Investing in Social Housing
The Social Housing Strategy 2020 was approved by Government and published in November 2014. Following from the Strategy, a wide variety of developers, investors, financiers, Approved Housing Bodies and others expressed an interest in being involved in the provision or financing of social housing across the country.
In 2015, a body called the Social Housing Investment Proposals Clearing House Group (or the Clearing House Group) was established to examine and consider proposals and to meet with the companies, groups and institutions involved. The Clearing House Group comprised representatives from:
- the Department of the Environment, Community and Local Government;
- Department of Finance,
- Department of Public Expenditure and Reform,
- the Housing Agency, and;
- the National Economic and Social Council.
The Chairperson was assigned by the National Asset Management Agency on a temporary basis at the request of the Department.
During the course of its work, the Clearing House Group received 25 proposals for funding social and affordable housing, using both existing mechanisms and new approaches.
The Clearing House Group reported to the Minister in November 2015. Arising from its work, a series of actions are being taken with a view to better facilitating private investment into social housing. These are described below:
Revisions to existing schemes to better facilitate private investment in social housing
The Social Housing Current Expenditure Programme operated through the Department currently provides a means whereby properties can be built or bought by Approved Housing Bodies (AHBs) with the use of private funding. These units are then leased through AHBs and Local Authorities for the provision of social housing. This scheme is underpinned by a lease and other legal agreements which provide that rental payments are made by the State over an agreed long-term time period. This is typically for 20 years. In return, the housing units are made available for social housing.
Changes are now being proposed to this scheme to provide revised arrangements which serve to expand these mechanisms. This is with a view to facilitating larger institutional private investors to come into the social housing market.
An affordable rental pilot scheme was announced in October 2015 as part of Budget 2016. It also formed part of the package of measures agreed by Government and set out in the Government policy document Stabilising Rents, Boosting Supply, published in November 2015.
€10 million has been committed to the affordable rental scheme in 2016. This is to be an on-going annual commitment to secure a long term increase in the supply of housing for affordable rental.
Affordable rental works on the basis of tenants paying the majority of the rental cost from their own resources with the State providing a subsidy to meet the shortfall. The scheme would be generally aimed at those in lower-paid employment. The provider of housing would receive some form of subsidy or concession from the State for the provision of dedicated rental accommodation. In return for this, the rent would be pitched below the market level – at some 70% of the market rent.
The overall objective of an affordable rental programme would be to provide affordable residential accommodation for low to moderate income households.
Timelines for roll-out of the schemes
The National Development Finance Agency is acting as financial advisor in respect of this work. The new and revised schemes arising from this process will require to be tested. This is to ensure that there is no negative impact arising from how they are viewed and treated in respect of the State’s General Government Balance. It is intended that the schemes be brought to the market in 2016.