Ms Rosalind Carroll:

I thank the Chairman and committee members for the opportunity to speak to them regarding the housing (regulation of approved housing bodies) Bill 2015. I am joined by my colleague, Ms Sophie Geraghty, financial regulation manager in the regulation office of the Housing Agency.

The regulation office was established as the interim regulator for approved housing bodies, AHBs, in February 2014. Our purpose is to implement the voluntary regulatory code for AHBs and to introduce a system of regulation pending legislation and a statutory framework. The regulation office reports to an interim regulatory committee of non-executive members. The committee, appointed by the Minister of State with responsibility for housing and planning, is a committee under the board of the Housing Agency but has independent decision-making powers.

Our specific brief is to implement the voluntary regulation code for approved housing bodies; to assess AHBs in respect of their financial viability, governance, performance management and overall compliance with the code; to develop the regulatory framework further; and to advise on and support the development of the statutory regulatory framework. There are more than 500 AHBs, also referred to as housing associations or co-operatives, providing in excess of 30,000 homes throughout the country. The sector is very diverse in terms of activity and size, ranging from small, voluntary, community-based organisations to large-scale national organisations, although most of the stock is held by a small number of large AHBs. The sector has developed steadily over the past 20 to 30 years in what was, until recently, a low-risk environment. However, the financing and delivery of social housing has been changing over recent years. The sector is becoming less reliant on capital grants from the Government and increasingly is borrowing finance to support the development of social housing. AHBs are now a central part of the Government’s vision for social housing provision, and regulation is vital to ensure the enhanced role of AHBs is managed effectively, that existing assets are safeguarded, and that the tenants of existing and future social homes are protected at all times.

The AHB sector has made a significant contribution to the development of social housing in Ireland. Regulation of the sector should enable, rather than impede, the further delivery of homes and is important for the following reasons: to ensure the investment made by the State is managed and that homes provided are available for tenants into the future; to build the capacity of the sector to deliver more and better quality homes; and to build the confidence of public and private funders to invest in the sector through the presence of regulatory oversight. Experience elsewhere has shown that well-designed regulation of AHBs can foster stakeholders’ confidence in the sector and create an environment that encourages growth and innovation. The presence of regulatory oversight is critical in building the confidence of lenders to invest in the sector and in building the capacity of the sector to take on new risk. At a practical level, good regulation can also lead to lower lending costs for the sector, when lenders are reassured as to the long-term stability and growth potential of the sector. Regulation is also very important in protecting the interests of tenants and ensuring social landlords provide good quality services.

Since the regulation office in the Housing Agency was established, the office has sought to promote regulation in the sector and develop a framework which allows for robust oversight of the sector and for a smooth transition to a statutorily based framework. At this point, 210 AHBs have signed up to regulation, representing 24,682 homes or 82% of the overall AHB stock. The office is confident that all larger AHBs, that is, those with a stock of more than 300 homes, are signed up and the numbers of AHBs signing up continues to grow by the week. We have completed the first cycle of assessments, based on an annual regulatory return of 142 AHBs, and have commenced the second cycle of annual assessments in respect of 2014. The office has been able to engage positively with a number of AHBs where issues have been identified or referred to the office. An annual report with aggregate data on the sector as a whole was published in July 2015, which gives an overview of what the sector looks like as well as how it is performing against certain criteria, and thus further supports the transparency and accountability of the sector.

Regulation has a key role to play, not just in protecting tenants and safeguarding the public investment in social housing but also in enabling further delivery of social housing. A significant number of AHBs have voluntarily signed up and have welcomed regulation. Many AHBs consider it a necessary element of them growing and providing social housing in the new funding environment and in the context of them being more transparent and accountable to tenants, the public and the State. There are a number of parallels between the current voluntary regulatory framework and what is proposed in the Bill. The experience gained in implementing the voluntary regulatory framework over recent years has informed the design and structure of the Bill. The Bill underpins many of the principles established under the voluntary structure in that it is a structure that is proportionate, risk-based and focused on the financial health, governance and performance of AHBs. The Bill also provides the necessary legislative powers for a regulator to be able to assess, investigate and intervene where necessary. It enables the regulator to set standards for the sector, which mirrors practice already occurring. Under the interim structure in place, a financial standard has been developed for the sector which establishes specific financial requirements for AHBs. The power to transfer assets is also provided for. This is a significant power and one that has rarely, if ever, been used in other jurisdictions, but it is necessary to protect assets and ultimately protect tenants where serious issues arise.

In an increasingly complex funding and delivery environment and with a growing need for organisations to be more accountable and transparent to their tenants, Government and investors, statutorily based regulation is to be welcomed. Good regulation supports what AHBs should already be doing from a business perspective and voluntary regulation is operating very successfully.