Joint Committee on Housing, Planning, Community and Local Government debate -
Tuesday, 4 Jul 2017

Finance for Social Housing: Housing Supply Alliance

Chairman

I welcome representatives from the Housing Supply Alliance, Mr. Cathal Callan, director of finance and corporate services, Clúid Housing; Mr. Kieron Brennan, chief executive officer of Co-operative Housing Ireland.

I also welcome Mr. Patrick Coyle, development officer with Oaklee Housing, and Mr. Declan Dunne, CEO of Respond! Housing Association.

Before we begin, I draw the witnesses' attention to the fact that, by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Brennan to make his opening statement.

Mr. Kieron Brennan

On behalf of the members of the alliance, I thank the committee for inviting us to participate in its consideration of credit union finance for social housing provision. We are four housing bodies - Clúid, Co-Operative Housing Ireland, Oaklee Housing and Respond! - that co-operate on matters of housing supply. We are four of the larger approved housing bodies, AHBs, and collectively provide more than 12,500 homes for families across Ireland. Some 3,000 of these have been delivered in the years since 2010 or, in other words, since the end of 100% capital funding. We have a delivery pipeline of 6,000 new homes to be delivered over the remaining years of the Rebuilding Ireland plan and are potentially some of the largest customers for credit union investment. All of us are tier 3 AHBs, have experience in accessing private finance and have been certified for lending by the Housing Finance Agency.

The national housing action plan, Rebuilding Ireland, identifies AHBs as key delivery partners for social housing, recognising "their track record in terms of both housing provision and management". This builds upon support for the sector in the Housing Policy Statement 2011 and Social Housing Strategy 2020, published in 2014. There is a clear and ongoing Government policy of support for AHBs playing a central role in social housing delivery.

Rebuilding Ireland sets out the key recommendation that the Government "should seek to mobilise as quickly as possible, all possible sources of funding, including funding from the Housing Finance Agency, Strategic Investment Fund, the Irish League of Credit Unions and Irish Pension Funds, to increase the supply of social and affordable housing". Regarding credit unions, the proposed addition of investments in tier 3 AHBs as a permitted investment class is welcome to us as a potential additional source of finance as we seek to play our part in responding to pressing local housing need. It would assist in promoting credit unions to our members and tenants and would offer an opportunity to showcase the potential for local social investment by the movement.

For our organisations, credit unions play a key role in local communities in promoting sound money management, providing access to travel, education and home improvements, and tackling the challenges associated with moneylenders. The ongoing sustainability of the credit union movement is vital to us and the members and tenants whom we represent. We also see key additional benefits for credit unions themselves from the higher yields that may be possible compared with the current range of permitted classes of investment. It would also allow credit unions to invest in a highly visible way in the delivery of services of value to the local community and to strengthen their bonds with their members.

Liquidity and stability are obviously key issues for all financial services providers. As the Central Bank's consultation paper notes, at the end of 2016, credit unions had assets of €16.1 billion, loans of €4.1 billion and investments of €11.4 billion. Given the range of permitted investments under the 2006 guidance note, it is clear that the movement as a whole has more than adequate levels of liquidity and is suffering from falling rates of investment income. We believe that diversification of the investment portfolio can be undertaken to provide for improved investment returns while sustaining adequate liquidity levels.

As a proposal that would support AHBs and credit unions, we welcome the consultation from the Central Bank on credit union finance for social housing. We have provided a collective response to that consultation and have circulated a copy of it to the committee. In it, we set out some of the key features of the funding arrangements for new AHB delivery through the capital advance leasing facility, CALF, and the payment and availability agreements. These and associated schemes can provide confidence to the Central Bank and credit unions about the robustness of social housing as an investment class. We are happy to provide more detail to committee members during our conversation.

The current consultation represents the culmination of many years of work by credit unions and housing providers in seeking to make the case for locally backed social housing delivery. The Housing Alliance would value the support of this committee in the context of the current consultation, both for the benefit of housing delivery and for the good of the credit union movement.

We thank the committee again for the opportunity to present to it and we are happy to answer whatever questions members might have.

Chairman

I thank Mr. Brennan. I might ask witnesses and members to check that their phones are switched off, as there is a little bit of interference on the microphones.

Deputy Eoin Ó Broin

I thank Mr. Brennan for his presentation. At the risk of us boring other committee members, some of us will probably repeat some of our comments from the start of the previous session so that the witnesses can know where each of us stands.

Sinn Féin supports the work being done by the witnesses' organisations and their efforts to access credit union and other sources of funding. As they will know, we argued for it at the Committee on Housing and Homelessness last year and have again argued for it in our submission to the Central Bank's consultation. We share the witnesses' frustration over the length of time it has taken this proposal to reach the point of the Central Bank considering it as a possibility. Some of the signals seem to be positive. We are conscious, particularly as constituency representatives who work with families that are homeless or at risk of homelessness, that if the decision by the powers that be had been taken two years ago when the credit unions first made their approach, thousands of families that are not housed currently would have been. That is an important point for everyone to acknowledge.

I will ask a couple of technical questions and I am interested in the witnesses' opinions on them. The payment and availability agreement has always been a complex issue to be negotiated by AHBs and the Department and local authorities. The current system uses a percentage of market rent as opposed to, for example, a calculation based on the cost of paying down the loan plus the AHBs' maintenance of the properties. Would the latter be a preferable model and provide more certainty or would the situation balance out between the swings and roundabouts and peaks and troughs of the rental market over 25 or 30 years?

In the witnesses' experience, do the payment and availability agreements cover their organisations' housing management maintenance and staffing costs?

Going by our discussion with the credit unions, the current arrangement is 30:70 between CALF payments and private financing. Is there an argument at this juncture for us to consider 100% loans so that there is no additional 30% requirement? Would that be advantageous or disadvantageous to AHBs? Does the 30% CALF payment benefit AHBs' overall financing and the structure of that or would 100% loans give them more flexibility? I would be interested in the witnesses' views.

A significant issue for the AHB sector is the capacity to deliver units. In its submission to the Central Bank, the Irish League of Credit Unions, ILCU, set out three funding schedules that in some sense depend on what the witnesses believe is their organisations' ability to deliver. If there was the type of funding that the ILCU and others are proposing, what do the witnesses believe their organisations could deliver above and beyond what is currently in their pipelines?

I am interested in the witnesses' thoughts on affordable housing. Traditionally, AHBs provided differential rent social housing. There is considerable demand for affordable renting and purchasing from middle-income families. Is that an area into which the sector could expand?

What kind of funding could be provided and what are the witnesses's thoughts on that? My final question is for Mr. Coyle. The Irish League of Credit Union's submission to the Central Bank listed the tier 3 approved housing bodies on the basis of their stock in this jurisdiction. Oaklee obviously has a very significant amount of housing stock in the North of Ireland and people may not know that it is a much bigger housing association on this island than suggested by its 400 units here in the South and the information before the committee. The members of this committee might benefit from having a clearer sense of the organisation's profile, North and South.

Deputy Ruth Coppinger

I thank the witnesses for their presentations. Speaking for myself and for a number of other representatives across the Oireachtas, some of us have an issue with this proliferation of approved housing bodies. What is their purpose? They started out as the provision of specialised knowledge or connection between groups of people, be they the elderly or the disabled or similar. Alone, for example, was known to provide specialised knowledge in the area of older people. That now seems to be gone, however, and housing bodies are popping up all over the place without any areas of specialisation. I do not really see why approved housing bodies have the degree of involvement in housing that they do. They are now being encouraged, both by the Government and by local authority managers. This is probably for ideological reasons because the Government does not want the local councils to provide housing on the scale that they once did. There are many different reasons for this.

Sometimes there are certainly problems with council housing. People are sometimes put into large-scale areas with no transport facilities, for example. We have all seen that happen over the years. I was a councillor myself for 11 years. Fingal County Council, for example, does not seem to run any housing anymore and this is largely ceded instead to housing bodies. I know that Clúid is involved in an upcoming project, as is Respond! Why is this case?

There is a difficulty here for the tenant. Many people on the housing list do not realise that when they get a house from a housing body they are not in fact council tenants. The problem with this is that tenants do not have the same level of representation from councillors and public representatives to help them address problems. It was previously the case that when, for example, windows needed to be replaced, councillors would lobby council management to get the funds from the Government to do this. We do not have that facility with the approved housing bodies. There is probably a good reason for this, as the bodies are not sufficiently funded or resourced.

There is also the issue of rent. If people get into massive arrears for some reason, the councils have always been willing to sit down and work out a programme to deal with this.

Then there are issues like pyrite. I have found it very difficult to set up a meeting on the pyrite problem in the Parnell Estate in Mulhuddart. Respond! is in charge of that estate. If the council were running that estate, not only would the problem be fixed by now, but they would also have sat down to have a meeting with public representatives like myself and with tenants. This has not happened. The approved housing bodies have to answer for that. People are contacting us as public representatives thinking that we can assist them but we cannot. The point I am raising is that we do not have the same ability to intervene with approved housing bodies when problems arise.

Another issue I have is a financial one. One of the reasons why approved housing bodies are being used more is the desperate search by the Government and like-minded parties to find off-balance sheet models and special purpose vehicles. So it is then, that local authorities are no longer to be provided with money. We have loads of money in this country and we could solve this housing problem. The funds are there.

The Ireland Strategic Investment Fund has money to offer, interest free. In my view, this is a political decision. I am sure some people began their involvement with approved housing bodies because they wanted to get specialised housing. However, I do not see how it can be argued now that the latter remains the case. I do not think that approved housing bodies can solve the housing problem. They are being looked to far too much in that regard. They are being given local authority lands. I do not know the nature of the transactions with the councils or whether the approved housing bodies pay for the land involved. From what I see in my constituency, the approved housing bodies are being given all the council lands. They are also being given responsibility for running housing estates. From the point of view of public representatives, this is a major problem. I would like the witnesses to address these issues.

Senator Jennifer Murnane O'Connor

I agree with Deputy Coppinger in the context of her concerns. Like previous speakers, I was a councillor for years. As councillors, Clúid and Respond! were the main approved housing bodies with which we would have dealt, if on a smaller scale. All of a sudden, Co-operative Housing Ireland has entered the picture and on a bigger scale. I welcome the fact that we need to work with the credit union movement to provide houses because local authorities are not doing that. I think this is a Government call. We are getting to the stage that this is the way forward.

When one applies to Clúid or Respond!, one must apply to the local authority and the names are then submitted to the different agencies. On some of the application forms it states that one cannot go to any political parties or one cannot have representations from political figures. As a person who has worked in the area of local authority housing and who has made constant representations on behalf of people on the housing list, that is an issue. The major issue is that a tenant cannot purchase his or her house. I do not like that. The impact of approved housing bodies appears to be growing. In my constituency, Fruithill Manor was developed by Co-operative Housing Ireland in Graiguecullen, County Carlow. I was at the launch of this development of 67 houses, and we are waiting to get word in respect of four of these. I hope we will receive word this week. This body is different to what it was previously. Even though the names of those applying for houses go to the local authorities, it is different because everything goes through the approved housing body. I know that Co-operative Housing Ireland has managers who run some estates. I have no problem with that because I think it is good that everybody can participate.

The main issue I have relates to the fact that the approved housing bodies need to look at giving people the option to buy. This is a major concern. It is putting people off applying for some of these houses because they feel, given that they are younger, that they may not be able to buy their houses. Hopefully, however, things are going change and they want the option to buy at a later stage. They will never have that opportunity unless they hand back their keys and seek either a local authority mortgage or to go on the local authority housing list. From my experience as a former councillor and as a Senator, I am of the view that there should be more co-operation with councillors because they work through the local authorities. I have had individuals to whom I could not give references because it is stated that people cannot obtain references from public representatives. I have been making representations for people for 18 years and I am concerned in that regard, particularly because we, as public representatives, ensure that we represent our communities and we recommend people who we believe would make good tenants.

I know that the approved housing bodies have been buying houses. Can I have an update on that? Numerous houses in my local authority area have been purchased. More houses have been bought by approved housing bodies than by the local authority. They are buying once-off houses. Originally, the approved housing bodes were supposed to cater for the needs of people with disabilities or those with special needs but that all seems to be changing.

I know we have a housing crisis. I acknowledge that it would be good if the credit unions worked with the approved housing bodies going forward. I think it would be good for the people who are looking for houses. However, in terms of the bigger picture, there needs to be an option for people to buy their houses and there must be increased co-operation with councillors, Senators, Deputies and local authorities. Perhaps the witnesses will revert to me on those points.

Deputy Fergus O'Dowd

This is a very important discussion. I agree with many of the points that have been made.

I wish to raise a number of points as I have questions I need answered. I agree with Deputy Coppinger that one needs protocols in place between the housing agencies and elected representatives. I had a case where a constituent was being put out of his home as a result of significant difficulties by a housing agency. Notwithstanding the fact that he was in my office, that we rang the housing body and spoke to the person in charge and that he confirmed to the person in charge his consent to me speaking on his behalf, the person on the other end of the telephone refused to communicate with him or with me on the grounds that she did not have a written letter of consent from the individual who informed her that he was illiterate and could not write. That was the bull that person had to face. It was an absolute disgrace. However, it was dealt with and we got a different outcome when I protested to the chief executive of the body. It goes back to the point made by Deputy Coppinger that one needs proper protocols in place. Obviously there must be data protection but when a public representative rings a State body, as we do, with the named individual in the room with him or her and with the person's PPS number, cut the bullshit and get on with the job. We have to be able to represent people.

NAMA has 6,564 houses that it offered to local authorities around the country. Only 2,520 of the houses were taken up by the local authorities. In Dublin, 2,030 homes were offered to local authorities, of which 757 only were taken up, which left 1,273 homes in Dublin. Were any of the approved housing bodies present offered any of those homes and if so, did they take them up or if not, what was the reason for refusing them?

It seems to me there is a significant lacunae of activity in housing. The local authorities have turned a blind eye to the housing crisis. They were offered houses they did not take. I acknowledge the good work that Ministers are doing, there is no criticism implied or intended on this matter, but we need dynamic leadership reporting to the Minister who will cut across all this red tape and get action.

In County Louth, they conducted a survey of empty houses, including boarded-up houses and they have done it very successfully. Is there anybody who lives on any street in any town that does not see or know of a house that is boarded up or shops or houses that have been boarded up for years? We need a more dynamic approach from the housing bodies, from the State or from an agency that will deal with this. If Louth County Council can go after empty homes that are boarded up and put them back on the market with social housing clients for an average of approximately €100,000 per house, without the need for additional infrastructure, as water, sewage works and other services are laid on, why do we not pursue this? What are the approved housing bodies doing about it? It is a no-brainer. One does not need millions to do this job right. It can be done for approximately €100,000 per home. The local authority puts the compulsory purchase notice on the boarded-up house and within a couple of months, if that is not responded to, it goes in and does the job. I think the approved housing bodies should do that as well.

I brought a housing agency round my town. I showed them 30 to 40 empty dwellings, blocked up, locked up and nobody in them. I hope something will happen out of that. There is a lack of urgency in our Administration in respect of dealing with this issue. I do not mean to be lecturing. I accept and acknowledge the excellent work the bodies represented by the witnesses are doing but that sense of urgency is not there today. We need to inject that sense of urgency into those dealing with housing. We as public representatives need to be more active as well.

Were the approved housing bodies offered houses that they refused? Is it not a disgrace that nationwide, there are 4,000 homes that could but do not house families as social tenants?

Such people may be paying exorbitant rents to vulture landlords. We missed a huge opportunity to deal with this matter. An opportunity exists now. If there are 165,000 empty homes in this country - there are at least 31,000 empty homes in Dublin - in the name of God, the housing bodies should get in there and deal with the matter. I urge the organisations to meet the Minister and the local authorities at county manager level. When that is done they should come back to us with a plan and we will push the initiative with our agencies and Ministers. The shame, disgrace and appalling situations that too many families face every day of the week cannot continue. They are living in extreme situations. Yesterday I read an article in a newspaper that highlighted the plight of a family who had to live in a tent located outside of a local authority building for three weeks.

Deputy Ruth Coppinger

That is not the fault of housing bodies.

Deputy Fergus O'Dowd

No. I am addressing the issue of housing. I will take no lectures about my views from anybody.

Deputy Ruth Coppinger

The Deputy might stay on topic.

Deputy Fergus O'Dowd

The family should be in a home. Regardless of whether one likes to hear it, we need to do more and be much more active. I feel strongly about this matter. I hope I get an opportunity to speak about this matter in the Dáil on Thursday. People who are not officeholders or leaders of other parties are allocated 12 minutes in which to speak. This agenda must be debated in this Oireachtas whether one likes it or not. Perhaps the Chairman wishes me to close me down.

Chairman

No.

Deputy Fergus O'Dowd

I will finish, if I may. The challenge for all of us is to stop human rights being abused. We must act outside of our little boxes. We must go for it and do it. That is the challenge I set for the organisations. I do not know what reply I will get. Notwithstanding all of the good work that has been done by the organisations, they have not done and are not doing enough.

Chairman

The next speaker is Deputy Casey. We tend to be quite lenient on this committee. I remind members that today's topic for discussion is credit union finance for social housing. I have been lenient with members and I hope they will stick as close as possible to the topic.

Deputy Fergus O'Dowd

On a point of order, is that a specific reference to what I said?

Chairman

No, I mean in general. A number of speakers spoke before the Deputy.

Deputy Fergus O'Dowd

Let me be very clear. Everybody else has raised the same issues as me.

Chairman

That is what I said. I have been lenient with all members.

Deputy Fergus O'Dowd

I hope that the Chairman did not criticise me specifically.

Chairman

As I have said, I have been lenient with all members.

Deputy Fergus O'Dowd

Yes.

Chairman

The Deputy was the fourth speaker.

Deputy Fergus O'Dowd

I thank the Chairman for her leniency. The job of a Chairman is to allow members to speak.

Deputy Ruth Coppinger

Chairwoman. She is a woman, in case the Deputy did not notice.

Deputy Fergus O'Dowd

Chairperson or Chairwoman. I do not mind using any title. I do not want to offend anybody by not using the correct title. The job of this committee is to articulate our views. The job of any Chairperson, Chairwoman or Chairman is to facilitate that.

Chairman

I did not single out anybody, Deputy O'Dowd.

Deputy Fergus O'Dowd

I thank the Chairperson. I have made my point.

Chairman

I said that in general I am lenient with all committee members. I call Deputy Casey.

Deputy Pat Casey

I have a few brief questions and will commence by asking about finance and the application process. Can the organisations avail of different types or sources of funding? Have they experienced difficulties in accessing finance? Is there a criterion for approved housing bodies to categorise them as tier 3?

Earlier Deputy Coppinger and I mentioned the regulation and governance of approved housing bodies. In 2014, there were only 300 approved housing bodies yet there are 520 approved housing bodies at present. A new housing body has been created every week for the past three years. Are there proper regulation and governance structures for approved housing bodies?

Deputy Mattie McGrath

I apologise for being late. I welcome all of our guests here today. I am sorry to have missed their presentations but I have read them.

I am a chairperson of a small housing body that has never been invited here or anywhere else. Deputy Casey mentioned the creation of housing bodies. I can assure him that many of the new housing bodies may be small but they have done a tremendous amount of work. My housing body has only 17 units but they are full and the tenants are happy. We built houses that were good value for money and we maintain them.

I wish to thank the person who originally set up Respond! The organisation has done wonderful work over the years.

I am very interested in learning more about the funding model used by the Irish League of Credit Unions. How does the Central Bank view the practice? The Central Bank and the Minister for Finance viewed this matter in a different light, including that other forms of funding were taboo for credit unions.

I was a member of the Irish Council for Social Housing, ICSH, for a decade or more. One of the reasons I left the organisation was because of the incremental way the bigger groups took it over and knocked out the smaller volunteer groups. I mean no disrespect but the ICSH was influenced by the boom generated by the Celtic tiger. It went mad buying up property and could not buy enough land in places. Expectations were raised and this country was left with a savage housing crisis. The organisation got too big for its boots in many ways. I do not mean anything personal by that, but I saw this situation occur before my eyes. The ICSH was taken over. The smaller groups could never progress or become a member of boards because the larger ones held power. It became a symptom of the problem rather than a solution. The movement did great work over the years, especially Respond!, and before we ever heard of Clúid, Oaklee Housing and many of the other housing organisations. The organisation had managing directors, boards of directors and whatever. Different people dealt with communities and the organisation had elected members throughout the country on sites. Unfortunately, the organisation is part of the problem now that is bureaucracy. One cannot build the blooming houses.

I want to ask the same question that Deputy O'Dowd asked about the NAMA offer. My own local authority refused NAMA. The NAMA complement of property was not taken up for a plethora of reasons, and the vacant properties as well.

The ideals of the organisation were perfect but it got caught up in big business rather than looking after the needs of customers or clients. Some clients of housing associations must endure awful issues. In some cases, public representatives cannot act on their behalf, which is anathema to what I stand for. I have a foot in both camps because I chair a very successful voluntary housing group. It has a small number of houses but we stuck to what we wanted to do. All the other smaller groups, and Deputy Casey might have mentioned some of them, have done great work but remained small. The organisation has gone into big housing like the big developers and is left with huge platters of land and maybe lots of houses that are not properly maintained or finished. It acted like NAMA.

The county councils have completely lost their way. I do not know whether they will hand over their housing provision to the AHBs or anyone else. I do not know who is expected to deliver all of the houses that the county councils have aspired to provide. No houses have been built in Tipperary and the same applies up and down the country. There is just talk. What about the unfortunate people who must sleep rough or live in unsuitable houses? The number of houses that are locked up is a disgrace. Any time one turns on the radio one can hear Fr. Peter McVerry and others talk about houses that are boarded up. I do not know why the organisation present cannot tackle the problem. Leaving houses boarded up attracts anti-social behaviour. I suggest that the organisation thinks about where it came from and what it originally set out to do. I suggest that it remain small and good at what it does because being all powerful has not proved successful in the building industry or in the voluntary association. I urge the organisation to show more respect for the voluntary associations. One or two of the voluntary associations may have grown too large, but volunteers took hold of them, which was necessary. Voluntary associations need a code of conduct but not because they are high and mighty. We can see why they have not been the answer because the houses have not been delivered. We need more volunteer groups but they need to be shown respect and given fair play.

Chairman

I thank Deputy McGrath. I ask Mr. Brennan to answer all of the questions and urge members not to interrupt him. Members can clarify their questions afterwards.

Mr. Kieron Brennan

I thank members for their questions. I will begin and then I will call on my colleagues to respond.

Some of the questions shared a common theme. Members inquired about the capacity and size of approved housing bodies, AHBs. Deputy Casey mentioned that there are over 500 AHBs. There are 30,000 housing units between them all. That sounds like a big number but it is only one tenth the size of the local authority stock.

Let us be honest. AHBs will not solve the housing crisis on their own. They do not have the scale to do so but are willing to play their part. One of the reasons we are sitting here is that we are determined to do so.

We must admit that our capacity is an issue. We plan to deliver 6,000 units.

That is a growth level of 50% over the duration of the remainder of the housing plan, which I think we would all agree is considerable. We hope it will mean 6,000 families in new homes, something to which we should all aspire and which we should support. However, we would like to do a lot more. Everybody, including local authorities and approved housing bodies, AHBs, needs to be firing on all cylinders to sort this housing crisis. Although in the overall scheme of things we are not the major players, we can make a major contribution in our own right.

Within the Rebuilding Ireland plan and the social housing strategy issued prior to that, there are commitments to assist or develop the capacity of AHBs. Those commitments have not been acted upon in the proposals from Government, I am disappointed to say. I wish to draw the attention of the committee to this. The development of AHB capacity is a commitment that has not yet been acted upon. We have an issue with this.

Affordable housing is very much an issue for us and for society at large. While we at AHB and local authority level are providing social housing for those within the limits of the income threshold, there are a lot of people above that threshold who cannot provide for themselves in the private market and have no recourse. At least social housing tenants will end up on a scheme and may hopefully be catered for at some point. There is no scheme for those who are above the income threshold. There is a commitment in the various programmes issued over the past year that there will be an affordable scheme brought about. It has to happen in order to create a balanced and fair housing market. AHBs and particularly the four bodies before the committee today are very much open to playing their part. It requires a degree of subvention, however. By definition, we are talking about people who cannot wholly look after their own housing need. As a group, we have also made a submission to the Government as to how we would like to see the affordable option being brought forward. If we have time later we might discuss it.

In respect of NAMA, my own housing body, Co-operative Housing Ireland, has never refused an offer from it. We have accepted every offer it has made. We found NAMA good to work with and have done our best to deliver quickly on what it offers. If NAMA was to offer more, we would gladly consider it. This would generally be the experience of the AHBs before the committee today.

In terms of vacant units, unfortunately we cannot resort to compulsory purchase orders. It is the prerogative of the State-----

Deputy Fergus O'Dowd

Working with local authorities. I accept that.

Mr. Kieron Brennan

I accept that, absolutely. There is a whole raft of issues around vacant housing. A strategy is, I hope, to be announced shortly. One issue to which we must all have regard is economy of scale and the efficiencies involved in dealing with individual units. In some cases we must consider the advisability of dealing with individual units. By and large, the AHBs do not normally engage in the purchase of single units, except in cases of special need such as elderly or disabled people, refugees, migrants, tenant members and so on, and unless requested to do so by a local authority.

Deputy Fergus O'Dowd

With respect, some actually do. I appreciate that Mr. Brennan is giving his opinion.

Mr. Kieron Brennan

Usually that would be at the request of a particular local authority.

Deputy Fergus O'Dowd

So the approved housing body will not. That is fair enough.

Mr. Kieron Brennan

Senator Murnane O'Connor mentioned Fruithill, a large project which we announced a couple of weeks ago. The Senator was in attendance at the announcement; it was a great day. It is an interesting project in that it is mixed tenure - the holy grail of housing development.

It contains a mixture of social and private housing. We put some youth services on the site as well. We have two local authorities, Laois and Carlow, nominating into that site. It is a great example of how we should be dealing with the housing crisis. That was a NAMA site and we were able to do it because we were dealing with a lease arrangement. In the absence of an affordable scheme, how could we go out and purchase stock to try to replicate it? We would need a scheme allowing us to purchase and put stuff on at market rate. It is difficult for AHBs or any players, including local authorities, to come up with those options. It might be facilitated through local authority or State lands being used for that purpose. The affordability piece could be offset against the value of the site, for example.

Senator Murnane O'Connor also mentioned tenant purchase. AHBs do not do that for a number of reasons. In our own case, it is a matter of belief and the reasons for which we were established. We want to provide social rental on an ongoing basis. One of the reasons we are in our current difficulties is that local authorities sold off a lot of their stock and are now short. We have less social housing available in this crisis than would have been the case had this not happened. That is just my view and the view of my organisation.

As a co-operative body, we support people into home ownership on a co-operative basis. For example, in Dún Laoghaire-Rathdown the local authority has provided a site and people have come together to form a co-operative. They are going about building units for their own benefit and, at the end of the process, the units will be in private ownership. The owners will have achieved this through a co-operative and affordable model. That is something that could be replicated on a wider basis.

I will pass some of the other issues raised to my colleagues. Mr. Cathal Callan might wish to address Deputy Ó Broin's questions about the payment and availability agreements and possible alternatives.

Mr. Cathal Callan

The first question was a comparison between cost rental and the current payment and availability structure. The second question was whether the payment and availability structure allows us to cover our costs. The current payment and availability structure is sort of structured on a cost rental basis anyway. It is set as a percentage of the market rent and is then measured against the asset we are buying and how much loan is required on it. What has moved is the amount of CALF that is available. There may be a situation in which no CALF is required and in that instance one would borrow 100% if one had a funder who was prepared to lend. Clúid has borrowed solely from the Housing Finance Agency, HFA, which will fund to 100% in that situation.

What is allowed by the Housing Agency when we put our assessment through is 3.5% above cost of funds. If we bring in a cost rental model, it will match the cost of funds to the amount of payment and availability required. We would also have to create a margin because the differential rent does not cover the day to day reactive maintenance, management of the property plus the planned programme. At the moment, the margin is around 3.5%, in return for which the housing associations are picking up the risk. A cost rental model would have to attach to a fixed loan over 25 years as there would have to be cost certainty whereby the cost of funds required would be set at the start and would stay the same for the full period. At the moment, if housing associations are not going to the market to fix the rate, they are bearing the risk of a variable rate over the full life of that loan. Comparing the two, what is in place at the moment is effectively a variant on the cost rental model. It has a slightly higher margin than one would expect of a pure cost rental model but that is because the housing associations bear the risk of the variability of the loan over the period.

Regarding risk mitigation in 100% loans, the key driver behind CALF when it was introduced up to a maximum of 30% was the fact that AHBs did not have adequate funding to put equity into the purchase of properties. If they did, they utilised their cash reserves very quickly. CALF was meant to create a situation whereby the risk that the funder - in our case, the HFA, external funders or credit unions - brought to the table was mitigated via the funder not taking the full risk on the loan. Those are probably the main drivers regarding the payment and availability agreements and the fixed loans.

To give some context to the question on funding pipelines, Clúid's pipeline is in the region of €350 million over the next three years, which will supply just short of 2,500 units. That is a considerable amount of debt to be taking on. It is being done within a framework of a regulator, which is now coming on line, and under which we are being more closely monitored and managed. Reference was made to an earlier statement. The professionalism within the sector is required because of the level of debt that we are taking on. Were we taking on that level of debt without the attendant professionalism in the sector, we would be running the risk of a larger AHB getting into problems or having difficulty accessing the funding because it is not adequately set up to do that.

Mr. Declan Dunne

I might answer a few of the questions, starting with the general points about the housing and homelessness crises. It is acknowledged everywhere that we are in a bad situation. There is no other way of looking at it. I often wonder how we can have a thriving economy if we do not have a functioning housing market. It is hitting many people in different ways. Constantly on my mind is the question of whether young people who are at the point of family formation will stay in this country if they cannot access housing in some form or other. What is their future in Ireland? This issue affects people who are trying to access mortgages or social housing, but there is also a group in the middle who are seeking an intermediate solution because they qualify neither for social housing nor mortgages. There is a significant question to be addressed in that. For this reason there is a need for the State to consider some intermediate provision, be it called "affordable", "cash rental" or whatever model is considered to be the right one.

As for the role of AHBs in all of this, I have been in my role since last August when I joined Respond! I come with an outsider's view of AHBs and a strong feeling that there is room for improvement. In a voluntary role, I chair the network of all of the homeless organisations in the four counties of Dublin. Previously, I worked as the CEO of a specialist AHB, Sophia Housing, which deals with people with complex needs. I cannot get the situation that those people are in out of my bloodstream. I cannot forget the degree of need that people have. That is why we in Respond! try to deliver our part. Our AHB role is a small part, though, and we are not the solution for housing. Local authorities, the wider State and private provision have a role. If all of the organisations present improved our delivery three times over, it would be a small contribution. We should increase our delivery and make our contribution, but it is not going to sort out the problem.

With people's needs in mind, the first thing that I did upon joining Respond! was to say that we needed to accept some responsibility for homelessness. We could not just sit pretty as a landlord taking in rent, able to do what we do and have 100 employees, a finance department and this and that department without accepting our responsibility for doing something about homelessness. For that reason, we have engaged in the provision of emergency accommodation. No one wants to do that and we should not have to provide emergency accommodation. It is crazy that we have to go down that route, but we absolutely have to because the delivery pipeline of all sorts of housing - private, social and any kind of affordable housing - is so slow that it will take us years to address it.

We have to do it while also doing other things.

I would be with anyone who wants to challenge us, our arrogance, our efficiency, our effectiveness or whatever. It is appropriate that happens and I would welcome it. My colleagues feel the same way. We are at this meeting trying to determine how we can be held to account and demonstrate how we are regulated, how we operate and how we can be challenged to improve what we are doing, and whether it is possible for us to do more, be that through credit union money or whatever. That is our motivation.

In terms of representation from local authority members or Deputies, I would personally be comfortable with that. We are in a democracy and that is what we are supposed, and need, to do. I have a personal commitment to doing that. It happens. It is helpful to our role on the balance.

Deputy Ruth Coppinger

I know that we have to finish, but I wish to ask about the pyrite problem in housing owned by Respond! in Mulhuddart. In June 2016, I wrote to Respond! about this matter but have still not received a response. Will Mr. Dunne agree to hold a meeting with the affected residents to give a progress report? The Pyrite Resolution Board copied Respond! in on its letter.

Mr. Declan Dunne

I would be happy to do that. I joined Respond! in August, so I did not receive the Deputy's letter. The situation has gone to the European court and the Supreme Court. It is looking positive in terms of an outcome. We accept our responsibility and will live up to it.

Chairman

I thank Mr. Dunne. Deputy Ó Broin had a question for Mr. Coyle on North-South issues but, with the agreement of the committee, I wish to stick to the topic of credit union financing and how it can facilitate AHBs.

Mr. Patrick Coyle

Oaklee Housing was established in Dublin in 2000 and has 700 units under management. We have ambitions to provide a further 700 homes over the next three years. We are a member of the Choice Housing Ireland Group, which is primarily based in the North and has more than 10,000 units of housing under management. The benefit of us being a member of the group is that we have many professional resources, for example, stock management. Senator Murnane O'Connor asked how quickly repairs would be made. We conduct a regular stock condition survey. Many of our new technical resources have allowed us to maintain and respond to our tenants quickly.

Regarding Deputy O'Dowd's question on vacant homes, we are working with the Housing Agency to purchase properties that were vacant in County Louth as well as in Dublin and a number of other counties around the country. It is a time-consuming process because the houses must be brought up to a standard at which they can provide a suitable home. We must recognise that significant work is involved in doing that and in ensuring that what we provide is safe and secure.

In terms of the question on-----

Deputy Fergus O'Dowd

I do not disagree with Mr. Coyle, but it is working and the houses are occupied now whereas they were not a year ago. That is my point. I accept all of the issues that Mr. Coyle has properly raised and Oaklee Housing is doing an excellent job in County Louth, where it has transformed areas where houses had actually been burned out and left derelict. That is the future, but doing that work is faster than applying for planning permission and going through the construction phases when houses are sitting empty and boarded up and everything is in place except the families. Obviously, the organisations before us must do significant work on such units, but the average cost in County Louth is approximately €100,000 per home, which is far less than it takes to build a house. I acknowledge and welcome the work that the organisations are doing.

We all have good ideas and are doing excellent work. I take on board the strong point that was made, in that we need to manage the situation more aggressively in terms of achieving outcomes and cutting through the red tape.

We need to plan it and do it. If a special unit is needed to look at the costs associated with individual loans, that should be facilitated. I accept that Mr. Coyle and his colleagues might not have the skills. This work needs to be done. When it is done, it works. Today, there are 50 families in houses that were boarded up a year ago. If this work were done in every county, thousands of homes would be occupied. No infrastructure needs to be built because the water, sewerage and electricity connections are already there. People are already living in these communities. This is an easy win. I thank the Chair for her indulgence.

Chairman

I will take a second round of questions in order that members can seek clarifications. We have 40 minutes left. I ask all present to stick to the topic we are discussing today, where possible.

Deputy Eoin Ó Broin

I thank the witnesses for their answers. I have a couple of follow-up questions. How do the housing bodies envisage that the special purpose vehicle fund will emerge if the Central Bank and the Registry of Credit Unions consent to change the rules to allow credit unions to provide such funding? Do they envisage that funding from the HFA will form part of that fund, or will funding from the HFA be available separately as it currently is? Given that HFA funding is currently available, what is the additional advantage of having another source of funds? Somebody might rightly or wrongly point out that the housing bodies can seek to borrow from the HFA anyway. What is the added value of the credit union fund? That is my first question.

I would like to repeat a question that I put to the representatives of the credit union movement this morning. The housing bodies are in discussions with the Department, which is involved in discussions with the CSO and EUROSTAT about the possible redesignation of approved housing bodies as on-balance sheet State actors rather than non-State actors. How concerned are the housing bodies about that? What is their sense of where that is at the minute? If this redesignation happens, as it has already happened in the UK, it will create a particular difficulty for their operations and for the Government's plans.

Obviously, the housing bodies are involved in ongoing negotiations with the Department about the legislation, which we have yet to see. I am sure the bodies have more of an idea than we do of how it is shaping up. Are those discussions going well? Are there concerns about this process? Is there anything that the witnesses feel it would be appropriate to share with the committee about all of that at this stage?

I would like to say that my experience of approved housing bodies in my constituency has been quite different from that outlined by other members today. I want to acknowledge that difference. Co-operative Housing Ireland, which was formerly known as NABCO, has a significant number of units in Dublin Mid-West. Respond! has acquired units there more recently. Clúid also has a significant number of units. My experience has been very good. That does not mean there are no problems. We sometimes have difficulties with housing managers. My experience with housing bodies has been no better or no worse than my experience with local authorities. I have found that these relationships have been very productive. The units the housing bodies provide and manage are of a very good standard. I had quite a lot of experience with Oaklee when I was a councillor on Belfast City Council and my experience was the same. I do not suggest other members are wrong but it is important to acknowledge good engagement with housing bodies, good housing managers and well-managed approved housing bodies. My experience is that these bodies provide good-quality social housing in addition to the local authority housing that is there. The witnesses have clearly articulated today that this should continue to be the model. As long as it is, I will be very happy to support it and to see more of it.

Senator Jennifer Murnane O'Connor

The houses that the housing agencies provide to people, often after buying them in groups, are of an extremely high standard. That is not the question. I totally disagree with what has been said in one respect. This is the way forward from the Government's point of view. I hope the credit unions work on the tier 3 we are looking at because that is important. I still think people should have the option of buying after ten or 15 years in a house. I think it should be given to them. I would stand firm on that. The other issue I would like to raise is not a major one. I am concerned about the timescale of the delivery of the houses. I think that is crucial in one sense. When a housing estate is built, how quick is the delivery? I think that is crucial. As the witnesses are aware, we have had separate dealings with the different bodies. I asked a question about this but I did not get a reply. I welcome the once-off purchases that all the housing bodies are doing now. They are providing houses that people need and that has to be welcomed. That is not even an issue here. I have never had an issue with the standard of any of the houses that have been provided by the housing bodies. They have an excellent standard in that sense.

I hope the plans for the credit unions work as we go forward. It is crucial because we have a housing crisis. What is the timing? I find that the timing can sometimes be slow. Do the housing bodies have a regulation or rule that requires them to complete their work within a certain timeframe after they purchase a house or get a housing estate through NAMA? I know they have worked very well with NAMA. I compliment them on that. They have always taken on the houses. I know they have been working on this issue.

Overall, we have to be positive here today. There are some little things that people come to me about. It is a question of political representation. I will make sure to say this if anyone comes to me again. I had felt that this issue needed to be addressed. These are just concerns that I have. I think we are positive here. We need to get more housing. I think the housing bodies have good plans and ideas for the future. That is really welcome.

Mr. Kieron Brennan

I will make a contribution. I am sure some of my colleagues will do likewise. I will begin by answering Deputy Ó Broin's question about additionality in the context of the availability of HFA assistance. The HFA provides a pretty good product at a good rate. We have to allow for that. We would not be sure that it will necessarily be available into the future. In the interests of having a workable market, it is better to have more than one good supplier of a product - finance, in this case - in the market. I would welcome the possibility of credit union funding for all sorts of reasons. It is not just about the funds themselves. It would be a great example of social finance doing what it should do in a particular local area. It would be a huge win for local authorities, the State and ourselves. We can all combine to provide housing for people who badly need it.

It is clear that credit union finance would be off the balance sheet. We are off the balance sheet at the moment. It is possible that this will change because we are under assessment by the CSO and EUROSTAT in this context. We have been communicating with the various authorities involved. We have been making our case fairly strongly. The Irish Council for Social Housing is working hard on that. We hope we will remain off the balance sheet. When the AHBs in the UK ended up on the balance sheet, one of the issues was that the regulation was deemed to be so intrusive that it amounted to State control. I think that has been factored into the regulation Bill that has been mentioned and will be introduced this month.

The wider question of regulation arises in this context. The word "proliferation" was used by someone when speaking about the number of AHBs. There are approximately 500 AHBs. As Deputy Mattie McGrath mentioned earlier, the vast majority of them are small, locally based entities that were established through local initiative to deal with a particular problem in a village or community. Those who put AHBs in place, drew down funding and have continued to manage those bodies must be applauded. They will continue to operate in this way. Most of them do not have the ambition to expand to deal with the particular issue of the general housing crisis. Since those days, more recently it has become extremely difficult to establish a new AHB. I understand that no new AHB has been established since the rules were changed a number of years ago. Regulation has increased significantly, as the members of the committee will be aware. Like all developing AHBs, we must sign up to the code of conduct with the regulator. We are heavily regulated. When the new legislation comes in, it will put additional requirements on us.

As Deputy Casey mentioned earlier, tier 3 might be called the ultimate level of regulation. All of the housing bodies represented at this meeting are tier 3 AHBs, which are bodies that have more than 300 units. All of us have significantly more than that. We are deemed to be suitable for increased regulatory attention because we are developing, borrowing and taking on judicial responsibilities.

Cathal Callan has spoken of Clúid's level of borrowing - €350 million - going forward. If a lender is to lend into that situation, such as the credit unions may be, they would want to ensure that those entities are properly regulated and that the systems to which Mr. Callan referred are in place. We welcome the additional regulation that will result, on a statutory basis, hopefully after the enactment of the Bill to be introduced this year. All of this is good.

With regard to representation, in general, approved housing bodies do their best to respond to representatives, be they Deputies, councillors at local level or council officials when they raise issues with us. Yesterday I was invited to a local authority strategic policy committee. I sat down and answered all the questions and addressed all the issues that the committee members had to deal with. We would do this on an ongoing basis.

As Co-operative Housing Ireland, CHI, is a co-operative, our members own and control our organisation. The majority of our members, be they at local co-operative level or at national board level - which I report to - are tenant members of our houses. They are elected, they control us and they keep us accountable. We are pleased with this structure.

Reference was made to the responses.

Senator Jennifer Murnane O'Connor

It was the timing of responses.

Mr. Kieron Brennan

On the timing of responses, once we receive completed units we must first pay for them. As the repayments kick in straight away, it is in our interests to ensure the units are filled. In our case, and I believe it to also be the case with most approved housing bodies, all of the nominations for allocations that we would take come from the local authority. If we have units coming on board, we approach the local authority - which is aware because it would have given approvals and so on - and we let the local authority know that we have, for example, ten new units and that we need ten, or more, nominations. Some of the units may not be accepted by the people involved. We depend, to a degree, on local authorities in that respect but this process would always happen in co-operation with the local authority. By and large, much as we do not or cannot tolerate much in the way of voids or empty units among our stock, neither can we tolerate unfilled homes. For financial reasons we must fill them.

Mr. Cathal Callan

Going back to the added value issue, and Mr. Brennan has touched on it, all of those present here are actively looking for alternative finance to that from the Housing Finance Agency. The motivation behind this is to widen the portfolio of debt and where we get it from, but it is also because we realise there is a limit to how much we can borrow from the Housing Finance Agency in the long term. As I have said, our programme will require significant additional funding. This is why we welcome the potential to borrow from credit unions. When we looked at additional funding coming in to the sector we recognised the limitations within the commercial banks for long-term matched funding. We then looked at long-term investor funding, which is long-term commercial bank funding from outside Ireland. We would welcome the opportunity to have another source of funding that could match the time periods we need to borrow for, which are around 20 years, 25 years or 30 years.

The second question relates to the CSO. I have very serious concerns about the implications of any decision. I believe the implications within the United Kingdom were not as significant and were managed quite well. However, they pertained to the level of governance and not to the financial or economic aspects. I do not believe we would have a problem with governance because, given the regulator is not on a statutory footing, there is not the same level of control in place. We will potentially have a problem around the funding streams that are coming through to us. I have been with Clúid for eight years. I came in when the capital loan subsidy scheme and capital assistance scheme funding stopped and it came as a juddering halt to the sector as to how we were going to move forward. It has taken a number of years for us to get to the point where we could borrow properly and where we knew what we were doing in relation to it. The regulator was put in place. My concern is that if there is a decision regarding the price and availability structure or the CALF structure that has implications in respect of the CSO decision, it could have the same juddering effect on the sector as had that cessation in funding. This could present major problems for this proposal in the context of credit unions accessing funds.

There are also major problems about our long-term plan and delivery programme because it is all premised on accessing funding from the HFA or elsewhere. I am concerned about the decision, and it will not be reversed quickly. There may have to be changes and the changes that are put in place may cause problems for the funding stream. One is stepping somewhat into the unknown but I would estimate a two-year or three-year window to rectify it, if it is possible to do so.

The issue of tenant purchase was raised. There have been lots of discussions and Clúid has looked at running some form of tenant purchase. Our executive board has actively held discussions on whether we want to do it. Mr. Brennan spoke about retaining properties for social housing but there is another problem, which is that all our assets are encumbered and have a loan against them. Any tenant purchase system has to work on a significant discount basis and the discount for AHBs, for example, would have to be compensated somewhere. It is not that we will start crying because we are out of cash - we have a debt and have to repay that debt. Whether it is with the CLS or the debt finance units there is the same implication. Clúid would welcome a tenant purchase system if we understood the mechanisms behind it and how it would work. However, we also understand the risk and there are issues that need to be worked through.

Chairman

I thank Mr. Callan, Mr. Coyle, Mr. Dunne and Mr. Brennan for coming before us and for their ongoing engagement. The committee will resume consideration of this topic tomorrow morning with officials from the Department of Finance and the Central Bank.

The joint committee adjourned at 1.37 p.m. until 9.30 a.m. on Wednesday, 5 July 2017.