New improved funding model to prompt funding applications for thousands more social homes

Revised funding model will facilitate AHB-provided social housing developments in all local authority areas and help deliver more social housing 
 
Revised model addresses financial viability issues in rural areas and will help sector overcome challenges caused by construction inflation and interest rate rises
 
The Minister for Housing, Local Government and Heritage, Darragh O’Brien TD, today announced changes to the Capital Advance Leasing Facility (CALF) funding model, the main funding scheme used by the Approved Housing Bodies (AHB) sector to provide social housing. The changes will address the challenges faced by the sector in accessing income to build social houses, particularly in rural towns and villages. 
 
Minister O’Brien now expects funding approval applications for thousands of AHB-provided homes to follow for areas where AHB-provided schemes were heretofore less viable. 
 
Announcing the changes, Minister O’Brien said:
 
“The changes I am making to the Capital Advance Leasing Facility will help Approved Housing Bodies to deliver more social housing in all parts of the country - in particular in rural towns and villages where projects at scale have been curtailed by the current funding model. These changes to how Approved Housing Bodies access Government funding will give them - and local authorities - a greater level of financial stability during projects. They will also help the sector overcome challenges arising from recent construction inflation and interest rate rises.
 
“Approved Housing Bodies are key partners in delivering the ambitious level of social housing envisaged in Housing for All. These reforms will help them to do more of what they do well: delivering high-quality, energy efficient homes and creating sustainable communities. Whilst the revised CALF funding model will remove certain limitations, my Department will continue working with Approved Housing Bodies to ensure that we maintain our focus on achieving value-for-money on all social housing projects.”
 
Among the reforms Minister O’Brien and his department will implement following completion of the CALF funding model review (published today) are:
 

• discontinuation of the approach of limiting the initial Payment and Availability Agreement (P&A) amount to a percentage of local market rent. The initial P&A amount will be calculated to achieve a debt-service cover ratio (DSCR) target that will provide sufficient borrowing capacity for the AHBs, with a minimum level of 25% CALF funding. This will ensure there is sufficient income within an AHB’s funding model to deliver social housing in all parts of the country 
   
   
• establishment of an internal Departmental working group to explore the issue of debt levels within the AHB sector and recommend solutions
   
  
  
• creation of a explicit link between applications for financial support under P&A-CALF and the relevant local authority’s Housing Delivery Action Plan

 
AHBs are independent, not-for-profit organisations who, alongside local authorities, provide housing for people on the social housing waiting list or for particular groups, such as older people or homeless people. 450 AHBs across Ireland are responsible for 53,000 homes (owned/leased and managed). At the end of Quarter 3 2022, there was an estimated 8,124 social homes in the AHB build pipeline. AHBs are expected to provide about 43% of the 9,100 new-build social homes and over 40% of Cost Rental homes targeted in 2023. The CALF review was a commitment under Housing for All, the Government’s housing plan to 2030.  
 
The Department will shortly issue a Circular and guidance document to accompany the review publication, to both local authorities and the AHB sector. In addition, this Department will hold regional information sessions for both local authorities and AHBs to give an overview of the review and the revised financial model.