Local authorities could get 1.5% housing loans fixed for 25 years

Finance for housing loans is currently available to local authorities at an “extraordinarily cheap rate”, fixed over a 25-year term, according to the Housing Finance Agency. The State-owned agency said it had access to significant funding from international markets and could offer loans to local authorities, fixed at rates of about 1.5 per cent for 25 years. Approved housing agencies, including housing charities, can access the funding for about 3 per cent.

Chief executive of the agency Barry O’Leary described the funding as “an extraordinarily cheap rate”, but warned that it was unknown how long such rates would be available. What was restricting the agency from lending was that such loans would have to be on the “Government balance sheet and there are of course constraints in this area”.

Mr O’Leary said local authorities could draw up their contracts and apply for funding. At that stage, €1 billion could be set aside to be drawn down later once projects were ready to start. A €1 billion loan at 1.5 per cent would cost between €15 million and €50 million to service, but it was probably costing local authorities more in spending on emergency accommodation.

“Going from zero to occupied is quite long,” he said, estimating it at between 18 and 24 months. Lending would probably be relatively small in years one and two but would pick up over years three, four and five. Mr O’Leary added that lending to local authorities for housing purposes amounted to €95 million in 2015. “We have advanced €35 million in the six months to June 30th this year.”

Fifteen authorised housing bodies, including Clúid Housing Association, the Iveagh Trust, Respond! Housing Association and Túath Housing Association have also received agency certification for loans.

Last year, €128.5 million in loans was approved to housing agencies and €34 million was drawn down for 351 units. Approvals have this year have already surpassed 2015, up to €130.6 million while €55.6 million has been drawn down for 963 units. The Housing Finance Agency will publish its five-year corporate strategy next month. Mr O’Leary said it was not particularly important to the agency whether local authorities bought or built houses.

In his housing plan launched last month, Minister for Housing Simon Coveney said the Government would build 47,000 houses over the next five years. Some 40 per cent of those will be required for the Dublin area.

Local authorities, however, cannot say how many houses they will build. “That is the wrong question. The right question is how much finance is available,” according to the chairman of Dublin City Council housing committee, Sinn Féin councillor Daithí Doolan.

Mr Doolan said there were three “massive” land banks available immediately for redevelopment to build 1,348 homes at O’Devaney Gardens in the north inner city, St Michael’s estate in Inchicore and the Oscar Traynor estate in Coolock. “We could start these projects within weeks if the finance was in place.” He added that the Irish Glass Bottle site in Ringsend could provide another 3,000 units. He said 30 per cent of the units should be social housing.

The Local Government Management Agency has said it does not matter how the housing was provided, whether through local authorities, public private partnerships or the refurbishment of empty units or “voids”.

Mr Doolan however said it was vital that housing was built by local authorities because public private partnerships had proved disastrous, with developers going bust.