Mr. Sean O'Connor:

A lot of what I would call turnkeys are projects we have been involved with, many of them pre-planning and certainly pre-construction. We would class them as new-build development agreements or forward purchase agreements, and the LDA term now is “forward purchase”. We think many of those schemes would not come to the market on the strength of sales, particularly with apartment schemes. As far as we can see, our intelligence on the market is that the only buyers for apartments right now are investors, local authorities or housing associations, and we do not see that particularly changing with the costs where they are.

In terms of the funding system and the Deputy’s question about equity, all we know is that the current funding system of CALF and CREL being loan-based and every scheme being 100% funded really puts us out of step with the rest of Europe, where grants are readily available, as I said when the Deputy was out of the room. We went overnight from a system of 100% grant funding to 100% debt funding. I think that is starting to creak badly now and we can see areas of the country where it is just not viable. The market rents which underpin the system are not sufficient to allow a scheme to become viable. Additional to that, associations are building up levels of debt within the regulatory framework. “Soften” is the wrong word, but it should be okay within the regulatory framework because it is a very strong underpinning of our borrowings and we fix interest rates in line with the term of the agreements, so there is a matching of income and expenditure, particularly loans expenditure.

The concept of equity is interesting. For me, it may be wishful thinking and it sounds interchangeable with “grant”. We would hope “equity” is not just semantics and it is around some protection about the use of social housing in perpetuity, which is what we are about. There is no provision to sell association stock at the moment to tenants; that is the position of the alliance and it is not on the Statute Book. If it was to be proposed, I think we would say we would prefer that it is retained for use as social housing in perpetuity. Possibly, the switch from CALF funding of this soft loan to a grant could be put in place in replacement for a guarantee of that perpetuity of the social aspect, which is not there at the minute because there are funding issues around lenders and they do not want those things in place. The CREL on the scheme in Enniskerry Road in Stepaside is a 70-year designation and the standard designation is now 50 years, which is not bad.

It is an interesting concept. As to our reasoning, as a sector, we would be very happy to consider it. Anything which involves less borrowing would be good. It is just how that equity would work because, normally, equity means control and there is a shareholding. That is not a bad thing for us but it might be a bad thing for the State because we think one of the big drivers of the CALF-P&A system was an off-balance sheet mechanism and that is now water under the bridge because we are on the balance sheet and, of course, we are borrowing off the Housing Finance Agency, which scores against public expenditure, so that is on the balance sheet. In a way, the whole design of the system has possibly moved on. “Equity” is just a word but it is around the control mechanism that the worry might be. If there is hope to get the sector off the balance sheet for obvious reasons, would that be an obstacle and how would it work in practice? In principle, I think people would be happy to look at anything which involves us borrowing less but doing the same or more.