A major new financing initiative will be announced in the budget to boost the supply of social housing.
As well as directing extra exchequer cash to this area, Minister for Public Expenditure Brendan Howlin, will announce that significant additional funds will be raised by way of new borrowings kept off the State’s balance sheet.
This will allow for a substantial housing package without having a major impact on future exchequer borrowing.
Extra borrowings will be raised using the new State-owned bank, the Strategic Banking Corporation of Ireland, and potentially also using funds from the Strategic Investment Fund, the fund that was created by the Government from the remaining money left in the National Pension Reserve Fund.
In the longer term the Government will commit to work with the local authorities – particularly the four Dublin authorities – and to reform the local housing associations to allow them to play a bigger role in raising finance and providing new properties for rent.
Housing associations are voluntary local bodies, but significant restructuring is seen to be needed to allow some of them to play a more significant role in new housing provision.
Earlier this week, The Irish Times reported that the Government was in negotiations with the European Investment Bank, which is offering to lend €150 million for social housing investment, if the Government comes up with matching funding.
Off-balance sheet funds
The plan to raise funds off the exchequer balance sheet will allow easier provision of such funding and also allow additional investment in what will be a key feature of next week’s budget package.
Sources said that as the new off-balance sheet structures will take some time to develop, additional exchequer cash will also be allocated to give the social housing programme a short-term boost.
In addition to social housing, the Government will also announce other measures to boost house building, including changes in the requirement on builders to make development contributions and tweaks to the capital gains tax regime to encourage landowners to develop on landbanks as quickly as possible.
