Housing bodies 'taking on too much debt' to build affordable and social homes

The Housing Alliance will also tell the Oireachtas committee that it requires access to affordable land

The Housing Alliance will tell the Oireachtas housing committee that Ireland is an outlier in Europe by asking approved housing bodies to take on the entirety of financing in loans. File picture: iStock

Ireland's largest housing bodies are taking on too much debt in order to build affordable and social housing, representatives will tell TDs and senators on Tuesday.

The Housing Alliance, which represents the six largest non-profit housing bodies in the country, will tell the Oireachtas housing committee that Ireland is an outlier in Europe by asking approved housing bodies (AHBs) to take on the entirety of financing in loans.

The Housing Alliance will also call for access to land development for its members.

"What we need to release that potential is a stable and sustainable system of funding that addresses the level of debt members now carry, and access to land on which to develop housing at an affordable cost. We recommend: funding move from 100% loan financing to provision of a part grant and strategic land management to ensure access to development land for all providers of social and affordable housing, including not-for-profit providers."

The Housing Alliance's opening statement will say that eight in 10 of its members' new homes use the CALF-P&A funding mechanism, which requires members to borrow 100% of the costs.

This makes the AHB sector in Ireland unique: no European country has asked not-for-profit housing bodies to meet such a significant proportion of social housing need without any state grant provision, particularly at such a relatively early stage in the sector’s development.

"Consequently, Housing Alliance members face gearing ratios much higher than, for example, their peers in the UK. These high gearing levels are the primary limiting factor for future housing development by larger AHBs: members are reaching a point where they will be unable to add further debt to their books to develop new homes."

The alliance will point to an analysis conducted by Savills Social and Affordable Housing Consultancy which concluded that “reintroducing an element of capital grant alongside the CALF/P&A model would extend the ability of AHBs to develop new homes in the long term”.

The Housing Alliance will also say that it requires access to affordable land and cannot take on more debt to do so.

"There is significant development capacity within the Housing Alliance if we have access to land at an affordable cost: access to publicly owned land on which to develop new homes is critical. As our primary funding mechanism is 100% debt-financed, the Housing Alliance cannot increase the supply of land by taking on further debt; grant funding would be required."

Construction sector

At the same hearing, Frank Curran, chairman of the County and City Management Association (CCMA) committee on housing, building and land use and CEO of Dun Laoghaire-Rathdown County Council, will say that while local authorities can deliver on the objectives contained within the Government's flagship Housing for All document "it must be recognised that the construction sector continues to experience issues in relation to material price increases; supply chain delays; and an increasing demand for skilled workers".

"These issues have the potential to impact upon delivery and will require close co-operation by all stakeholders for the foreseeable future," he will say.

He will add that local authorities are currently recruiting more than 200 additional architects, engineers, and administrative staff to assist in social housing delivery.

The housing committee is hearing from stakeholders in social and affordable housing with a view to producing a report on the sector's financing.