Rory Hearne (Dublin North-West, Social Democrats)
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462. To ask the Minister for Housing, Planning, and Local Government to confirm if there is a practice of applying cost deductions on AHB scheme approvals, in the form of disallowing major portions of land, construction, communal, and financing costs; to clarify if this practice is in some cases disallowing costs ranging from €2-4 million of the cost to build the schemes, making the schemes unviable; and if he will make a statement on the matter. [56596/25]

James Browne (Wexford, Fianna Fail)
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Approved Housing Bodies (AHBs) are making an important contribution to social housing delivery, as envisaged under current Government policy. My Department operates a number of funding programmes that assist local authorities to work in partnership with AHBs to construct, purchase and lease new homes and make them available for social housing. One such programme that AHBs progress construction projects through is the Capital Advance Loan Facility (CALF).

CALF funding is capital support provided to Approved Housing Bodies (AHBs) by local authorities to facilitate the funding of construction or acquisition of new social housing units. This loan facility can support between 25% and 30% of the eligible capital cost of the housing project, with the remaining finance sourced by the AHBs from private lenders (usually the Housing Finance Agency (HFA)).

The housing units are provided to local authorities for social housing use under long-term lease arrangements known as Payment and Availability Agreements (P&A). A nominal interest rate of 2% fixed per annum is charged by the local authority on the initial capital amount. Repayments on either the capital or interest are not required during the term of the loan (between 10 and 30 years), although where an AHB chooses to, repayments can be made during the term. At the end of the term, the outstanding capital amount plus the interest accrued, is owed and repayable to the local authority. The local authority issues the CALF monies to the AHB and the local authority, in turn, recoups same from the Department.

The P&A and CALF financial assessment is currently carried out by the Housing Agency on behalf of my Department. This assessment involves analysing the eligible capital costs, projected income and projected expenditure against a standard set of agreed assumptions which have been published and are available to the sector. As part of the financial assessment, the Housing Agency examines the overall capital cost indicated in the application and, where appropriate, costs that are ineligible for inclusion in the assessment are deducted. Any such deductions are explained to the AHB. The purpose of the assessment is only to determine the appropriate level of funding that my Department is willing to provide, in line with the parameters of the scheme and it is not intended as a viability assessment of a project. Viability assessment of any proposed project is a matter for each AHB.

As with all Exchequer-supported projects, my Department as sanctioning authority, assesses each project proposal for suitability as determined by the Local Authority, value for money and compliance with the various requirements of the funding programme before approval is issued.

With the allocation of additional monies the Government approved in July 2025, the total combined budget for CALF in 2025 stands at €710 million, which is the highest annual allocation since the Funding Scheme commenced. This is a significant increase from 2024 budget of €440 million, highlighting the strong support provided to the AHB sector by the Government.

The application process for AHB developments under the Cost Rental Equity Loan (CREL) scheme is managed by the Housing Agency. The funding made available to CREL projects is a function of modelling the costs of constructing or acquiring, financing, managing, and maintaining the cost rentals homes subject to the terms and condition of the Scheme.

Under my Department’s Capital Assistance Scheme (CAS), funding of 100% is available to Approved Housing Bodies (AHBs) for the capital development costs for new social homes for priority category needs tenants and while each project is considered on its own merits there is no practice of applying cost deductions to CAS approvals in the form of disallowing major portions of land i.e. land utilised for housing by the AHB is fully funded by my Department. With regard to construction, costs are approved in line with accepted tenders. Financing costs are, in the main, not an issue for AHBs advancing projects under this delivery programme on the basis of 100% capital funding being provided. Communal Facilities Grant scheme funding to compliment a CAS project is allowed at 95% of the costs of the works or €7,500 per unit of accommodation whichever is the lesser.