Oireachtas Joint and Select Committees
Tuesday, 2 October 2012
Joint Oireachtas Committee on Environment, Culture and the Gaeltacht
Discussion with Housing Finance Agency
We are now in public session and will discuss the functions and responsibilities of the Housing Finance Agency plc, HFA. I welcome here today Dr. Michelle Norris, chairperson, Mr. Philip Nugent, director, Mr. Barry O'Leary, chief executive officer, and Mr. Tom Conroy, company secretary of the Housing Finance Agency, and thank them for their attendance this afternoon.
In commencing proceedings I wish to draw attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if witnesses are directed by this committee to cease giving evidence in relation to a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses 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, persons or entity by name or in such a way as to make him, her or it identifiable. I also wish to advise that the opening statements submitted to the committee will be published on the committee's website after the meeting. 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 by name or in such a way as to make him or her identifiable.
We have invited the HFA to brief us on its activities and how it spends its money. The company's annual report of 2011 states that its principal objectives are to advance funds to local authorities and the voluntary housing sector to be used by them for any purpose authorised by the Housing Acts and to borrow or raise funds for these purposes. I would contend that "for any purpose authorised by the Housing Acts" is a very broad remit and am interested in what role, if any, the agency has in refining this remit, particularly given that there is further housing legislation coming down the line. I am referring in particular to the forthcoming Residential Tenancies (Amendment) (No. 2) Bill, which will apply further governance requirements to the voluntary housing sector. I would also ask that during today's deliberations witnesses do not get too bogged down in the minutiae of facts, figures and sums with regard to the agency but deal in more general terms with headline expenditure and so forth.
The number one question concerns how much finance is available at present to the agency and where it sees that being spent in the short to medium term. How will the HFA ensure the State is getting good value for the investment and support it gives to the agency? Finally, I would be interested in a brief description of one or two successful projects the agency is engaged with at present. I am sure members will have many questions regarding both the national and local approaches of the HFA. I now call on Dr. Norris to make her opening statement.
Dr. Michelle Norris:
I thank the Chairman and members of the committee for inviting me and my colleagues here to address them today. My name is Michelle Norris and I am the chairman of the Housing Finance Agency, HFA. I would like to introduce my colleagues again. I am joined by Mr. Barry O'Leary, who is the chief executive officer of the agency, Mr. Tom Conroy, who is the company secretary and financial controller, and Mr. Philip Nugent, who is a board member and non-executive director of the agency and a principal officer in the planning and housing policy and finance section of the Department of the Environment, Community and Local Government.
I will start by outlining the functions of the agency and our mission. The agency was established in 1982 and its function is to advance loan finance to local authorities and voluntary housing bodies to be used by them to fulfil their functions under the Housing Acts. We borrow or raise funds for these purposes to lend on. Our mission is to source and structure the loan finance in the most cost-efficient manner possible. The agency is not funded directly by the Exchequer but is a self-financing organisation, funded by a small charge on each of its loans. The agency does not formulate housing policy, which is the reserve of the Minister for the Environment, Community and Local Government, but simply implements it. The Government guarantee on the agency's borrowings enables it to raise funds at very low interest rates. The total outstanding loan book of the agency, as of 31 December 2011, was €4.4 billion.
In terms of the structure of the agency, the board is appointed by the Minister for the Environment, Community and Local Government with the consent of the Minister for Public Expenditure and Reform. The term of membership is generally five years.
The board normally consists of 12 members, including a serving county manager and representatives from the private sector. It also includes a senior official from the Departments of the Environment, Community and Local Government and Finance.
The directors of the agency are committed to maintaining the highest standards of corporate governance. We follow corporate governance principles for companies, known as the UK Corporate Governance Code 2010, and the code of practice for the governance of State bodies as published by the Department of Finance. The board has established a performance review committee which evaluates its own performance and those of individual directors.
The principal function of the agency is to raise finance which we lend on to local authorities and housing associations for their functions under the Housing Acts. The details of what we fund have changed since we were first established, reflecting changing Government policy and needs among clients of local authorities and the voluntary housing sector. The agency was originally set up to operate a specific scheme of income-related mortgage loans which allowed 16,000 households to acquire houses between 1982 and 1986, but our remit has been widened in the intervening period. In 1986 we were given responsibility for funding all local authority house purchase loans and since 1992 we have funded the shared ownership scheme, which enabled lower income households to buy houses, and the capital loan and subsidy scheme, which until recently was one of the main schemes for funding the provision of social housing by voluntary bodies. In 2002, we were given powers to lend to local authorities for water, waste and environmental projects, and to lend directly to voluntary housing bodies. Previously we lent to local authorities and they lent the money on to voluntary bodies.
The agency categorises its business into the following two broad areas: mortgage business, which accounted for €1.4 billion as of 31 December 2011 and 32% of total outstanding loans; and non-mortgage business, which was about €3 billion at year end and 68% of the total. Of the mortgage-related business loans, 82% are variable-rate annuity loans, 9% are older income-related loans and shared ownership loans and 9% are fixed-rate loans. In total, these schemes lend to about 25,000 households. Non-mortgage business covers the wholesale aspects of housing by local authorities, such as support for the voluntary housing sector, land acquisition, bridging finance and projects ancillary to and supportive of housing.
While we have been empowered to lend to voluntary housing bodies since 2002, we only recently began to do so as capital grants from central government, which was the traditional source of funding for these bodies, became more difficult for the State to finance. Powers for such lending are enshrined in section 23 of the Housing (Miscellaneous Provisions) Act 2002. To date the agency has received 17 applications from voluntary housing bodies for certified borrower status - in other words, eligibility to borrow from the agency. Of these 17 applications, four have been approved, eight rejected, and five are pending a decision by the agency’s credit committee. Once voluntary housing bodies achieve approved borrower status they can then apply to us to borrow for particular schemes. To date, we have approved applications from four certified voluntary housing bodies to borrow to the value of €14 million.
I am sure the committee will be interested to know how we set and manage our interest rates. The agency has adopted a policy that sets interest rates at the lowest level commensurate with its costs, thus effectively operating on a break-even basis. On mortgage-related rates, interest rates are set to ensure the agency can meet its costs from its operations. We also have regard to the level of average rates generally in the market. The current variable rate to the borrower, excluding mortgage protection insurance costs, is 2.75%. Historically the rate was approximately 0.5% below the average comparable market rate; currently, it is about 1.5% below it, which offers borrowers a significant saving in the current economic climate. Our non-mortgage-related variable interest rate is closely tied to our ongoing cost of funds. We achieve this by setting the rate monthly in arrears once our costs are known for that month. The average rate for 2011 was 2.34%, which was significantly less than average private sector finance rates, where they were available.
Ordinarily, the agency funds its operations by borrowing on the domestic and international capital markets. For funding housing-related loans, all our borrowings are State-guaranteed and our borrowing limit was increased to €10 billion in the Housing (Miscellaneous Provisions) Act 2009, which should be sufficient for the foreseeable future. The majority of the agency’s loans have a variable-rate structure and hence its funding has traditionally matched this through use of a State-guaranteed €6 billion euro commercial paper, ECP, programme. However, as the sovereign began to experience difficulties in borrowing on international markets during 2007 and 2008, the agency encountered similar difficulties which led to unfavourable conditions for issuing under the agency’s ECP programme. An alternative source of floating rate funding became available in 2011 through the multilateral EU-IMF programme of financial support for Ireland, via the NTMA. This programme, with a capacity of €4.5 billion, is more than sufficient to cover the agency’s variable funding needs at present. The agency also utilises the guaranteed notes, GN, programme to provide local authorities with an investment facility for their surplus cash, offering competitive interest rates. In 2011, the agency dealt with 24 local authorities in this area of its business and the average weekly turnover of investments grew by 12% to €173 million in 2011. As well as providing a cost-effective and flexible service to our customers, the facility is another source of funding for the agency. Our other debt consists of fixed-rate and index-linked bonds totalling some €287 million and domestic commercial paper.
This level of fund-raising and lending to local authorities and voluntary housing bodies clearly raises risk management issues. The agency’s board closely oversees its risk and its risk management framework and policy is a standing agenda item at its meetings. The agency’s risk management policies are set out in its annual report.
An important element of the agency's financial risk, and a major factor in our efforts to build up reserves, is the long-standing mismatch in our index-linked and older fixed-rate books. This is a legacy of the old Irish pound regime of more than 20 years ago, when it was not as easy to structure debt in a flexible way as it is now. As a result, there is an overhang of index-linked and fixed-rate bonds over the matching loans to borrowers, which will result in a cost to the agency arising until 2018 when the last bond matures. We have had a policy for many years of building up reserves to cover these costs.
The agency has a staff of 14 people which, taking account of job-sharing arrangements, equates to 11 whole-time equivalents. This complement was reduced by one in 2010, bringing staff numbers back to 2002 levels. Since 2002, the number of loans dealt with has increased by 90% and the total loan book has grown from €2.4 billion to €4.4 billion. We have managed to take on and manage these additional responsibilities with the same number of staff. The annual administration budget for the agency accounts for some 0.035% of the total outstanding loan book as at 31 December 2011. Most of our business is carried out through a dedicated custom-built members' website, which allows for loan advances and treasury dealing to be done online. This involves co-operation between the agency, local authorities and the Department.
As I have stated, the agency is a self-financing body and is not in receipt of Exchequer funds. The agency made a surplus of €3.6 million in 2011. We expect to see an overall surplus of some €15.2 million for 2012, thereby increasing reserves to approximately €74.3 million. This extra profitability is due to an unexpected low cost of funds, as a result of the settling of the markets since the latest European Central Bank base rate decrease in July 2012.
I will conclude with a brief outline of the challenges facing the agency in the coming years and my priorities as chairman. The main challenge for the board will be in securing suitable funding to allow us to continue to meet the changing needs of our customers. During the period covered by our corporate plan, the State is expected to return to the market for its borrowing requirements. The agency, in turn, will seek to resume the use of its euro commercial paper, ECP, programme. We will continue to enable local authorities to manage their loan portfolios by continuing to offer flexible loan structures. Examples of such structures currently being offered include extending current mortgage loan terms, allowing interest-only loan periods, and allowing interest-only loan periods with partial redemptions, in line with flexible terms being offered by local authorities to distressed borrowers. We will also seek to maintain and improve, where possible, the credit risk management structure we have in place to assist us in lending to approved housing bodies. The latter is preferable to lending indirectly via local authorities, as we did in the past, which raises additional risks for the agency.
I hope this brief overview has provided a useful background for questions or comments from members relating to our activities.
I thank Dr. Norris for her presentation. It is a matter of months since she last attended a meeting of the committee, prior to her appointment. She seems to have got her feet well under the table since then. I will now take questions from members, beginning with Deputy Catherine Murphy.
I thank Dr. Norris for her comprehensive introduction and for the copies of the Housing Finance Agency's annual report, which makes for interesting reading. I accept that the agency does not make policy, but I assume it does advise the Government on such issues as the costs and risks associated with, for example, the shared ownership loan scheme. That particular scheme is aimed at people who will struggle to meet loan repayments and there is a subsidy aspect built into it. Does the agency receive direct feedback from local authorities in respect of how these types of loans will play out? Can offerings be redesigned on the agency's advice?
There are opportunities for local authorities to invest money with the agency and earn a return. As I understand it, in the case of development contributions and certain other funding sources, there is a restriction on spending anything other than what comes in the current year. The last time I inquired about this, I was told there was almost €1 billion between all the local authorities which could not be spent. This is an extraordinary sum of money which would interfere with the national debt if it were to be spent. These moneys are collected in order to match allocations by Government for the provision of such facilities as wastewater treatment plants and so on. Does the agency actively go after that money or do the local authorities approach the agency with a view to investing it? Of the 24 authorities that have invested money with the agency, does Dr. Norris know whether the money is coming out of that particular fund?
Lending has become much more onerous in that significantly more stringent stress tests are now applied. We can all understand why that has happened. Does Dr. Norris have any information on how the local authorities' loan portfolios are performing, associated debt levels and so on, or is that left entirely to the authorities themselves? Dr. Norris referred to a long-standing mismatch in the agency's index-linked and older fixed-rate books. As I recall, however, some of the products it offered in the early days, such as the HFA loans and fixed-rate mortgage loans, were charging interest at rates of up to 12.5%. Were these lending conditions not disproportionately onerous on the borrower? I cannot figure out why such offerings would be more expensive to fund than others.
Does the agency consider location when providing funding to the voluntary housing sector? As I understand it, 43% of the entire housing waiting list is comprised of people living in Dublin, Cork city and County Kildare. The bottom six counties, meanwhile, account for only 3% of the housing waiting list. It goes without saying that rents will be higher in areas of higher demand. Does the agency have any role in deciding where voluntary housing provision is located, having regard to differing regional needs?
Dr. Michelle Norris:
I will respond to the Deputy's questions with some preliminary comments before passing to my colleagues for a more detailed response. In regard to the question of soliciting for loan business, the agency does not actively seek out lending. Rather, organisations come to us seeking loans. Our function is not to set policy, but we work with the Department of the Environment, Community and Local Government and the local authorities on an ongoing basis to ascertain their needs.
We give regular feedback. For instance, our work in trying to provide local authorities with more flexible borrowing options is to enable them to deal with problems related to their mortgage loan books and distressed borrowers and to refinance their loans in the same way as private banks are doing as part of the mortgage arrears resolution process. We actively work with them to monitor the level of arrears and come up with the most flexible funding model possible to meet their particular needs in the current economic climate and the needs of their clients.
On whether voluntary housing associations choose to use our loans to buy developments, we do not actively seek loan business - the voluntary housing sector approaches us. However, most of the voluntary housing sector developments the Housing Finance Agency has funded to date also have a small grant attached to them. This grant is provided by the Housing and Sustainable Communities Agency and the criteria used in making decisions on its allocation include whether social housing is necessary. Our assessment of applications from the voluntary housing sector considers primarily the corporate governance standards of the organisation in question and its capacity to repay the loan we issue.
Mr. Barry O'Leary:
On shared ownership, the Housing Finance Agency has a continuous dialogue with local authorities and the feedback they are providing is that some of their clients with shared ownership loans are experiencing difficulty. In the majority of cases, the loan is approaching the end of the term and the clients are realising that the rental portion has not been redeemed. We are examining ways of addressing this issue. As the Chairman noted, the agency did not design the scheme, although we fund it. It is important for us to offer solutions to local authorities to help their clients. The difficulty that will arise if we start offering annuity loans is that many of those with shared ownership loans are approaching the end of their working lives. However, many of them also have significant equity in their homes and are keen to find a solution to the problem. We have been exploring this issue with local authorities for the past six months and hope to have something to offer them shortly.
Mr. Philip Nugent:
Any house purchaser under the shared ownership scheme who is experiencing difficulties with mortgage arrears and has a mortgage from the local authority will be covered by the mortgage arrears resolution process. Structures are in place, therefore, and the shared ownership scheme is also being examined as part of the review of Part V announced in the Government housing policy last year. Some longer term and more fundamental changes to the shared ownership scheme may arise from the review, including how to deal with people who are approaching the end of the 20-year lease period and how to work them through the process in terms of their tenure options at the end of the process.
Mr. Barry O'Leary:
To respond to some of the other questions, while local authorities approach us with their surplus cash, we do not know the source of this money. The numbers cited are broadly correct in respect of the surplus the local authorities may have had. Unfortunately, very little of this surplus of approximately €100 million comes to the Housing Finance Agency, probably because we are offering reasonably low rates. Our cost of funds is such that we are able to secure borrowings from elsewhere at a reasonably attractive rate and, as such, we do not have to compete for deposits. The local authorities are attracting higher interest rates elsewhere, including in some of the pillar banks which are offering a little more than us at this stage.
On fixed-rate loans, it is correct that they were initially advanced at rates in excess of 10%. This was done in an environment in which interest rates in the market were 16%. We borrowed money at 10% to match-fund the loans and the Government at the time kindly allowed an opportunity for borrowers to redeem without penalty. This is unusual in a fixed-rate scenario. We have a fixed-rate borrowing rate of 10% and anyone who has a borrowing from us at 10% can redeem at no cost. Obviously, if a borrower can refinance his or her loan at 3% or 4%, it creates a difficulty for us. However, we have all the treasury risk put away in our balance sheet at this stage.
The agency has set out a number of measures to deal with the issue of shared ownership loans, including extending the current mortgage loan term, allowing interest-only repayments and allowing interest-only repayments for partial redemption. Are these measures sufficient given that exactly one year ago, 38.9% of shared ownership loans were in arrears of 90 days or more? These figures, however accurate, were provided by the Department in response to a parliamentary question.
Some of the houses on which shared ownership loans were taken out have been abandoned as owners have decided to shut up shop, as it were, and move on. Local authorities would like to transfer some of these vacant properties to their housing stock and some have already done so. I understand that in the case of at least one local authority the Housing Finance Agency receives the rent and uses it to service the loan. Does the agency intend to act to ensure houses are not left abandoned for extended periods?
The Housing Finance Agency has been a progressive and good body. However, having provided finance to house a large number of people, it now has loans outstanding on its borrowings as a result of a hangover from the Celtic tiger era. The assets of the agency and local authorities - the houses for which the loans were borrowed - are being left idle and their conditions are deteriorating as a result of vandalism, freezing pipes and so forth. In addition, boarded up houses have a negative impact on the image of neighbourhoods. Can something be done to fast-track the sale of such houses or their transfer into local authority housing stock? Are the steps set out by the agency sufficient? Should it offer a rental option when there is no hope of a loan being repaid? I am aware of borrowers whose incomes have collapsed to perhaps one quarter of the level they were at when their loans were taken out. They may be able to pay €50 per week but they cannot pay €200 per week.
Will the witnesses provide a ballpark figure on the percentage of loans taken out under the affordable housing scheme that are in arrears? Is the agency extending loans to local authorities for the purposes of refurbishing, maintaining and repairing existing housing stock?
I was interested to note that a large part of the Housing Finance Agency's loan book is for environmental projects in areas such as water and waste. Will the witnesses provide some examples?
Mr. Philip Nugent:
I will respond on the shared ownership issues. The solutions probably lie within the remit of the Department and local authorities rather than the remit of the Housing Finance Agency. As the provider of funding, we do not produce solutions for people who are in arrears or at the final stages of the arrears process. However, the Department has been working with the agency and local authorities to devise proper solutions. Arrears are becoming an increasingly difficult issue in some local authority areas. Local authorities with the largest number of shared ownership transactions have obviously been worst affected by the shared ownership scheme.
It is the case that we cannot have properties lying vacant when households are on waiting lists. We are working with local authorities to devise longer-term solutions in order that repossession and eviction occur only in circumstances in which there is no other solution.
The agency is working on a mortgage-to-rent scheme for local authority borrowers, which will be slightly more complicated than the scheme being made available by mainstream lenders.
Local authorities in making available a mortgage-to-rent scheme will have a loss arising to them. There are two issues – first, the value of the property as it is purchased under a mortgage-to-rent scheme and then the hole left in the local authority balance sheet. That has to be filled; otherwise local authorities will not be able to provide services. It is a question of trying to devise solutions that also protect the ability of the local authority to provide services outside of housing. Mortgage-to-rent will be seen for local authority borrowers in the worst of distress which will include shared ownership borrowers.
We do not have a breakdown of arrears cases by the type of house purchase scheme. We have an overall arrears rate, using the 90 days measured model, which is around 28% or 29%, three times higher than the rate of arrears in the private sector. Then again, one would expect it to be higher because local authorities, by definition, are lenders of last resort.
I note the Housing Finance Agency, HFA, has reserves of €74 million. However, it must pay back the money it has borrowed commercially. Is that an incentive for the agency to be putting the squeeze on local authorities and the Department to come up with solutions? Last year, arrears over 90 days on shared ownership houses stood at 38%. I have no reason to believe that has changed for the better. This crisis must be faced up to. My primary concern is for the people who are in such arrears. However, the agency must get the cash back in too. That is the reality of its operation.
I thank the agency for its presentation. Many houses, particularly on the western seaboard, are vacant. These homes vary in size from two-bedroom apartments to three-bedroom semi-detached houses. Recently, I viewed the property registration website which detailed the prices of such homes as between €40,000 to €80,000. Has the HFA discussed with local authorities the possibility of financing the purchase of such properties as social housing stock which now cost substantially less to buy than to build? Many of the homes are in towns and villages and conform to building regulations. They would suit as social housing for the elderly, for example. Has the agency ever considered lending to individuals?
Mr. Barry O'Leary:
On the possibility of such homes becoming social housing for the elderly, as we outlined in our opening statement, we do not actively go out looking for business. Local authorities or voluntary housing bodies come to us with projects for financing. Our role is the wholesale raising and lending of finance. We do not get involved in the development side in any shape or form. We have a staff of 11 and our expertise is in raising moneys, lending them to the local authorities and getting it back.
We have never considered getting involved in lending to individuals. Purely from an operational point of view, we have a small staff and, accordingly, it is not practical. We would have a whole range of risk assessment issues that would have to put us on a footing similar to that of a bank. The model used since 1984 is that the local authorities carry out that function on our behalf. They have the relationship with the individual. It is their responsibility to get the money back on shared ownership loans. Our lending relationship and, accordingly, credit risk is with the local authority. The reason we are successful is that we have managed to stay small and focus on our business which is to raise money cheaply, lend it to local authorities and allow them to do the real work.
Has the agency had many funding applications from local authorities in Sligo, Leitrim and the north west? There are significant concerns in the area about the number of people on housing lists. This is an ideal opportunity for local authorities to get social housing stock.
Mr. Barry O'Leary:
None of the applications we have received from voluntary housing bodies to date is based in the west. Up to €3.5 million has been lent to Sligo County Council for 2011. If any local authority approached us with a council’s resolution and the Department’s sanction to draw money from us, we would give them money. We have plenty of funding available with a facility in place that allows us to borrow up to €10 billion. Money is relatively cheap. It is the function of the Department’s allocation to local authorities as to whether local authorities are likely to get funds from us.
Dr. Michelle Norris:
The focus of our activities reflects the focus of government policy in social housing. In recent years, that policy has changed much. In the past we funded local authorities to acquire land for social housing building. The Department of the Environment, Community and Local Government, in turn, funded them with, basically, 100% capital grants to build houses. The voluntary housing sector was funded in the same way.
As the State has experienced a severe fiscal crisis, the programme of capital grants for social house building was cut down radically. Now the focus of government policy is on using the remaining capital grant money for social housing regeneration and funding voluntary housing agencies to get social housing. My understanding is that the main reason for this lies with where the loan lies. If we loan money to a voluntary housing body, it does not lie on the State’s books as part of the national debt. If we loan to local authorities, it does. In my day job, I lecture in University College Dublin and I research this area for a living.
My interpretation is that this was driven primarily by practical concerns about the size of the national debt. Practical concerns will be a key problem if we are to continue to deliver social housing in the way it has traditionally been delivered in this country, which is mainly via the local authority sector.
I would like to ask Mr. O'Leary to clarify his comment that the agency has the capacity to borrow or raise €10 billion. Is that in addition to what the agency already has on its loan books, or is that the ceiling up to which it can borrow?
I will ask an obvious question. Why are we not engaging in rent-to-buy programmes involving vacant housing in suitable areas across the country where NAMA has properties? I wonder why that issue has not been examined. Perhaps Mr. O'Leary can clear something else up for me. What is the current position with the incremental purchase scheme? Is the agency providing funding to local authorities for the scheme? I will proceed to ask about some other matters when I get an answer to those questions. Is the agency funding the incremental purchase scheme at this time?
I think that is a good idea. If the agency were able to make recommendations to Government Departments, I would suggest that it should recommend the scrapping of the programme, which was dreamt up at a time when the average house value at the entry price was approximately €250,000. Given that those properties now cost somewhere between €80,000 and €120,000, the rationale that underpinned the incremental purchase scheme no longer exists. It is a bad deal for the Exchequer and a bad programme for the purchasing tenant in the long term. It is a bad deal all around. The rug has been pulled from under the rationale that led to the establishment of the incremental purchase scheme by a previous Administration. I would like to pick up on what Deputies Stanley and Ellis said earlier.
I apologise. I meant Deputy Catherine Murphy. Deputy Ellis and I are on the same psychic level, so I know what he is going to say in a moment. Deputies Murphy and Stanley referred to the Housing Finance Agency as the vehicle that provides funding to local authorities that want to borrow money. Those borrowings end up in three specific categories. The traditional tenant purchase loan, which is provided at a rate of 3% for every year occupied in the house, up to a total of 30%, is the old scheme we all knew. The borrowings can also end up being used as part of the shared ownership approach or as affordable housing loans. The difficulty with the standard tenant purchase approach is that people may be in arrears. The difficulties with loans in the two other areas are far more complex. It can be taken as a given that every affordable loan issued from 2005 or 2006 onwards is now in negative equity. That is in addition to the fact that such loans might also be in arrears. At the top of the bubble, affordable housing was priced at approximately €250,000 in certain areas of Cork. Those properties are not within an ass's roar of €250,000 today. They would be lucky if they reached €125,000 or €130,000.
The particular difficulty with the shared ownership programme relates to the fact that when it was first rolled out, houses in an estate in the Douglas area of Cork were sold for £40,000, half of which was taken on a mortgage and half of which was deferred over a 20-year period. That valuation became somewhat skewed, obviously, when we went into the euro, etc. The real difficulty arises upon the completion of the 20-year schedule that was agreed at the outset. The owners do not have to clear the euro equivalent of £20,000. They do not even get 50% of the current market value of the property. They have to make a balloon payment that is far in excess of half of the current value of their property. It is as if the shared ownership scheme was based on the premise that property values would keep increasing into the future. People now have balloon payments that are greater than the entire proportionment of the property. One could buy the property for less than what the half-share should actually be.
In her presentation, Dr. Norris said the Housing Finance Agency had €59 million in reserves at present. She said those reserves will increase to €74 million in the coming period. I accept that the reserves are needed, but should the increase of more than €20 million in the reserves be examined? Could we consider an element of write-down of the debt, particularly with regard to the shared ownership programme? We have discovered that the programme was flawed from the outset. It has put people of 60 years of age in impossible situations. They cannot remortgage. They cannot get another 20-year schedule because one's schedule has to be completed by the time one reaches 65 years of age. We should forget about using the mortgage arrears resolution process, which was mentioned earlier, because it is designed as a deferment process. We are bringing forward the insolvency Bill because the mortgage arrears resolution process keeps pushing the problem down the line. The process will not resolve the dilemma of those who live in shared ownership properties. They need a significant debt write-down. Is there a possibility that the reserves that have been accrued by the Housing Finance Agency could be used to reduce those debts?
I ask the witnesses to park those issues while I mention another matter of lesser importance that is nonetheless worth considering. In the risk analysis section of their presentation, they said that the agency's loans are protected. As Dr. Norris knows, my view is that mortgage indemnity insurance should be mandatory in this State, just as car insurance is. If one takes out a mortgage on a house, one should be required to have it insured, just as one has to insure one's car. There seems to be some kind of model out there at the moment. If I took out a local authority loan that was financed by the Housing Finance Agency, what requirements would the agency place upon me with regard to having that loan insured at the end of the process?
Mr. Barry O'Leary:
We do not. We talk to them about what they do. They have a facility with the client who is the underlying user of the loan. Death and disability insurance are the two types of insurance that are covered for a cost of approximately 0.5%.
Mr. Barry O'Leary:
That is the relatively straightforward question answered.
The Chairman also asked about the use of our reserves. One needs to think about what the relationship is. We lend to the local authority. We are making the heroic assumption that the local authority will always pay us back - that the local authority will not go bust. Obviously, the local authority has an issue with lending to shared ownership clients who have genuine difficulties with paying off the rental side of it. The figures mentioned by the Chairman are broadly in line with what the experience would be. One would find people who have ignored the situation. The premise of the loan in the first instance was that it would be paid back in small tranches over a period of time during which the value of the house and the household salary would increase. We would not comment on the question of whether that was the right premise on which to base the loan. All we do is fund the loan. We do not actually create the scheme. There is a real difficulty that will ultimately have to be addressed. If the Housing Finance Agency were approached for a contribution to the rolling out of a solution, we would look favourably on any approach that would be made by the Department.
At the risk of putting Mr. Nugent in the frame we would suggest the Department would probably formulate any solution that would be rolled out ultimately.
Mr. Philip Nugent:
As a statement of fact there is a certain logic in the Housing Finance Agency's reserves being identified as a possible means of supporting local authorities in making available solutions in that regard but, ultimately, it is a ministerial decision by the Minister for Public Expenditure and Reform who is the beneficial owner of the agency.
Dr. Michelle Norris:
To reiterate the commitment expressed by Mr. O'Leary, we have an open mind about the prospect of entering into discussions with the Department about the use of the relatively short-term reserve we found on the books for this year and next year.
Regarding the Chairman's two points about the shared ownership scheme, my understanding is that one of the problems with the shared ownership scheme is that by the time the borrower has funded the mortgage on half the equity plus an income related rent on the other half, the total repayment was the same as if they had paid a mortgage to buy the property.
Dr. Michelle Norris:
My personal opinion is that there is a strong argument on grounds of equity for addressing the position of those people.
Regarding the other point about our mortgage insurance, as Mr. O'Leary mentioned, the local authorities have a group scheme for mortgage protection which covers illness and unemployment. It does not cover default but compared with many of the schemes on the market from the private sector throughout the boom, it is a relatively generous and solid scheme. It has been very useful from the agency's perspective for protecting our risk but it might be worth exploring whether it could be extended. Obviously, that is outside our remit but I am aware of many of the problems associated with similar products being offered on the market.
The reason we have suggested that is because local authorities are tied into that but since the housing Act of 2009, which has facilitated a situation where voluntary housing agencies can also engage in tenant purchase programmes. As we move into regulating the voluntary housing agency with the forthcoming Residential Tenancies (Amendment) Bill, the requirement could be put upon them also to have an evolved insurance model because it could well be the case that the social housing agencies rather than the local authorities may be the vehicle for rent to buy in terms of NAMA properties and other areas.
As regards the agency's governance of the funding it is giving to local authority and housing agencies Dr. Norris mentioned, it should not be a presumption that the housing agencies will have the proper insurance structures in place that not only protect the borrowers but also protect the State because it is the State which picks up the tab on mortgage interest relief. We would be better off having that ensured for a period.
I thank the witnesses for their presentation which I am sorry I was not here for as I was delayed at another meeting. They might indicate if I ask them questions they have dealt with already and I will get the information from the Official Report.
On the presentation, the agency is using outside experts to assess the suitability of any such lending approved housing body for a loan. It is in section 6 under its business category. Who are the outside agencies it is using?
From reading the report a few questions arose. The agency seems to be renegotiating and rolling over. Is its approach to renegotiate rather than default? Would that be what I should understand from the annual report?
Mr. Barry O'Leary:
That would not be correct. Our relationship is with local authorities. We will facilitate the local authorities in managing their cash flow. If they have renegotiated with a client on the ground, the cashflow coming from that loan is different but they must be careful that the cashflow they are about to pay us for our loan is matched with that. We will mirror anything they do on the ground in order to facilitate them but it is not our policy to renegotiate because our clients are only the local authority.
Mr. Barry O'Leary:
That does not relate to mortgage business but to loans we have given to local authorities for land acquisition. We gave them a facility of between three and seven years in which they could have interest only and the assumption was that during that period they would develop the land and build houses on it. That assumption no longer holds and they are now in a position where they have land which they will not build on for which they do not have a particular use. We rolled it over or renegotiated - whatever term the Deputy wishes to use - for a period but then something else happened with this and now all the matured loans to the value of €155.43 million the Deputy mentioned, from 1 July last, were converted to annuity. They are now on a process where they are beginning to pay interest on capital to pay down that loan, but there is no underlying client on the far side.
What Mr. O'Leary is saying is that that €155.43 million has been moved into annuity and it is on land that will not be developed. It is a fairly heavy liability on the local authorities that had that land because they are paying interest plus capital on it.
Mr. Barry O'Leary:
It would range in its quality. There is an arrangement in place in the Department where local authorities which do not have any use for this land can transfer it into the housing sustainable communities agency and it will manage it centrally but it is not a function of the agency. We do not manage that. We have raised the money and we lent it cheaply to the local authorities.
Do I understand that they are paying interest plus capital on that? What are the repayments of interest plus capital on that loan on an annual basis? Our interest as an environment committee is in the impact of those liabilities on local authorities in terms of the services. I am trying to get a grasp of the cost to local authorities and the €155.43 million. What percentage of the capital and what interest are they paying on the loan?
Mr. Barry O'Leary:
They would pay a straightforward annuity over 20 or 25 years, whatever they choose to pay. The interest rate we charge on those loans is 2.3%. At a rough guess we would say that perhaps 3% of the €153 million would be their cashflow per annum. It would be €4.5 million or thereabouts.
-----but I will be brief. Mr. O'Leary mentioned the shared ownership scheme and I know his responsibility is to lend the money but he mentioned the Part V review. As the Chairman said, there is a real problem in that people have come to the end of it but the other problem is that they had taken shared ownership loans from 2004, which suited them at the time, but in the case of a single man or woman or a married couple in a one or two bedroom apartment, their family sizes may have increased. I have personal experience of one family with two children living in a one-bedroom apartment. The value of the apartment was €210,000 on purchasing. They would be lucky to get €110,000 for it now, and they want to move on with their lives. They need accommodation suitable to the size of their family but even if they took a 100% write-down they are not in a position to sell on because the local authority will not take the write-down on the value of their side of the loan.
Is there any mechanism or have the delegations had any discussions with the local authorities about the cohort of people caught in that area? They are living in unsuitable accommodation and cannot move off. The value of the local authority's share in the home is still at its purchase value but the owner or tenant or shared ownership person has taken a 100% write-down. Has any discussion taken place? It is a tragedy to meet large families living in one-bedroom or two-bedroom apartments. They simply want to move on with their lives and they seek accommodation that suits their lifestyle but they are caught in limbo. Has any conversation taken place between the Department, the agency and local authorities about some form or mechanism to consider this problem?
Mr. Philip Nugent:
Certainly the Department has been receiving that sort of feedback from several local authorities. Those with the most uptake under shared ownership have that problem, naturally enough. The review of Part V is under way and it includes looking at shared ownership. Several local authority personnel are involved and they are from the local authorities with the most shared ownership loans. It is being looked at as part of the Part V review process.
I wonder why the Housing Finance Agency is so called because it has responsibility for water and everything else under its brief. Will the delegation elaborate on that, including environmental capital projects and so on? Reference was made to the mortgage to rent scheme. The agency implements policy while the Minister makes policy so we cannot expect the delegation to state that they will implement A, B, C or D. I understand the reserves amount to €76 million. I am unsure whether it is necessary to carry this level of reserves. We have seen what happened to businesses that do not have reserves, especially insurance companies. The agency needs reserves but is it necessary to have such large ones?
Many contributors have raised the issue of shared ownership. I have raised this issue with the Minister of State, Deputy Kathleen Lynch, and she said she was examining the matter. Whatever is decided, it is a policy matter.
I am sorry, the Chairman is right. I would like to see a recommendation from the committee, especially in view of the fact that the delegation said it had an open mind on the reserves. I propose that a recommendation be made. I would hate to see a good debate such as this get lost in translation. The Minister is in place. We want to ensure that the message goes to the right circles and that everyone is talking to everyone else. We have all seen what happens when Departments do not talk to one another.
A recommendation has been made on shared ownership. Dr. Michelle Norris stated that the shared ownership people ended up paying what they would have paid on an ordinary mortgage and they are suffering more of the brunt now than the ordinary mortgagee. I am keen to see something done in this regard.
Reference was made to a change in the interpretation of policy and to keeping mortgages off the Government books. That is how public private partnership schemes work and it is how they should work in this time of need. This is not only in the case of shared ownership; it works in other areas and it is not to be sneezed at if it works. If the Government does not have money to build and if someone else does and can put the facility on the ground then that should be a recommendation.
I was surprised to hear that we do not have companies available in Ireland for outsourcing. EC Harris is a UK-based capital funding company. Is there no Irish company available? Probably there is none, but there is much talk about keeping jobs in Ireland and so on. There is no money in Ireland to lend in this area and the lending source of the Housing Finance Agency is not Irish-based, or is it? Is it partially Irish-based? How does the agency focus its borrowing proposals?
I will not dwell on it but the purchase of NAMA buildings is an issue. We all know we have a good deal of property and we do not want to build any more. We want regeneration but not more building and this is where the Government has spoken. If the agency cannot do what it seeks to do, for example, purchase empty NAMA properties, then the policies should be changed and we should make a recommendation that that should take place.
Dr. Michelle Norris:
I wish to answer the question on outsourcing. The contract awarded to EC Harris to advise us on assessing credit applications from the voluntary housing sector was put out to competitive tender. The consultants we engaged have a strong record of advising the United Kingdom regulator of housing associations. When we were devising our system for assessing housing associations we drew on international best practice in the area from throughout the European Union. In Ireland until the mid-1980s we funded housing mainly by borrowing. Then during the last fiscal crisis the Government moved away from that system towards capital grants and until recently most social housing has been funded by capital grants. We do not have the experience within the sector of managing loan finance or of regulating organisations funded by loan finance whereas there is a good deal of such experience in other European countries. This is the main method used to fund social housing throughout western Europe. We believe there is significant expertise available internationally on which we should draw and the awarding of the contract reflects that. This was not the tradition in Ireland but it was internationally.
Mr. Barry O'Leary:
The contract was awarded after an Official Journal of the European Union tender. It was not a question of picking a UK-based or Irish-based firm. We picked the successful tenderer.
We engage in water and environmental projects but only if they are beneficial for housing purposes within the area. A water treatment plant is being built in Waterford and a waste management plant in Wexford because the housing under development in the area requires it. Only if it is something that helps or is ancillary to housing do we get involved.
A question was asked about the source of our funds. Until the crisis we borrowed money from throughout Europe through a euro commercial paper programme. This has since stopped and since the State cannot borrow in the markets we are getting funds through the EU-IMF channel. Money comes to us via the National Treasury Management Agency, NTMA, and this has been provided for under the programme.
We have a requirement for approximately €50 million or €55 million in reserves for the legacy issues to which we referred earlier. These relate to index-linked loans and fixed loans. These legacy issues will go away by the end of 2018. We do not have an absolute requirement for any profits we make this year in excess of the €50 million or €55 million category. The risks ebb and flow. Changes in interest rates and so on dictate what the quantum of the risk will be, but we take the view that anything above that level is open for discussion.
I congratulate Dr. Norris on her appointment and I thank the delegation for the presentation. Dr. Norris raised one particular issue which I have been looking at as well.
We know that capital funding for housing has been cut dramatically. What is happening is the HFA is funding most of the voluntary housing bodies. As Dr. Norris mentioned, the policy was to lend to the local authority which in turn lent the money on to voluntary bodies but now the HFA has the power to lend directly to voluntary housing bodies. I have always had a serious concern that we are seeing a significant growth in these voluntary housing associations at the expense of the local authorities. There are many very good voluntary housing groups, but I wonder about their capacity down the road to deal with the problems that arise as buildings get older. I do not know how the HFA would judge that.
Much of the NAMA property is going to voluntary housing bodies. They are striking deals with NAMA but I assume they then seek funding from the Housing Finance Agency. I assume the HFA does not engage with NAMA but considers all the proposals that come before it. It would be interesting to find out if there is an engagement between HFA, the voluntary housing groups and NAMA. Have problems arisen with the ability of the groups to pay back their loans?
The HFA stated to a committee in 2011 that it had made a profit of €3 million, which increased to €15 million in 2012. I wonder what areas are not paying a good dividend. Will it also provide the detail of how this money has grown, particularly the significant increase in profit from 2011 to 2012? I am trying to figure out how the HFA made such a significant jump in its profits during these difficult economic times.
We have been flogging the idea of shared ownership but I know that some 58 properties purchased under this scheme have been handed back to Dublin City Council. A number of people who bought houses under this scheme are experiencing difficulty with the rent, with arrears constantly building up. People did not redeem that portion quickly enough and now they owe more and more. Mr. O'Leary said it might be possible to look at the HFA surplus and use some of that money to help them out. I do not know if that is a serious proposition. Deputy Kevin Humphreys as well as the Chairman mentioned it. It would be very welcome if there was a way of dealing with the issue.
The HFA lends to the local authorities for environmental projects. What proportion of the loan book is that? Does that get paid back on target and on time?
I thank Dr. Michelle Norris and her colleagues for the presentation. I am very interested to hear everything she has to say. It is interesting that the HFA has expanded its role since 1996 and can now lend to the local authorities for water, waste and environmental capital projects in addition to the original remit for housing. Will one of the delegation give me an example of an environmental project that the HFA would have been involved in? I am thinking of the Dublin City Council proposal to bring water from the Shannon to Dublin. There is a requirement to fund that big project to take water from the River Shannon to the city. I have an interest because it is proposed to hold the water in Garryhinch in my constituency, where the water could be contained before it is pumped further to Dublin. Is that the type of project that the HFA could possibly fund? I am not asking specifically about that project. Could the HFA fund a project on that scale? A project of that type would have a knock-on effect on the community. Other project would have cultural facets. Does the HFA take account of that? Has the HFA engaged in such a project previously?
I note the HFA provides an investment facility for local authorities. May I have an indication of how many local authorities avail of this service? How has that investment fared out?
Mr. Barry O'Leary:
I will deal with Deputy Ellis's questions. We have concerns in terms of our lending directly to voluntary bodies. Our primary concern is to ensure we safeguard the assets of the State, which is our job. We have put in place a rigorous assessment of them. The results to date show that of the 17 groups that applied, we have approved only four, rejected eight and five are still pending and under negotiations. The level of success at this stage is quite small because we are particularly anxious to ensure that they have a structure in place both in terms of financial and governance structures to make sure they are capable of managing these projects. That is particularly important to us.
He also asked why our profits jumped from €3.6 million to €15 million. This arose from movements in the international financial markets. Our cost of borrowing has fallen by approximately 1.25% in the past 12 months and as a consequence we will make €12 million. As things settle down in the financial markets we will return to normal profitability, which is somewhere between zero and €3 million or thereabouts.
On the question of loans for water projects and so on, the proportion of those loans that we have on our book is quite small, there is less than €100 million involved. Therefore these are relatively small projects and we have borrowed through two European banks, the European Investment Bank and the Council of Europe Development Bank. In all cases all the money is paid back on time and in full. As an agency, we are probably the only financial institution in the country which has no loan arrears. We have absolutely no loan arrears on our book because we do business with local authorities.
It seems to be Government policy to put the delivery of social housing to the voluntary housing group. Is there pressure being put on the HFA to invest in the voluntary housing sector as opposed to the local authorities?
Mr. Barry O'Leary:
Let me give the committee an example of the projects in which we have been involved. Two come to mind. In County Waterford we have done a water treatment project. In County Wexford we have done a waste management project. Nobody has approached us from any of the Dublin authorities in terms of the large scale projects. Our issue would always be that the projects would have to be housing related so there could not be a commercial water issue attached to the loan.
There will be some policy changes in the funding and provision of water services in the future. My colleague, Mr. Nugent, may wish to discuss that matter.
Mr. Barry O'Leary:
We did investment business with 24 local authorities throughout 2011. Increasingly, local authorities have acquired their own skills and have not come to us for much advice in the past 12 months. Our costs are quite small. We are offering rates of 0.3% and they are getting considerably more from the pillar and other banks. As the cost of our funds is so low, we cannot afford to pay any more than that rate.
Let me summarise the issues that are outstanding. We are seeing the broadening of social housing provision, which goes back to the Housing (Miscellaneous Provisions) Act 2009 under which every agency is now defined as a social housing agency provider, once it is registered to be so. The HFA is a lending agency and will be lending more and more to voluntary housing bodies, in respect of which there is always a risk. One of the historical difficulties with social housing concerns the differential rent and income ceilings. Traditionally, one ends up with poor people in poor housing. If a different approach was adopted, one could have a blend, with some having a higher income threshold. From the point of view of funding, that means the ratio of risk would be much better and the people living in voluntary housing estates would not be drawn only from those on low incomes. One would have a more balanced society as a result.
That leads us to the differential rent system operated by the local authorities. The local authorities and voluntary housing bodies repay their loans to the HFA. Is there a possibility of revisiting the differential rent scheme and creating a second tier for those with more substantial income in order that they could participate in the voluntary housing sector, albeit at a different level?
I tabled a parliamentary question on the number of vacant properties in the possession of the local authorities. I remember that in terms of rent forgone to local authorities, the figure ranged between €12 million and €15 million per annum. That is a whopping amount of money when one considers €20 million a year is being put aside to fund long-term leasing. In fact, a greater number of properties are vacant and they would generate more money than the sums paid out to fund long-term leasing.
Mr. O'Leary referred to short-term lending. Is it time to look at this? I recognise that he does not decide on policy, but could consideration be given to the issue? Is there a possibility that some short-term lending programme could be looked at where the turn-around process for vacant local authority houses could be speeded up? If one takes it, as a base level, that a local authority house will be vacant for the 52 weeks of the year, at €100 a week, the local authority will lose €5,200.
There is an economic argument for using vacant properties more quickly. The HFA issues a loan that is repaid in the short term and is earning interest on the money lent to the local authority. The local authority will have a house that can generate an income and somebody on the housing list can be housed more quickly. Is it within the scope of the HFA to put a financial instrument in place to facilitate local authorities in rolling out such a programme?
Mr. Barry O'Leary:
We have the ability to put an instrument in place. However, I cannot say anything on the policy side. The fact of the matter is that we charge money for putting a loan in place and have to find some way to have the loan paid back. There is an issue from the State's point of view. There are gross Government borrowing, GGB, levels to be considered, as well as the issue of whether any increase in borrowings would impact on the current EU-IMF deal because there are some constraints on borrowing. In terms of the mechanics of putting an instrument in place, it can be done. It is straightforward. We have the ability and the facilities in place. It is a question of whether the policy in place would allow it to be done. That would not be a matter for us to decide.
Dr. Michelle Norris:
Let me respond to the Chairman's point on differential rents and the relationship with the voluntary housing sector. I once conducted a large study for the Department of the Environment, Community and Local Government on differential rents. There are 102 schemes in operation in the local authority sector for about 120,000 households. From memory, one of the major benefits of differential rent schemes is that in general they are very progressive, as people pay a larger proportion of their income as it rises. Sometimes the contribution is capped, which can make a scheme less progressive, but in many cases it is not. If the Department decided that it wanted to have a wider mix of incomes within the social housing sector - that is a policy issue - to my mind, it would not require a change in rentspayable per se, rather it would require a change in the rules regarding to whom local authorities and housing associations could let. From the perspective of the agency and how it is funded, the loans to voluntary housing associations are paid back using two mechanisms, first, the rents tenants pay and, second, the social housing leasing scheme which the Department funds. If the rent payable was higher, the contribution from the Government would be lower.
Deputy Dessie Ellis commented on the structure of the social housing sector and the challenges facing the Government in funding social housing without adding to the national debt. We face European Union state aid rules in the funding governments can provide for housing. Obviously, the agency does not play a role in deciding policy, but I can give the committee my personal opinion. Every country in western Europe that has a social housing system has faced similar issues. Many countries have amended the structures of their social housing sectors to try to address these issues. That is one potential route that could be taken to address them. Here the Government is trying to fund the voluntary housing sector and trying to introduce a system of regulation of the sector to help it to grow. Other countries such as the United Kingdom have tried to deal with the matter by setting up arm's length bodies controlled by local authorities but not part of them. The structural issues will have to be explored in the end. As I said, the role of the agency is to try to provide the finance that will enable the Government to implement these policies. However, there is a limit to our ability to grow the national debt in the current context as we are dependent on the EU-IMF emergency loan. For that reason, the borrowings we can issue to the local authority sector are limited.
Mr. Philip Nugent:
On the idea of broadening eligibility, that has happened recently. Last year the eligibility criteria were expanded in order that those on higher incomes would be eligible. There are pros and cons.
One of the downsides to raising the income threshold is that immediately waiting lists grow because more people are now eligible for social housing. There is an immediate downside. The Department can see the positives in terms of a better social mix. Mistakes have been made in the past with the creation of mono-tenure housing estates. People from a similar income group have been left in large estates and years later they require regeneration. Hundreds of millions of euro have been invested in the regeneration of Ballymun because of the approach taken initially to social housing. We recognise that social mix is a requirement of social housing and that a greater blend of social housing tenants is necessary.
I thank Dr. Norris, Mr. Nugent, Mr. O'Leary and Mr. Conroy for coming before the committee. There is broad respect for the work of the Housing Finance Agency. While it may be viewed as a financing agency, it does and has created a great deal of value in the social fabric in Ireland. I think housing is an issue of historical importance. Home ownership is very important to Irish people. The HFA facilitates home ownership for people who in other circumstances may not be able to own their homes. That is to be commended.
I welcome the indication, if not a clarified response to how the HFA views the reserves it has on account. I would appreciate if the committee could be kept informed as to the consideration it is giving to this area. If proposals are being brought forward either in conjunction with the local authorities or the Department of the Environment, Community and Local Government with regard to identifying the reserves that it has in hand to deal with people who are in debt to the local authorities or particularly in regard to the shared ownership programme, the committee would be interested in learning of the ideas that will be brought forward. The reserves could grow by €20 million, which is nearly a third of the HFA's reserves at present. For those in mortgage debt, especially those with social housing mortgages, whether it is under the tenant purchase, affordable housing or shared ownership schemes, the shared ownership category has particular difficulties that must be tackled. If a solution is to be found for this one category, could the reserves be used as a means of tackling that problem? The committee would be delighted to hear what the HFA is working on and would be delighted to assist it in terms of asking a Minister to come before the committee to discuss the ideas.
I thank the delegation for its attendance.