Dáil Éireann Debate, Thursday - 26 January 2023
152. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage if he will provide an update on the CALF and CREL reviews; and the number of CALF and CREL homes delivered in 2022. [3596/23]
Amharc ar fhreagraHousing for All sets out national housing policy and implementation measures for the period to 2030. As part of the objective to increase social housing delivery, the plan recognises the significant role that Approved Housing Bodies (AHBs) have played as partners in social housing delivery and will continue to play.
Over the past decade, the Capital Advance Leasing Facility (CALF) funding model has worked very successfully. Under the Housing for All Action Plan Update, a specific objective, Action 4, is to “review the structure and operation of CALF to assess whether any refinements to the facility are required to support delivery of social housing by the AHB sector across a wider range of Local Authority areas, and to identify resulting actions for implementation.” The review commenced in Q4 2021 and my Department has had the assistance and support of the Housing Agency in this process.
One of the key purposes of this exercise was reviewing the structure of the P&A-CALF funding model to determine if it should be adjusted to support delivery by the AHB sector across a wider range of areas and what options might be available to enable this. This is a recognition that the CALF model historically did not work well in areas of lower rent. The review is also cognisant of the significant rise in construction inflation and increases in interest rates so these aspects are being considered in the context of a revised funding model.
My Department, in conjunction with colleagues in the Housing Agency and relevant stakeholders, has now prepared a number of draft recommendations and a draft report on the CALF Review. I have considered these draft recommendations and the Department of Public Expenditure and Reform will shortly consider a request for sanction for the changes to the CALF Funding model. It is planned to implement the new methodology for the P&A-CALF funding model as soon as approval has been obtained. The implementation will be assisted by a Circular to guide the sector, along with intensive stakeholder engagement to explain the changes in Q1 2023.
With regards to the second part of your question, the number of CALF homes delivered once finalised are reported quarterly, the latest figures are available through the following link:
www.gov.ie/en/publication/2b4cd-social-housing-construction-projects-status-report-q3-2022/
Cost Rental is a new form of tenure in Ireland, which was legislated for in the Affordable Housing Act 2021. AHBs have utilised funding from the Cost Rental Equity Loan (CREL) to deliver the majority of the Cost Rental homes tenanted to date. Since the initial CREL projects were approved for funding, international factors have resulted in an increase in the cost of loan co-financing due to the trajectory of interest rates, while high rates of construction cost inflation have also been apparent. Taken together, these have impacted the viability of Cost Rental homes, where the rent charged is a direct function of the cost of provision of the homes.
With this in mind, following a review of CREL funding structures at the end of last year, increases to the CREL funding available were approved by Government. This included increasing the funding ceilings, with the 30% flat rate being replaced and applications being assessed on a sliding scale basis, up to a maximum of 45% of the total capital costs of delivering the homes. It also included a facility to access funding on an advance basis to enable site purchase or upfront deposits to facilitate further direct delivery of Cost Rental homes by AHBs, and thereby support the development of a long-term AHB delivery pipeline. An updated CREL guidance note was submitted to the AHBs in December setting out the revised application process and assessment criteria. Budget 2023 also saw the funding allocation for CREL increase from €70m in 2022 to €75m for this year. These changes will help to address some of the challenges faced by AHBs in the continued delivery of Cost Rental homes.
