Jan O'Sullivan (Limerick City, Labour)
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1345. To ask the Minister for Housing, Planning, and Local Government if he met recently with the credit union movement; the progress that has been made in progressing the proposal of the organisation to fund social housing construction; and if he will make a statement on the matter. [46730/17]

Eoghan Murphy (Dublin Bay South, Fine Gael)
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The Programme for a Partnership Government recognises the potential role that credit unions can play in housing finance and supports the efforts of the Registrar of Credit Unions at the Central Bank to gradually lift current lending restrictions as appropriate, including for housing.  The Programme further provides for consideration, with all stakeholders, as to how credit unions can support the delivery of social housing.

Credit Union bodies have set out proposed means by which funding could be provided by credit unions to Approved Housing Bodies (AHBs) for the development of social housing.  I met the Irish League of Credit Unions last month and officials from my Department and the Department of Finance have met with the credit union representative bodies on a number of occasions to examine how their sector can assist in the area of financing social housing delivery.

Conscious of the independence of the Central Bank in its regulatory role in respect of credit unions, bilateral engagement has taken place between my Department and the Department of Finance to consider the potential regulatory and legislative implications of credit union involvement in the social housing sector.  Both Departments have also met with the Central Bank to provide information of a technical nature in relation to social housing funding arrangements.  This was with a view to assisting the Central Bank in understanding how these arrangements operate, as it deals with issues arising from proposals put forward for credit union investment in social housing.

I note the publication in May 2017 by the Central Bank of the Consultation on Potential Changes for the Investment Framework for Credit Unions.  The potential changes that are provided for would allow for investment by credit unions in the delivery of social housing by the larger Approved Housing Bodies which are categorised as ‘Tier 3’ under the voluntary regulation framework for the AHB sector.

The Social Housing Current Expenditure Programme provides a means whereby properties can be built or bought by AHBs with the combined use of State and private funding, and leased by AHBs and Local Authorities from private providers, for the provision of social housing.  This scheme which is underpinned by a lease and other legal agreements, provides that rental payments are made by the State over an agreed long-term period, typically 20 years.  In return, the housing unit is made available for social housing purposes.

Changes are now being proposed to this scheme in order to facilitate larger institutional private investors to become involved in the financing of social housing.  Subject to other regulatory requirements being met, this could include credit unions.

The National Development Finance Agency (NDFA) is acting as financial advisor to my Department in this work and has undertaken market engagement in the development of the scheme. The new arrangements arising from this process are being tested to ensure that there is no negative impact arising from how they are viewed and treated in respect of the State’s General Government Balance.  As part of this process, the proposed changes have been examined by Eurostat.  Work on the scheme is well advanced, with details expected to be announced in the coming weeks.

The Rebuilding Ireland Action Plan for Housing and Homelessness emphasises the need to look at new ways of funding social housing delivery, in particular the need to provide structural, funding and policy supports to increase delivery of social housing by Approved Housing Bodies.  In that context, it provides for support to be made available to an Irish Council for Social Housing (ICSH)/sector-led new special purpose vehicle, involving investors which could potentially include the credit union movement.

In May 2017, my Department announced funding of €49,000 for the ICSH to support this initiative, with the aim of establishing a sector-led financial vehicle to allow AHBs to expand and to facilitate the delivery of additional housing units.  Ultimately, the funding structure required to facilitate credit union involvement in the financing of social housing will have a neutral impact on General Government Debt, or be “off balance sheet” using the more commonly applied term.

The mechanisms to be used in the deployment of investment funds will have to be agreed by credit unions, with the support of their members and with the agreement of the Central Bank.  My Department remains available to provide any necessary technical advice and support.