Housing bodies to assess removal of their borrowings from State balance sheet

The Republic’s main approved housing bodies (AHB) are weighing a fresh bid to have their borrowings removed from the State’s balance sheet, as they seek to ease constraints on future financing and growth.
The wider AHB sector, the most active bulk buyers of homes in the State, seek to rent to people who cannot pay private-sector rates or buy their own home. It had €7 billion of borrowings at the end of last year on €8.3 billion of housing stock, according to the AHB Regulatory Authority’s latest annual report, published last week.
It either owned or managed more than 61,000 dwellings as of last December, compared with fewer than 37,000 four years earlier.
The Housing Alliance, a representative body for the seven largest AHBs, including Clúid Housing, Oaklee and the Iveagh Trust, has begun a search for researchers to assess the benefits and drawbacks by the sector’s liabilities remaining on the Government’s balance sheet, which is subject to EU fiscal debt and budget restrictions.
It comes eight years after Eurostat, the EU’s statistics agency, and the Central Statistics Office (CSO) deemed a number of AHBs, including all of the largest ones, to be part of the general government sector. The lobby group has said this risked restricting the sector’s ability to raise finance and deliver new homes.
The classification has had minimal tangible impact so far, as the EU suspended fiscal rules – requiring budget deficits to be limited to 3 per cent of gross domestic product (GDP) and public debt within 60 per cent of GDP – between 2020 and early 2023 as a result of the Covid-19 pandemic. The Government has also operated well within the normal rules in recent years.
“But this work is about having a solution before we have a problem,” said Andrew Daly, housing policy manager at Clúid, who is handling the alliance’s search for research. “The alliance has long believed it doesn’t make sense for AHBs to be classified on the Government balance sheet.”
Still, he said the group was keeping an open mind to what proposals emerge from the research.
The Housing Commission highlighted in its report in May that Ireland is spending more on housing than any other European country, relative to the size of the economy, partly due to the on-balance sheet nature of the AHB sector. It warned that spending pressures elsewhere would constrain increasing housing expenditure “to any greater significant extent”.
Of the 62,435 houses and apartments sold in the State last year, non-households bought 12,201, according to Central Statistics Office (CSO) data. Close to half of these buyers were public sector entities – including AHBs and local authorities.
Supporters of the AHB sector argue it is driving new home construction at a time of chronic undersupply, mainly by pre-funding developments. AHBs have stepped up, they say, when much of the overseas private residential sector (PRS) money that piled into the market between 2016 and 2021 has backed away following a spike in interest rates. However, policy changes, such as rent-hike caps and a special stamp duty on the bulk purchase of house, have also weighed.
Others say AHBs are distorting the market, being able to fund deals much more cheaply than the private sector.
The so-called capital advance leasing facility (Calf) from local authorities to AHBs for up to 30 per cent of cost of a deal carries a 2 per cent rate, while long-term fixed rates of about 3.75 per cent are available for additional funding needs from the Housing Finance Agency (HFA).
Private developers can face rates of 8-12 per cent in the market, depending on risk, to fund similar types of properties, according to industry sources. Private bulk buyers of 10 or more residential properties in 12 months, other than apartments, must also pay 15 per cent stamp duty.