Mr. Cian Ó Lionáin:

I am a principal officer in the Department with responsibility for developing the regulation of the approved housing body or the housing associations sector. I am accompanied by Ms Sheila Power. I thank the committee for the opportunity to discuss the topic.

As previously mentioned, the past five years has seen a radical change in the social housing sector. Wider economic circumstances have forced a major reduction in direct Exchequer support to social housing.

In 2008, for instance, €480 million was made available to the approved housing body, AHB, sector. This year, the equivalent figure is €55 million. To maximise the impact of the limited amount of money available, the Department has led a shift in the AHB sector from capital-funded programmes of construction and acquisition to more revenue-funded options. Common to all these options is the necessity for approved housing bodies to direct their own resources to projects and, in addition, to raise non-Exchequer finance. The statement I submitted to the committee last week outlines these options, namely, leasing, purchasing and-or construction, and the acquisition of properties using the Department's capital advance leasing facility. It is in this context that the Government's housing policy statement, published in 2011, clearly places approved housing bodies at the heart of social housing provision.

The Government is committed to working with the AHB sector to create the conditions that will protect the Exchequer investment to date in the sector, create conditions that will encourage financial institutions to invest, and provide a framework to protect the tenant while allowing the AHBs to engage with new models of funding and housing provision. In all of this, today's topic, regulation of the approved housing body sector and the driving of ever-better standards and performance are key planks of the Department's strategy. If the sector is to expand its housing delivery capacity, it will also need to increase significantly external investment in the sector. This will happen when investors are reassured that the sector is well-monitored and regulated. A low risk sector is one in which people want to invest. Regulation is also right for boards and for tenants as it provides them with a way of measuring and improving performance. I must point out that while housing outcomes-based regulation has not been in place for the sector until now, the sector has been subject to a wide range of other regulatory regimes, including those in the Companies Registration Office, the Revenue Commissioners and the Health Service Executive.

My colleagues referred to this document, Building for the Future, published by the Department in July 2013, which sets out a voluntary regulation code for approved housing bodies in Ireland. The code is the precursor to a statutory regulatory framework. It outlines the minimum standards applying to all approved housing bodies as well as additional requirements for large bodies. The code provides a real-world opportunity to design the best regulatory structure for Irish housing associations that builds on existing regulatory strands and engages with the approved housing bodies.

In developing the code, the Department has been very up-front that we expect to see this code evolve over the next two years. It is a living document which should be influenced by the participation of as many approved housing bodies as possible. As such, we are open to further submissions on the code and we look forward to feedback from this committee.

The code is underpinned by four key guiding principles, namely, a tenant focus, proportionality, accountability and transparency. In the longer term, we would like to have a statutory regulatory framework in place by 2016 and over the lifetime of the code. In the meantime, we recognise that it is important to have a credible autonomous system in place that will give all stakeholders confidence that we are taking the right approach. With that in mind, the Minister of State with responsibility for housing and planning, Deputy O'Sullivan, is looking at appointing an interim regulatory board to oversee the roll-out of interim regulation and to advise her on the development of statutory regulation. The Department is also considering the resources that will be necessary to support this entire process, and I would hope the Department would be able to make an announcement on these issues before the year is out.

As part of the evolution of the code, the Department has also established an approved housing body sector financial capacity group to identify the further detailed financial requirements that could be included in an extra chapter to be added to the code specifically targeted at the largest approved housing bodies, or tier 3 bodies, as the code calls them.

Regulation is but one very important aspect of the wider plan for developing the sector. The Department is also committed to working with the sector to build its capacity to pool skills and deepen expertise to best equip the sector to meet the social housing supply challenges in the years ahead. It is also imperative that local authorities are embedded in this entire process, with a key strategic and facilitative role. Now that local authorities are no longer direct providers of new social housing to any major extent, how can the skills and expertise in the local authority sector be put to use to help approved housing bodies provide new social housing?

As the regulatory process gathers pace and the expectation is increased on approved housing bodies to expand further their delivery of social housing, strategic issues arise for all segments of the approved housing body sector. For instance, what is the long-term strategy for smaller approved housing bodies? Having commenced, survived and usually thrived as entirely voluntary organisations, where do they see themselves in five, ten or 20 years time? Can more be done in terms of the pooling of skills and resources to enable smaller approved housing bodies operate in this new, more challenging environment? These are questions the Department wants to explore fully with the sector, but for now I take this opportunity to thank the committee and to urge all approved housing bodies to sign up to the code and work with the Department in shaping the future of the sector.