Credit union money finally seems to have found a home

It looks like an ideal match of money looking for a home and homes looking for funds. Asset manager Gresham House is tapping credit union funds to help build or acquire property for social housing around the State.

Credit unions, which have been desperate to secure opportunities to invest member funds in line with strict Central Bank of Ireland rules, will put in up to €100 million to purchase or build up to 450 homes through approved housing bodies that, as always, are hunting for funding.

The payback for the credit unions and their members will come via the rental stream on the properties over the following 25 years.

As the Government's Housing for All policy aims finally to comprehensively address the ongoing housing crisis, funding remains a key stumbling block. Bank lending is still much more restricted following the 2008 financial crash. So developers have to be more creative in how they fund projects.

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Funds

That applies equally for the approved housing bodies. And their commitment to a less profit-driven model makes the job all the more difficult.

For the credit unions, it is a welcome opportunity for a sector that is strictly controlled by its regulator – the Central Bank – in what they can do with members’ money. In large part, this dates back to the voluntary nature of the movement.

In most cases, certainly before the recent rapid consolidation among credit unions, management of member funds, investment and lending decisions has all been in the hands of enthusiastic volunteers with degrees of financial expertise that varies from extensive industry experience to that picked up in their credit union role.

But, to fulfil their role, they need to make a return on member savings. This has involved broadening the type of investments they need to consider.

This fund, with its Central Bank sanction, looks like a good solution for both sides of the deal at fairly low risk.