remediation of those properties has led to a huge increased cost to the local authority, which is not getting any extra money. This has already happened. While I am not opposed to this aspect of the Bill, I am of the view that the process needs to be there and that we need a proper resolution and a processing fund. I am interested to hear our guests' thoughts on that.

A more general comment relates to section 47. It is about the kind of language that sets the bar against which the regulator can carry out investigations and so on. The kind of language to which I refer is "Where the Regulator considers it is necessary". In other legislation, it is usually where the regulator has "reasonable suspicion". This is important because we are talking about the reputation of not-for-profit organisations. The Department needs to look at that language. I am not in any way trying to prevent the regulator from going in. If the regulator has suspicions, then it should go in quickly. However, phrases such as "considers it necessary" or "is of the opinion" set a much lower bar. I urge the Department to consider that or to explain why it has chosen this wording.

Section 48 refers to interim reports. If I read the Bill correctly, the regulator can publish an interim report without an AHB having been given a copy of that report or an opportunity to respond. An interim report could have a series of serious issues around governance, management or so on. It could affect the reputation of the AHB or the managers. Again, I am not trying to stifle the publication of reports but if a report is to be published the individuals and the organisation to whom it refers should have sight of the report and an opportunity to respond. Correct me if I am wrong, but that is not the case with these proposed interim reports.

I am very glad to hear about the fees, and I hope the Minister accepts them. It is clear that a person should pay a fee for a service. For example, fees for reports are fine, and I welcome that.

I have two general questions. I hear what Mr. Lemass has said about the reclassification. Has there been any engagement, even an informal engagement, with the Central Statistics Office, CSO, or is such an engagement even permissible? While the group that Mr. Lemass sits on might have a view, ultimately the CSO has the expertise in this area. I am interested to know whether or not there was any engagement with the CSO. In the past, the Government has tried to get things off the balance sheet or off the books, and that failed because it is a complex process. Perhaps our guests could offer some reassurance in respect of that matter.

I also wish to follow up on a point made by Deputy Darragh O'Brien. I would like the legislation to be very explicit that all appointments for the regulator and the board are made through the Public Appointments Service process. The legislation does not currently say this. During a previous appearance before the committee, Mr. Lemass stated that it would be the intention to do that in any event. I would much prefer it to be in the legislation, because then a Minister does not have the option of bypassing the Public Appointments Service. I strongly support Deputy Darragh O'Brien in this regard.

The legislation could go a little bit further. Consider, for example, the Construction Instruction Register Ireland. The heads of the Bill, if not the Bill, stipulate different categories of expertise the Government would like to see on the board. Stipulating categories of expertise could be a very valuable aspect, disability being an obvious one and tenants advocates being another. Without wanting to give the Department too much work - I want to see this legislation through as quickly as possible - that kind of approach could make the board much more robust, which would serve everybody better.

Mr. Paul Lemass

I thank the Deputy. Is he satisfied with the previous answers in respect of section 38 tenancy management and regulatory conflict?

Yes, in terms of the RTB but not so much with the Department and the local authorities. That is the question.

Mr. Paul Lemass

Each fund will set out its operation and some funds have stipulations regarding allocations and nominations. That continues to apply. On the operation of the AHB, standards will be set by the regulator for governance, financial management and performance management. Those standards will also continue to apply. The broader social housing policy framework, such as differential rent, will also continue to apply. There are a range of rents charged by AHBs but the differential rents schemes will continue to be as they are from the parent local authority. I am not sure how much more I can say about that.

Let me rephrase the question. This is quite important. The Government sets the policy for legislation. The local authorities are the direct contact with the AHBs in terms of the schemes and so on, but the regulator will have a function around tenancy management, nominations and allocations. What will the regulator do with regard to these functions? For example, if there is an AHB in any of our constituencies that is not abiding by some aspect of Government policy, we can go to the local authority manager or the director of housing, who will then respond. With this proposal, will we have to go to the regulator or will the local authority have to go to the regulator? I am not objecting to it, I am just trying to understand what function the Department is giving to the regulator in the context of tenancy management, allocations and nominations. What is the regulator going to do that is different to what a local authority currently does? Does Mr. Lemass understand what I am asking?

Mr. Paul Lemass

With the AHBs, the regulator would set policies and procedures through the performance management standard. An example from the current performance management standard states:

AHBs should aim to attain the highest levels of tenant occupancy and in turn avoid loss of rental income to the AHB. Close links and nomination agreements with Local Authorities can improve void turnaround times and AHBs are expected to take an outcome-focused approach to managing voids, allocations and lettings.

This is the kind of detail that one would expect to see in the performance standard. Is that the area the Deputy wanted to look at?

As I said to Mr. Lemass on the previous occasion, it would be useful if members were given a briefing note on that matter. Mr. Lemass has just stated that the regulator would set policies. It is my understanding that the Government sets policies. The regulator's job-----

Mr. Paul Lemass

Okay, that is that point.

I am just trying to be clear on-----

Mr. Paul Lemass

The simplest thing is to get a briefing note on this.

For the committee.

Mr. Paul Lemass

Yes.

On the questions of the transfer of dwellings, that there be a larger number of small ones, and the increasing numbers coming through the regulator, the first point is that if a small AHB wants to continue in existence, that is no problem whatsoever. I would not want any suggestion to the contrary. If a smaller AHB feels that it can continue in operation and in compliance with the requirements of the regulation, that would be no problem.

I spoke at the ICSH conference last week and met one or two people afterwards who were in that position. They insisted that they wanted to keep going as they were and said it was absolutely not a problem.

As regards those who may decide that they would rather identify their assets available and surrender the tenancies to a larger AHB or a local authority, that is absolutely provided for within the regulation. The funding is not something we would like to get into in the regulation. It is not quite comparable to the credit union situation. There is a whole range of different funding schemes between the capital advance leasing facility, CALF, the CAS and the CLSS. They have maintenance funds and streams with them, payment on availability and such like. There is a funding stream there to ensure that a property is maintained as well as the differential rent that would be paid for the property also.

This is really important. There is no threat to small AHBs in this but what if a situation arises where, in the view of the regulator, an AHB is no longer able to operate, for example if the stock is not being maintained and there are issues? These are real things.

There is a vote in the Dáil. We will conclude on this question and then suspend.

It is in respect of those cases where the regulator takes a view that there is a problem with an AHB and certain of its stock; the funds that are available may not cover the cost of that. I only say this because I had a live case in my own constituency a number of years ago of approximately 100 units. I am not saying it should be as complex as the credit unions but a resolution process and a fund have to be part of it, although maybe not in the legislation.

Mr. Paul Lemass

In truth-----

I am very sorry to cut across Mr. Lemass. To keep the show on the road, it might be best if we nominate one of the Senators to take the Chair briefly.

We can follow the answers in the Official Report.

Yes, if that would suit everybody. I propose that Senator Boyhan take the Chair. Is that agreed? Agreed.

I am happy to do it.

Senator Victor Boyhan took the Chair.

I am next on the list to ask a question in any event. I hope it will not take too long. I welcome Mr. Lemass and thank him for his concise presentation.

I want to set the context for my questions. In September, we heard that more than €2 billion in Government funding had been given to unregulated bodies to provide for social housing over the past ten years. That money went to a variety of co-operatives, associations, charities and other non-profit groups clustered under the heading of AHBs. That was stated at our previous engagement here. Despite the great sums of money and substantial contribution of the AHBs to social housing provision, providing 40% of all new social housing in the country last year, they still have no statutory basis for their operation. If Mr. Lemass wants to dispute that, I am happy to take it on board but those are the figures.

I welcome the legislation; it is really important. It is long overdue and we have had a lot of discussion about it. Between 2009 and 2018, the AHBs received €1.745 billion in funding directly from the Department of Housing, Planning and Local Government or channelled through the local authorities. To date this year, they have received €260 million in capital funding and €210 million for current spending. Those are the figures. I have researched and checked them with the Department. I acknowledge the vastness of this thing. It is hard to believe that these AHBs to date have had no strong regulation. The legislation is therefore welcome. Mr. Lemass might pass on a personal view of mine to the effect that the Minister might consider initiating this legislation in the Seanad if possible. It is open to the Minister. I understand that people are keen to get on with the legislation. Any legislation can be initiated in either House. The Seanad is not sitting today but I am sure it would welcome the opportunity. I have spoken to the Minister about initiating other legislation in the Seanad and he has said he is mindful of and open to the idea, subject to timescales and other considerations within his Department. I ask Mr. Lemass to bring my request to the Minister's attention that he might consider it. It is ultimately a matter for the Minister and I fully respect that.

What happens in the case of insolvency or examinership in the context of an AHB? We know there have been some complications in examinership and insolvency issues regarding AHBs in the past. This is not a new scenario. Mr. Lemass will be familiar with it. Could he outline the grounds on which the regulator can cancel the registration of an AHB? There are going to be knock-on effects of that. Senator Kelleher touched on the issue of what happens to dwellings where an AHB registration is cancelled. There are significant concerns for residents and many implications for ongoing management. There may be reluctance on the part of other AHBs or local authorities to take on such dwellings, particularly if there is a complex legal matter involved or if there are major issues around the governance of the outgoing AHB. Not everyone will be queueing up to take these on. There are some serious concerns about AHBs.

There is clearly a need for a protocol between AHBs and the Department and, more importantly, the local authorities, which are the statutory housing authorities. I understand a draft protocol was being worked on and that some of the bigger AHBs were keen to see one. Inevitably, there are conflicts and in the past there was a lot of unnecessary and uncalled for competition and comparison regarding the delivery of AHBs versus that of local authorities, how they raise funding and the different mechanisms used. There has been a great deal of concern on the part of elected members in particular about feeling isolated or not fully versed in what AHBs are doing within their local authority areas. That is not to say that local authorities should have a veto over AHB work but there needs to be good working relationships between the housing authority, the AHBs and the general sector dealing with the provision of housing under the AHB system. I understand that the heads of some sort of protocol were drawn up. Mr. Lemass may not know about it but he might undertake to look into it and bring back a memo or report to the committee.

Mr. Paul Lemass

I thank the Acting Chairman. The first thing to say is that we would see that the sector is regulated at the moment but it is done on a voluntary basis. We would consider that the voluntary regulation has been very effective. It has established standards for finance, governance and performance and it has withheld approval from that assessment process for a range of AHBs. That has directly led to improved performance and compliance by AHBs. I would argue strongly that the voluntary system has worked quite well at getting AHBs aware of the need to be compliant and of, frankly, upping their game in order that the transition to a statutory system will not be such a leap. In many ways, we can treat it as a virtue that, having had this Bill rocking around for four or five years, we have a voluntary scheme in place that has upped the game of AHBs consistently over the past four years to the point that only 11 are still in engagement and awaiting a satisfactory outcome out of the 260 or so that are registered under the voluntary code. It is important to recognise that it is not an unregulated sector.

The regulations are not on a statutory basis, but there is a voluntary system that is working very well. That voluntary system also informs funding through a circular from the Department which talks about the need for a satisfactory assessment. As such, there is a linkage between funding and compliance with the voluntary code.

I accept it is of a voluntary nature-----

Mr. Paul Lemass

It is.

In no other area of Government are such vast amounts of money disbursed on the basis of voluntary regulation. It is up to the Department to provide an answer.

Mr. Paul Lemass

The increased funding obviously increases the need for statute-based legislation.

Mr. Paul Lemass

That is why we are here. That is why we hope to get the Bill through the Dáil this year. The Bill is already on Second Stage. However, I will inform the Minister that he should consider initiating in the Seanad because we have other legislation coming through.

Mr. Paul Lemass

On the question of examinership, the Bill provides that the regulator must be notified when an AHB is brought into the examinership process. Once an AHB is in this process, my sense is that it should be given time to run its course. This would inform any further action on the part of the regulator regarding the financial, governance and performance standards. Frankly, I would be surprised if the regulator was not aware of the financial challenges facing an AHB before it reached the stage of examinership. There is a quite strong level of engagement with AHBs.

Regarding dwellings whose registration is cancelled, the ideal scenario would be a voluntary transition. The goal of the regulation is to protect the tenants and the assets. Ideally, there will be a voluntary transition in which an AHB recognises that for whatever reason its board is unable to comply and wants to move on, for example, if it is aged. There have been voluntary transitions from AHBs, transfers of assets and mergers of AHBs. It has happened, although perhaps not at the pace we would like. Obviously, this would not happen overnight and would be planned in advance. Given its understanding of the sector, part of the regulator's role would be to identify alternative AHBs, or possibly a local authority, which would take on the units. That would have to be done on a case-by-case basis, as would the consideration of the condition of the units.

We will undertake to check what protocol is in place or is being developed for engagement between housing authorities and AHBs. This is a broader policy matter and is distinct from the regulation of AHBs, which is the specific focus of this legislation. However, we will undertake to check it out.

I thank Mr. Lemass for his replies. I also wish to thank him for the question-and-answer document that was circulated. I had a very brief look at it before I came in here. It is exceptionally helpful. I wish to thank those involved in its preparation. It is really helpful and will be of great assistance to others who want to understand the system.

I have a very brief question. It was prompted by a question posed by Deputy Ó Broin. It concerns the allocations policy and the rule of the regulator in overseeing it. Obviously, we want flexibility, particularly for the small housing providers, but we also want strong, clear and transparent governance rules. As Senator Boyhan outlined, considerable public funds are allocated to AHBs for the provision of valuable assets, that is, houses. What measures are in place to ensure that voluntary boards are making allocations according to the overall housing policies of the relevant local authorities? What measures ensure that members of voluntary boards do not allocate housing to their cousins, to people they know or for other improper reasons? How will the regulator ensure that the allocation of the valuable asset that is a home is transparent, fair and in line with local authorities' priorities rather than local relationships or connections?

Mr. Paul Lemass

There are two sides to the question of allocations and nominations. The allocations policy is tied to the funding instrument in many respects. There is a broader allocations policy, which a local authority will adopt, and there is a social housing list from which eligible candidates will be taken. The funding scheme determines the extent, but my understanding is that nearly 100% of candidates come from the local authority housing list. Perhaps there are a few exceptions in the cases of individual funds, of which I am not aware.

The regulator would set the policies that have to be complied with. We referred to a regulation about managing voids and not leaving properties empty. The individual fund would then set down obligations about reporting on that. We would expect that by the terms of a contract between a local authority and an AHB, reports would be issued to the local authority.

Is that something the regulator would examine?

Mr. Paul Lemass

The regulator would want to know that the policies were in place.

Would it check that they were being adhered to?

Mr. Paul Lemass

There is a limit to how much detail the regulator could get into but in the context of performance management, if the regulatory saw a high level of voids and a large housing list, there would certainly be a concern.

What about misallocation? For example, what if it transpired that people who were known to the committee members were getting houses? How would a regulator be satisfied that the allocations were in line with the expectations of the local authority funding the AHB and its policy on allocations to meet social housing need? What information would a regulator need to be assured that everything was in order, not just voids but nominations and allocations as well?

Mr. Paul Lemass

The allocations policy is adopted by the local authority itself. The expectation is that when a local authority allocates tenants to an approved housing body, it is in control of that process. The nominations of individuals to this or that house will sit with the AHB. The AHBs manage their own stock. However, the upfront allocation of social housing support would come through the local authority.

I will finish on this. If there were local concerns around nominations and allocations, recourse would be to the local authority rather than to the regulator. The regulator would not have a role in that regard. Is that right?

Mr. Paul Lemass

That is my understanding. That would pertain to a contractual arrangement under which the funds will be drawn down.

I, too, have concerns about regulations. We can have as many regulations as we want, but they do not work unless they are implemented fully. The biggest issue I see for local authorities is staffing. The timeframe for applying to go on the local authority housing list is so long that I am currently working on a Bill to bring it down to three weeks. I have been informed that the biggest issue is staffing. It could become a serious issue. That is unacceptable. Regulation and its effects are very important. I deal with a lot of AHBs. They are registered charities. As such, they are subject to regulations. The local authorities seems to be taking this road. They are not building any more. I have a massive grievance with local authorities for that reason. For the last 100 years we built local authority houses. We are not building on the same scale at all. That is a problem. I know of many AHBs that have done great work. Their building has been absolutely excellent, second to none. I can only praise them for their work. They work with the local authorities. Senator Kelleher asked a related question. I find from working with AHBs that most of their work is done with the local authority. When they are actually allocating the houses, they give every power to the local authority. That needs to be examined.

There are so many staffing issues facing local authorities. We have great staff, by the way. I am not criticising the staff that are there. However, local authorities have become so understaffed that it has become a huge problem. This could cause problems for local authorities. We must achieve a balance. If this is done right, the local authorities get their share of it while working with the Department. Unless we can achieve that balance, I will be quite concerned.

Do the witnesses believe that these regulations will have a better impact on people's lives and on the local authorities? The AHBs state that they have a discretion of 15% on allocations that they can work on with local authorities. I have never seen them use their 15%. All the local authorities work with AHBs. With regard to, for example, medical grounds or cases where we would be looking for housing, will they be given more of an input into deciding, which is a big issue for me, or will the Department say that they have to go 100% with local authorities? At present, there is a discretion of 15%, whether it is Tuath Housing Association, Clúid Housing or Respond Housing.

Like all members, I work with local authorities and in my clinics I deal with housing. The new data protection has become a major issue when one is making representations for people to local authorities and even to an AHB about interviews or whatever. One cannot get any information back because the councils say they no longer give names. That is becoming a problem. There must be a balance. I can understand that one must have a consent form from the person for whom one has made the representations. One gets the person to sign a form giving his or her consent to have representations made on his or her behalf. There are many issues that have fallen through the cracks in the system. Unless we start to put some sort of system in place for regulation, there are many inefficiencies.

Deputy Noel Rock resumed the Chair.

Mr. Paul Lemass

The Senator spoke a great deal about staffing in her first question, whether it is local authority staff or AHB staff. My colleagues might confirm it, but I believe the AHBs in the voluntary code have approximately 10,000 staff. There are many staff in the AHBs. They might not all be involved in the provision of social housing. In many cases, they have a broader remit. However, there are a number of staff involved with the AHBs. If there is a particular local authority where the Senator believes there is a staffing request that has not received sanction from the Department, we could undertake to look at that and see what staffing is being withheld. When it receives a request for sanction for staff, the Department's role is to either approve or withhold that request. In general, if it is part of a workforce plan that is already provided for and it is just a replacement of somebody who has retired, there is no necessity to come to the Department.

I have introduced a Bill and I have been told by my local authority, which works very hard, that it does not think the Bill will work because it does not have the staff to get people on the housing list more quickly. I am not blaming the council, but that is unacceptable. I will ask Mr. Lemass to check that for me. Staffing is a huge issue in my local authority in Carlow and I believe it is the same for other local authorities.

Mr. Paul Lemass

We will check to see if there is any request for sanction outstanding for Carlow and perhaps get a sense of what sanctions have been given in the last while. Obviously, when sanction is given, somebody has to be recruited and that takes time. There might be stuff working through the process on that.

On the question of the increased use of AHBs, frankly, Rebuilding Ireland calls out the role of AHBs. It is welcome that AHBs are stepping up and exceeding targets. We welcome them. The fact that this regulation is going forward is a reflection of the fact that the Government takes the role of AHBs very seriously and wants them to be a permanent feature on the housing landscape.

I welcome that. Many of the AHBs construct beautiful houses and I have worked with people in the constituency in which I live who have done excellent work, but I believe there is a niche here. We need to be considering small two-bedroom bungalows for people with disabilities. That is not happening in that sector. They are not in the bigger and fast builds. That is something the Department should address. We need to build more bungalows and given that people are living longer we must look at accommodation that is more fit for purpose. In my area we must look at these issues, but that is not being addressed. Local authorities always built two-bedroom and three-bedroom bungalows, whereas it is not as easy to get them through the AHBs. Do the local authorities need to look at that? It is a major issue for us.

Mr. Paul Lemass

In the context of bungalows, this is very much driven by the need at local level. Each local authority adopts an allocations policy. They are required to do so under existing housing legislation. That allocations policy can have regard to specific needs of different cohorts. In the scheme for social housing assessment we capture information on a range of disabilities, be they physical, sensory, mental or intellectual, and we track the movements in the numbers on that list. There are significant decreases in the numbers on the list and significant numbers of people with disabilities are moving off the list and getting allocated houses. Off the top of my head, the number on the list is approximately 4,500 out of a total of 68,000 and I believe the number allocated in the last year to people with disabilities was approximately 1,500. Local authorities have regard for people with disabilities.

However, it is very small given the number of people on the housing list. It is becoming an issue with people living longer. It is an issue I come across daily.

Mr. Paul Lemass

I accept that it is an issue but if one is moving approximately 1,500 people with disabilities into social housing support each year, and there are 4,500 people identifying as having disabilities, one is getting through a significant number annually.

Could Mr. Lemass get me the figures in that regard?

Mr. Paul Lemass

I will.

I would appreciate the breakdown on that.

Mr. Paul Lemass

On the regulatory impact on lives, we are convinced that having regulation has helped thus far on a voluntary basis and will continue to help on a statutory basis. It will enhance the sector's profile and its attractiveness for investment. It will be a positive step overall. When one looks abroad and sees the scale of AHB involvement in the housing agenda, it can only be a good thing to have statutory regulation.

The amount of flexibility is very much scheme dependent, as well as on how much funding comes through Government sources. If one raises funding privately, that gives one different options too. The Senator referred to specific medicals. That is covered in the previous comment.

In the context of data protection, local authorities and AHBs are subject to data protection like everybody else. That is just the environment in which we work now.

Can we examine that and identify whether there is a system where people have given consent? I appreciate that they must give consent. However, even if they have consented, my understanding is that one cannot get that information. While we are dealing with the AHBs, regulations and so forth, perhaps that could be addressed. If people wrote letters and gave their consent, can we deal with that?

Mr. Paul Lemass

This Bill is not the avenue for that.

I thought it might be possible to include it.

Mr. Paul Lemass

It might be a much bigger hornets' nest.

I thank Mr. Lemass for his presentation and wish him luck with his optimism about getting this through by Christmas. It started in the House in 2015. Everybody here welcomes the legislation and agrees that it is necessary. Most of my questions have been asked. Some of the issues are concerns more than anything else with regard to regulation and the smaller approved housing bodies. Initially approved housing bodies were established to deal with vulnerable people in society. Now they are providing mainstream social housing. I welcome the comment that some of the legislation is proportional. There are three tiers of AHBs so perhaps the regulation will tie into the different tier strands.

I welcome this regulation and am not questioning it, but I must return to the on and off balance sheet problem the State has. AHBs remain on balance sheet.

They will not be able to deliver the capacity of housing that is needed until we get them off balance sheet. Therefore, it may as well be a local authority if it is on balance sheet. I wonder if some of this regulation could be applied to local authority housing as well. It would be useful if the Department would comment on that.

The witnesses mentioned nominations and allocations and they said it is within the regulation and the local authority still has an input. I know this is an issue that brings us back to the question of being on balance sheet or off balance sheet again. These were more of the criteria that had an impact in driving the approved housing bodies on balance sheet. Does the Department foresee that in the future the local authority would ever be removed from those nominations and allocations or that the local authority would be held to statute in that process?

Mr. Paul Lemass

I will pick up on the Deputy's comments. The origins of the sector was initially related to vulnerable people but it is a much broader response now. There are three tiers operating in the voluntary system. I would be surprised if the statutory system does not follow something similar, if not identical. They seem to be working well and it is proportionate to the size of the AHB.

On the question of capacity when it is on balance sheet, the national development plan out to 2027 envisages significant construction of social housing. It is in the order of 11,000 to 12,000 houses per annum from 2021 to 2027, and that money is provided for in the national development plan. That is a baseline that is already provided for in funding. Thereafter, if there is a challenge in funding, it would be a matter for the Government to look at prioritisation and to ask if there are priorities for capital funding in another area or if it should go to housing. We are working on the question of reclassification. We met the Irish Council for Social Housing last week, we are due to meet the Housing Alliance in the next week or two and we have had engagement with the CSO, which is to answer Deputy Ó Broin's earlier question. We have had engagement with the CSO as recently as this week and we intend to meet it to see what the options are.

On the nominations process, the proposal on the table from the ICSH, and the Housing Alliance's proposal is broadly similar, is that by use of choice-based lettings, a clear distinction is made between the allocations and the nominations. The allocations would come from a scheme for social housing support assessment, which local authorities do every year and which gives us the figure of 68,000 people on the housing waiting list, but the nominations to a unit would be done by the AHB. The idea is the choice-based letting process would demonstrate an absence of control by the local authority on that process. We are teasing through the various process steps. I cannot see how we get away from having some form of social housing need assessment at present. That generates a social housing list, which then feeds AHBs when they are drawing down funds through the various Government funding lines. I cannot see a way out of that at present but let us continue to work on it and see what we can do about it. That is where we are.

Most of the questions have already been teased through as I said.

Mr. Paul Lemass

I was halfway through Deputy Ó Broin's questions, so I might pick up on them before he has to leave. We were going to do a briefing note for the Deputy on the question of standards and the role of the AHB in performance management policy vis-à-vis local authorities. We will come back to him on that.

We were on the question of the transfer of dwellings and the question of whether we would set up a fund in a similar way as was done with the credit unions. We have a range of different funds in place such as CAS, CALF and the CLSS. All of them include some form of a maintenance provision. This regulation is about safeguarding assets and tenants. On a case-by-case basis, there will be situations such as the one that arose in the Deputy's local authority. It will happen. Going the whole way to a fund would be broader than this legislation. It would be a policy matter so we would need to work it through in that way, but I would hope that as part of any transfer of assets, due regard would be had to the houses themselves and to the broader access an AHB might have to funding or other facilities or assets that could be used to support maintenance. That is as far as I would like to commit on it, other than to say that on a case-by-case basis it is something that could be looked at.

Deputy Ó Broin also mentioned section 47 and the language used for investment. The context here is the role that is defined for the regulator. There is no question of the regulator doing anything outside the scope of its role. The language has to be seen in that context. Part 2 deals with the role of the regulator. Anything the regulator will do thereafter in investigations or anything else, is in the context of that role. I would not see it going beyond that.

My point is a different one, because I accept that. The issue is what is the threshold against which the regulator is allowed to take those various steps, particularly in terms of the investigations etc.? To simply use language, as it does in another section of the Bill, to the effect that the regulator is "of the opinion" is very broad. Surely, if the regulator is going to instigate an investigation into an approved housing body because it has information or evidence to suggest there was a problem, it should be that the regulator should have reasonable suspicion rather than just being "of the opinion" on something, because that opinion could be determined by the regulator just sitting on his or her own and deciding to do this investigation. There has to be some information he or she has which prompts him or her to act. That could be a third party complaint, for example. Does Mr. Lemass see the point I am making?

Mr. Paul Lemass

I do see the point the Deputy is making but the danger with specifying the circumstances in which the regulator could do this is that we would have to be exhaustive in what we would specify. If we say there has to be a third-party complaint and there is no third party complaint but the regulator has his or her own reasonable suspicion, if we start to specify-----

I am not arguing that third-party complaints would be specified. I am suggesting "reasonable suspicion" would be a better formula for the legislation than "of the opinion".

Mr. Paul Lemass

Ideally, there would be a process where, in common with all AHBs, there would be an assessment process provided for. If during the assessment process, an issue of compliance arises, there is a compliance plan and that is provided for. If there is non-compliance with that plan, there is a non-compliance step to escalate it. Ideally, it might only be in those circumstances where one would look at investigation. However, there may be an unforeseen circumstance where information comes to light at short notice and it becomes necessary to launch an investigation immediately. We have to rely on the good offices of the regulator to be proportionate and balanced in its use of the investigation instrument. This would have been the guidance we got from the Office of the Parliamentary Counsel on the use of language. That is what is behind all of that and the language that is used in section 47.

On section 48 and the intention to publish the interim report etc., this is drawn from the Charities Act 2009. The precedent is this is what was approved for the Charities Regulator and we want to be consistent with that where possible.

Deputy Ó Broin's other question was on CSO engagement. Yes, there has been an engagement and there will be follow-on engagement on the question of the reclassification. We have met the ICSH and will soon meet the Housing Alliance as well.

On the question of taking all of the regulator's appointments through PAS, that is the standard practice. The guidance that has been given from the Office of the Parliamentary Counsel is it is not necessary to put that in legislation. The intention is they be filled through PAS.

Does that then mean the Minister is not legally obliged to go through the Public Appointments Service because it is not specified in the legislation? Is that the impact of that decision?

Mr. Paul Lemass

What would happen is the Public Appointments Service would make recommendations, those recommendations would be conveyed to the Minister and he or she would make appointments on that basis.

I accept that but if the use of the Public Appointments Service is not stipulated in the legislation, does that not allow the Minister to legally make appointments outside of the Public Appointments Service process? The answer is "Yes" is it not?

Mr. Paul Lemass

I would have to double-check that but the general practice is the Public Appointments Service would be used.

I accept that but I am saying that notwithstanding the general practice, because we have had cases in the previous Oireachtas where the general practice was not adhered to in another Department and it caused some controversy if Mr. Lemass remembers, if it is not stipulated the Public Appointments Service must be used, a Minister is then free to appoint somebody outside of that if he or she so chooses. That is not a good practice.

Mr. Paul Lemass

I have not had experience of that kind of situation. We will undertake to take a closer look at it and see if it is appropriate to stipulate the PAS must be used. The guidance we got heretofore was that it was not necessary. We have undertaken to take a closer look at the categories of expertise as well. That should cover the main questions we did not get to before.

I thank Mr. Lemass. Local Government Audit Service report No. 29 is on the oversight role of local authorities in the provision of social housing by AHBs. It is dated December 2015 so it is a reasonably old report. Mr. Lemass might be familiar with it. It makes a number of recommendations which are quite detailed. I will not ask Mr. Lemass now for feedback on them but he might write to the committee and let us know how his unit set about implementing those recommendations.

Mr. Paul Lemass

That report is from 2015.

That is correct.

Mr. Rory O'Leary

The Local Government Audit Service has undertaken an update to that report, which is in preparation and is due to be published shortly. It will contain an update on the recommendations in the original 2015 report. We can ensure that a copy of the update is circulated when it is published.

We might also like to have some more specific timelines in that regard. The clerk to the committee will liaise with the Department to arrange a date for Committee Stage. The officials might come back to us as a matter of urgency on outstanding issues to ensure we have all the information we need ahead of that meeting.

I thank the witnesses for engaging with the committee. It is always informative. I thank members for their time.

The joint committee adjourned at 11.11 a.m. until 1 p.m. on Tuesday, 5 November 2019.