Credit unions may fund social housing projects

Credit unions could be in the position to fund social housing projects through approved bodies by next year.

That’s the opinion of members of the Oireachtas housing committee who have heard advice and submissions from the Department of Housing and the Central Bank.

Lenders still face a number of risks after the recession and are also restricted by regulations, the committee heard yesterday.

It is estimated that the sector, with around 270 unions with surplus funds to lend nationwide, could lend more than €500m annually for housing if it was agreed.

However, this is the upper level and a more medium level of around €360m a year would be more realistic an option to invest by unions in public housing.

Des Carville, in the department of finance’s advisory division, said credit unions have looked at putting some of their investment funds into social housing.

“This is a new departure for credit unions. Discussions have taken place in a variety of fora to try and progress these interests and, although our role is limited, the Department of Finance has been engaged in some of those discussions.”

However, committee legislation would be needed to lend to groups or individuals who are not union members, the committee heard.

Unions are also restricted as to the type of investments they can make by the central bank. Consultation is underway on this, including the option of funding housing bodies. Any investment in such bodies would need to carry reduced amounts of risks, TDs and senators were told. Mr Carville added: “The department recognises that the credit union sector could play an important role in the funding of social housing. The establishment of a vehicle to pool resources and expertise would appear to be a sensible approach, provided of course that the underlying economics work for all stakeholders.”

The Central Bank signalled that the sector was still recovering after the crash, partially through mergers, a recovering loan book and by improving services.

But investment income in unions was also falling, members were told. Ed Sibley, director of credit institutions supervision, said governance issues in unions had been prioritised.

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