Dáil Éireann Debate, Tuesday - 4 July 2017
622. Deputy Joan Burton asked the Minister for Housing, Planning, Community and Local Government if he will report on the progress with EUROSTAT in respect of allowing credit union investment of surplus funds in social housing; and if he will make a statement on the matter. [31498/17]
View answerThe agreed Programme for a Partnership Government recognises the potential role that credit unions can play in housing finance and supports the efforts of the Registrar of Credit Unions at the Central Bank to gradually lift current lending restrictions as appropriate, including for housing. The Programme further provides for consideration, with all stakeholders, as to how credit unions can support the delivery of social housing.
Credit Union bodies have set out proposed means by which funding could be provided by credit unions to Approved Housing Bodies for the development of social housing. My Department and the Department of Finance have met with the credit union representative bodies on a number of occasions to examine how credit unions can assist in the area of financing social housing delivery.
Conscious of the independence of the Central Bank in its regulatory role in respect of credit unions, bilateral engagement has taken place between my Department and the Department of Finance to consider the potential regulatory and legislative implications of credit union involvement in the social housing sector. Both Departments have also met with the Central Bank to provide information of a technical nature in relation to social housing funding arrangements. This was with a view to assisting the Central Bank in understanding how these arrangements operate, as it deals with issues arising from proposals put forward for credit union investment in social housing.
I note the publication in May 2017 by the Central Bank of the Consultation on Potential Changes for the Investment Framework for Credit Unions. The potential changes that are provided for would allow for investment by credit unions in the delivery of social housing by the larger Approved Housing Bodies which are categorised as ‘Tier 3’ under the voluntary regulation framework for the AHB sector.
Ultimately, the funding mechanisms required will have to be put in place in the first instance by the credit union, with the support of their members and with the agreement of the Central Bank. My Department will continue to contribute to this process by providing necessary technical advice and support.
The Social Housing Current Expenditure Programme provides a means whereby properties can be built or bought by Approved Housing Bodies (AHBs) with the combined use of State and private funding, and leased by AHBs and Local Authorities from private providers, for the provision of social housing. This scheme is underpinned by a lease and other legal agreements. These provide that rental payments are made by the State over an agreed long-term time period, typically 20 years. In return, the housing unit is made available for social housing purposes.
Changes are now being proposed to this scheme in order to facilitate larger institutional private investors to become involved in the financing of social housing. Subject to other regulatory requirements being met, this could include credit unions.
The National Development Finance Agency (NDFA) is acting as financial advisor to my Department in this work and has undertaken market engagement in the development of the scheme. The new arrangements arising from this process are currently being tested to ensure that there is no negative impact arising from how they are viewed and treated in respect of the State’s General Government Balance. As part of this process, the proposed changes are being examined by Eurostat. Work on the scheme is well advanced, with details expected to be announced in the coming months.
