Funding and Delivering Social Housing

Dr Michelle Norris

School of Applied Social Science

University College Dublin

and

Chair of the Housing Finance Agency (PLC)

Introduction

Key Messages

1)Funding social housing is a challenge

2)Delivering social housing is an even bigger one

Demonstrated by examining:

•Lessons from history

•Lessons from recent experience

Lessons from HistoryCompare Social Housing Output and Finance Ireland’s Three Worst Economic Crises

Reform of funding model

Reform of funding model

Lessons from HistoryDelivering social housing during economic crises is:

1.desirable: Stimulus Meets rising need Evens out supply peaks/troughs

2.Possible (with the right funding model): 1950s – borrowing repaid using central government interest

subsidies + rates Post 1987 - capital grants:

Affordable in booms, but pro cyclical and poor value for money Unaffordable in busts so output falls radically

Social housing waiting lists grow As does dependence on rent supplement

Implications For Policy in 2015The finance lessons have been learned:

Return to borrowing based finance: Housing Finance Agency – state guaranteed borrowing, European

Investment Bank finance, long term future as a bond aggregator. Public investment used to lever finance from pension funds etc Commercial Banks Repaid using a guaranteed revenue subsidy (PAA)

Developing other revenue based funding models: Public Private Partnerships NAMA finance for Part V units which will be leased for social housing Real Estate Investment Trusts (REITs) – annual costs circa 5% of capital costs

Limited use of 100% capital grants - €450 million

However, delivery is challenging.

We can raise the money but can we spend it?

Prior to the crash local authorities delivered 75% of social housing, but they can’t borrow but entirely reliant on capital grants.

Housing associations can borrow but can they increase their output fourfold? Requires a radical change in skills and mind-set Structural change – large number of very small organisations.

Solutions• Get local authorities involved again

– Enable them to set up ‘arms length’ bodies to access borrowing

– Dublin Social Housing Delivery Task Force should pilot this model.

• Positive discrimination:– Concentrate public spending on the housing associations

which deliver– Clúid, Tuath, Oaklee and NABCO deserve particular praise

– Encourage critical mass, mergers, partnerships.

• Tough conversations with boards and CEOs

• If this fails put the subsidy package out to tender.