Housing association change could add to Government debt

The Central Statistics Office (CSO) wants to reclassify the State's largest housing agencies as public rather than private bodies in a move that could add millions of euros in debt on to the public balance sheet and threaten plans for thousands of social housing and rental units.

In a recommendation to Eurostat, the CSO said it was advising that a " number of the largest approved housing bodies be reclassified to the Government sector rather than as private non-profit bodies" as they were being funded directly by Government.

This would mean they would be treated as being on the State’s balance sheet, the agency said. Ireland’s debt stood at €200 billion by the end of 2016 and a reclassification of housing agencies could add an additional €17 million to the balance sheet.

Housing associations have warned the decision could potentially lead to many fewer social housing being built as the Government seeks to rein in borrowing.

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The CSO said most of the debt already incurred by the housing bodies is already on the Government’s balance sheet, saying that the privately raised debt currently stands at no more than €17million.

However, Donal McManus, chief executive of the Irish Council for Social Housing, on Wednesday said almost three-quarters of some 15,000 social housing units scheduled for completion by 2021 are due to be constructed by organisations affected by the CSO ruling. The plans would, Mr McManus said, require €2 billion in loan finance.

Funding

The State's largest social housing providers are currently classified as privately controlled non-market entities which means their funding is off-balance-sheet. They provide about 30,000 of the State's 160,000 social housing units, with the bulk of units coming from the four largest organisations – Clúid, Respond, Tuath and Oaklee.

They typically finance themselves through direct Government grants and loans from the Housing Finance Agency, but they also require additional revenue subsidies from Government to assist with loan repayments. Tenants pay rent when they move in.

The complex arrangements arose in the wake of the financial crisis when the Government was forced to seek more off-balance-sheet ways of funding public infrastructure such as social housing.

In its determination, the CSO said it will continue the work of reviewing the classification of other housing bodies next year, leading to a concern that the amount added to the public balance sheet could rise further.

Clúid Housing, which last week began a €21 million redevelopment of St Mary's Mansions flat complex in Dublin's north east inner city, said it was "disappointed but not surprised" by the CSO's decision. Simon Brooke, head of policy for the body, expressed optimism that the decision could be reversed.