The status of the review group of establishing a special purpose vehicle to enable credit union funding
To ask the Minister for Housing; Planning and Local Government the status of the review group of establishing a special purpose vehicle to enable credit union funding; and if he will make a statement on the matter.
The Programme for a Partnership Government recognises the potential role that Credit Unions can play in housing finance and supported the efforts of the Registrar of Credit Unions at the Central Bank to gradually lift current investment restrictions as appropriate, including for housing.
Credit Union bodies have set out proposed means by which funding could be provided by the sector to Approved Housing Bodies (AHBs) for the development of social housing. This follows on from the amendments introduced by the Central Bank to the regulatory regime within which Credit Unions operate.
My Department referred the Credit Unions’ representative bodies to the Irish Council for Social Housing (ICSH) with a view to both sectors sharing, as far as practical, the benefits of their respective work in this area, including the work undertaken by the ICSH on the development of special purpose vehicles for social housing financing purposes. The work of the ICSH was supported by grant funding from my Department. In addition, both my colleague, the Minister for Housing, Planning and Local Government, and I have met with the Credit Union movement and the AHB sector on this matter.
The ICSH, along with 6 Tier 3 AHBs, have worked with specialist financial advisors to establish a funding mechanism or vehicle which would source suitable sources of non-state finance to fund the delivery of social housing by AHBs, based on best value for money. Market testing undertaken revealed good interest in lending to the AHB sector from various lenders including banks, institutional investors and the Credit Union sector. So far, one AHB has set up an SPV, 2 AHBs have sourced private finance from a private institution and there are 2 AHBs looking at the next phase of establishing a structure to work collectively in securing private finance. As such, the work in this area is ongoing and has led to individual AHBs establishing SPVs for financing social housing.
The Credit Union sector is one potential funder whose terms are assessed as part of the process of market testing to establish best value for money and optimum terms and conditions from lenders. While my Department will continue to be available to provide any clarifications that may be required in relation to social housing delivery, it falls to the relevant parties, i.e. the AHBs, on the one hand, and potential investors on the other, to agree a workable and mutually acceptable approach in order to bring potential investment possibilities to a successful conclusion.
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