Timeframe for 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 timeframe for 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 lending restrictions as appropriate, including for housing.
Credit Union bodies have set out proposed means by which funding could be provided by Credit Unions 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.
Along with my colleague, Minister English, and officials from my Department and the Department of Finance, I have met with the Irish League of Credit Unions (ILCU) and the Credit Union Development Association (CUDA) to examine how their sector can assist in the area of financing social housing delivery. Minister English met with CUDA as recently as 23 October 2019.
Throughout the discussions with the Credit Unions’ representative bodies, my Department has emphasised that while it has provided technical assistance regarding the mechanisms for funding social housing, it is a matter for the Credit Unions themselves to set up special purpose vehicles to enable them to invest in the sector.
For this reason, 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 this group was supported by grant funding from my Department.
In parallel with the work undertaken by this group, the ICSH along with six Tier 3 AHBs have worked with financial advisors to establish a funding mechanism/vehicle which would identify suitable sources of non-state finance which could fund the delivery of social housing by AHBs. To date market testing has revealed good interest in lending to the sector from various lenders including Banks, Institutional investors and the Credit Union sector. This work has involved seeking sources of lending based on best value for money.
To date, one AHB has set up a special purpose vehicle; two AHBs have sourced private finance from a private institution and two AHBs are currently examining the possibility of establishing a structure to work collectively.
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. It is now a matter for the relevant parties to agree a workable and mutually acceptable approach.
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