Dáil Éireann Debate, Tuesday - 5 April 2022
368. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the estimated impact of voted expenditure for Vote 34, subhead A28, cost rental equity loan, which amounts to €70,000,000 for 2022 including additional approved housing body borrowing in respect of the general government balance. [18143/22]
View answerUnder Housing for All, 10,000 Cost Rental homes will be delivered from 2021 to 2026. These new homes will be delivered by Approved Housing Bodies (AHBs), supported by Cost Rental Equity Loan (CREL) funding, and Local Authorities, funded by the Affordable Housing Fund. The Land Development Agency will also deliver Cost Rental, either on its own portfolio of sites or through acquisitions under Project Tosaigh.
Budget 2022 allocated €70 million to the CREL scheme for Cost Rental delivery by AHBs in 2022. Over 900 homes have been approved for funding under the scheme to date, with a total of almost 4,000 CREL-funded homes being targeted for delivery over the 5 years to 2026.
Under the Second Call for Proposals for CREL funding, issued to AHBs in October 2021, I approved in principle the allocation of €53.6 million for the provision of 521 Cost Rental homes across 11 sites in 7 Local Authority areas. Details of the funded projects, including locations, unit types and cost-covering rents will be released when the relevant AHBs have completed necessary financial and commercial arrangements.
With regard to the CREL scheme, the Government provides loans to AHBs to finance up to 30% of the capital costs for new Cost Rental homes. The CREL loans will be for a 40-year term, with simple rather than compound interest, fixed at 1% for the loan term, and will not require any repayment until the end of the loan term. CREL funding will reduce the financing costs of AHB projects and will therefore directly reduce the cost-covering rents to be charged to tenants. While AHBs may invest their own equity, it is anticipated the majority of remaining capital costs will be primarily sourced from long-term commercial debt funding. To this end, the Housing Finance Agency has indicated 40-year loans will be made available for CREL-approved projects, with very competitive interest fixed for the first 30 years and variable rate for the remaining 10 years. The decision to grant CREL funding will always be taken on the basis of value for money.
Furthermore, an open Rolling Call will be established under CREL this year. This will facilitate ongoing applications from AHBs, as projects present themselves, will assist with applications for Cost Rental and social housing, through the Capital Advance Leasing Facility, on the same sites and will facilitate longer-term developments, where AHBs can purchase land and undertake design and build contracts directly.
