Mr. Cathal Callan:

The first question was a comparison between cost rental and the current payment and availability structure. The second question was whether the payment and availability structure allows us to cover our costs. The current payment and availability structure is sort of structured on a cost rental basis anyway. It is set as a percentage of the market rent and is then measured against the asset we are buying and how much loan is required on it. What has moved is the amount of CALF that is available. There may be a situation in which no CALF is required and in that instance one would borrow 100% if one had a funder who was prepared to lend. Clúid has borrowed solely from the Housing Finance Agency, HFA, which will fund to 100% in that situation.

What is allowed by the Housing Agency when we put our assessment through is 3.5% above cost of funds. If we bring in a cost rental model, it will match the cost of funds to the amount of payment and availability required. We would also have to create a margin because the differential rent does not cover the day to day reactive maintenance, management of the property plus the planned programme. At the moment, the margin is around 3.5%, in return for which the housing associations are picking up the risk. A cost rental model would have to attach to a fixed loan over 25 years as there would have to be cost certainty whereby the cost of funds required would be set at the start and would stay the same for the full period. At the moment, if housing associations are not going to the market to fix the rate, they are bearing the risk of a variable rate over the full life of that loan. Comparing the two, what is in place at the moment is effectively a variant on the cost rental model. It has a slightly higher margin than one would expect of a pure cost rental model but that is because the housing associations bear the risk of the variability of the loan over the period.

Regarding risk mitigation in 100% loans, the key driver behind CALF when it was introduced up to a maximum of 30% was the fact that AHBs did not have adequate funding to put equity into the purchase of properties. If they did, they utilised their cash reserves very quickly. CALF was meant to create a situation whereby the risk that the funder - in our case, the HFA, external funders or credit unions - brought to the table was mitigated via the funder not taking the full risk on the loan. Those are probably the main drivers regarding the payment and availability agreements and the fixed loans.

To give some context to the question on funding pipelines, Clúid's pipeline is in the region of €350 million over the next three years, which will supply just short of 2,500 units. That is a considerable amount of debt to be taking on. It is being done within a framework of a regulator, which is now coming on line, and under which we are being more closely monitored and managed. Reference was made to an earlier statement. The professionalism within the sector is required because of the level of debt that we are taking on. Were we taking on that level of debt without the attendant professionalism in the sector, we would be running the risk of a larger AHB getting into problems or having difficulty accessing the funding because it is not adequately set up to do that.