Dáil Éireann Debate, Thursday - 2 February 2012
6Deputy Pádraig Mac Lochlainn asked the Minister for the Environment; Community and Local Government his plans to encourage financial institutions to lend money on a fixed rate to voluntary housing associations for the development of their housing stock. [5923/12]
Amharc ar fhreagraThe Government's housing policy statement, published in June 2011, identifies approved housing bodies, AHBs, as key partners in the delivery of social housing. This recognises both the constrained funding levels available for local authority construction programmes and the capacity and track record of the voluntary and co-operative housing sector.
AHBs are uniquely placed to help drive the achievement of the housing supply responses set out in the policy statement. However, the move from capital-funded programmes of construction and acquisition by approved housing bodies to more revenue-funded options does present challenges for them. As such, I intend to develop an enabling regulatory framework for the sector that will provide support and assurance to both the sector and its external partners as the sector takes on the expanded role envisaged for it in the policy statement and to underline its status as a viable and attractive investment opportunity for financial institutions.
The development of such a regulatory framework which is both robust and harmonised with the varying capacities of individual AHBs will take some time. In the interim, my Department is actively working with the sector on the development of a voluntary code which I expect most bodies will endorse. This code, which should be finalised and agreed in the coming months, will serve as a learning opportunity for the sector and for my Department as we develop a longer-term statutory framework that will best support the enhanced role of AHBs.
In the shorter term, to assist in this transitional phase between fully capital-funded delivery programmes and greater reliance on borrowing, my Department's capital advance leasing facility, CALF, scheme allows approved housing bodies to apply for a capital equity injection to assist them to secure finance from financial institutions and the Housing Finance Agency for the purpose of acquiring or constructing dwellings for social housing purposes under the leasing initiative. Direct loan financing by financial institutions will be part of the Government's mortgage-to-rent pilot scheme under which the purchase of the property will be part loan financed using loan finance obtained from the initial mortgage provider.
I have met many of the voluntary housing associations in recent months. Many of the associations are looking to buy housing units but they are having great difficulty raising money through financial institutions. Concerns have also been raised that interest rates, while low at present, if they rise could create problems in keeping rents at fair rates for their tenants. This is why there is talk of a fixed rate given we do not know what will happen in the future. Many of these associations are hanging on a limb with regard to their funding as matters stand. They could be driven to the wall if rates changed.
The Minister of State referred to the capital advance leasing facility, CALF. This does not seem to be given sufficient support in regard to the associations' endeavours to secure funding, or that is the sense which comes across from them. The best solution to the housing crisis is a State-led development of social housing units. In this vein, the Government has sought to relinquish responsibility to the voluntary sector. Increasingly, it seems the issue of social housing is being directed to the voluntary housing sector at the expense of social housing provision and those on waiting lists. That seems to be where the funding is going.
The voluntary housing sector plays a very positive role and the State wants to work with the sector. To take Britain as an example, that sector plays a strong role there as well. The Deputy will be aware that the Housing Finance Agency, HFA, can also provide finance. It is a good mechanism and provides good interest rates, which we expect will come down in the near future. We want to assist the voluntary housing sector in whatever way we can.
One of the issues I referred to in my response is that we need to ensure these bodies are properly regulated, and we are working towards that. There will be much more confidence from financial institutions in lending to voluntary housing associations if they are in a regulated situation. The CALF system of funding is relatively new and it will certainly grow in the years to come.
The Minister of State referred to CALF. It does not appear the facility is able to ensure suitable loan conditions. The Minister of State also referred to the HFA. I would like to think the Minister of State will strengthen her efforts to provide public money through the HFA. On another issue, how many publicly owned social housing units will be built in 2012?
I do not have an exact figure for social housing at this stage as, obviously, some units will be approved and go to tender and so on during the course of the year. I will come back to the Deputy with information that is as accurate as possible.
The reality is there is not a huge level of public money and we have to ensure we get the best possible methods in place whereby we can provide homes for people. In some cases, these will be directly built in the traditional way but we must also find other ways, including using voluntary housing associations and encouraging private capital to help with that. Ultimately, what we are focused on is providing homes in whatever way we can for those who need them in what are very difficult financial times for the country.
