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 History Compare Social Housing Output and Finance Ireland’s Three Worst Economic Crises Reform of funding model

Lessons from History Delivering 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 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 2015 The 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.