Social housing targets at risk if State funding reclassified

Government plans to provide more social housing to ease the homeless crisis could be put in jeopardy if an investigation reclassifies how the State accounts for its funding of the largest housing agencies.

The European Union's independent statistics agency, Eurostat, has asked the Central Statistics Office to review whether non-profit agencies that manage more than 300 homes should be reconsidered as being on the State's books.

A change in their off-balance sheet treatment could deprive the non-profit agencies of critical State funding and disrupt Government plans to rely on the sector to provide a third of its target of 50,000 social housing units by 2021 under the Rebuilding Ireland programme to address the severe housing shortage.

Sitting off the Government’s books enables so called Approved Housing Bodies to borrow State funds through local authorities to provide a range of social housing and housing assistance schemes.

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Department of Housing statistics show the sector received State funding of close to €1.6 billion over the decade to the end of last year with tens of millions of euro more drawn so far this year.

The CSO said that Eurostat had this year asked it to review the classification of the larger housing bodies as to whether they should be included in the Government’s national accounts. The State office could not say when the review would be completed as it was a “very resource-intensive exercise”.

The review has sparked fears in the sector that any reclassification could hamper plans to provide more social housing given the Government’s heavy indebtedness and constraints on its capacity to borrow more.

“We are very concerned because of our future development plans,” said Donal McManus, the chief executive of the Irish Council for Social Housing, the representative body for 270 housing associations.

Policy changes

“The expansion of the non-profit housing sector would be limited if there was a reclassification. There would have to be new policy changes made.”

Mr McManus said that a reclassification of British housing bodies by the UK’s Office for National Statistics in 2015 took two years to resolve and warned of the uncertainty from a similar change here.

“Any disruption could lead to a more long-term impact,” he said. “It is another couple of years you could waste. If it was to happen in Ireland and things were left in abeyance, the disruption in the current housing crisis would not be good.”

Should Eurostat push for a reclassification – treating housing agencies as it did Irish Water in 2015 – the change would affect the funding of large housing associations such as Respond, Túath and Clúid.

Most housing associations in the EU in receipt of State funding operate independently of government controls.

“I would be confident that if the worst came to the worst and if, at some stage, we were reclassified as on-balance sheet, the Government would be able to take measures to put us off-balance sheet again,” said Simon Brooke, head of policy at Clúid, which aims to deliver 2,500 new homes over three years.

“That might take a couple of years but we would hope that, in the meantime, the State would continue to fund us in the normal way.”